Ecosystem Services: Perspectives on the Bottom Line for Business and Industry Marcus Lee, Millennium

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Ecosystem ServicesPerspectives on the Bottom
Linefor Business and IndustryMarcus Lee,
Millennium Ecosystem AssessmentFIDIC 2005, 6
September, Beijing
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Largest assessment of the health of Earths
ecosystems

• Experts and Review Process
• Prepared by 1360 experts from 95 countries
• 80-person independent board of review editors
• Review comments from 850 experts and governments
• Includes information from 33 sub-global
  assessments
• Governance
• Called for by UN Secretary General in 2000
• Authorized by governments through 4 conventions
• Partnership of UN agencies, conventions,
  business, non-governmental organizations with a
  multi-stakeholder board of directors

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Focus Ecosystem Services The benefits people
obtain from ecosystems
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MA Findings - Outline

• 1. Ecosystem Changes in Last 50 Years
• 2. Gains and Losses from Ecosystem Change
• Three major problems may decrease long-term
  benefits
• Degradation of Ecosystem Services
• Increased Likelihood of Nonlinear Changes
• Exacerbation of Poverty for Some People
• 3. Ecosystem Prospects for Next 50 Years
• 4. Reversing Ecosystem Degradation

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Why ecosystems and their services matter to
business and industry

• Businesses interact with ecosystems and ecosystem
  services, directly or indirectly, by
• Using ecosystem services
• Contributing to ecosystem change
• If current trends continue, ecosystem services
  will become more costly or cease to be available
• Operating environments are also likely to change
  in the face of ecosystem-related challenges
• Customer preferences
• Regulatory and policy regimes
• New markets
• Competitor strategies
• Investor demands

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Important ecosystem changes with negative impacts
on business

• Water scarcity
• Governments will allocate supplies / water rights
• Market mechanisms for allocation and efficient
  use
• Climate change
• Habitat change and land conversion
• Biodiversity loss and invasive species
• Overexploitation of the oceans
• Nutrient overloading

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Biodiversity current estimates of species loss
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Overfishing example from collapse of
Newfoundland cod
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What we can expect in future (I)

• Growing demand for food
• Without further harming the environment
• In particular, capture fisheries vs. aquaculture
• Growing fresh water needs for agriculture,
  industry and consumption
• Given globally uneven distribution of supply
• Growing demand for energy
• While minimizing impacts on climate and air
  quality
• Balancing biodiversity conservation with economic
  development

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What we can expect in future (II)

• Unexpected and abrupt changes in ecosystems
• Cannot assume that there will be ample warning
• Businesses may well be caught by surprise
• Substitutes can be developed for some, but not
  all, ecosystem services
• Where substitutes are available, their cost is
  generally high
• Insurance industry taking account of growing
  risks from degradation of ecosystem services
• Independent, third-party verification of
  performance / certification

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Challenges for business and industry

• Increased regulatory constraints as governments
  seek to protect degraded ecosystems
• Risk to reputation and brand image for businesses
  directly tied to threatened ecosystems and
  services
• Increases in costs of important inputs
• Vulnerability of assets and operations to natural
  disasters
• Conflict and instability in areas affected by
  scarcity of ecosystem services

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Opportunities for business and industry

• New markets and products to address degradation
  in ecosystems and scarcity of ecosystem services
• Enhanced image and reputation, political capital,
  and brand value from genuine proactive management
  of ecosystem issues
• First-mover/competitive cost and operational
  advantages from early recognition and action with
  regard to ecosystems

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What does this actually mean?Example Water
scarcity

• Businesses will have to compete - including with
  other businesses - for water
• Cost of water may cause substantial increase in
  overall business costs
• Decisions about locating operations must take
  account of long-term water supply
• Increasingly, new ways to recycle supplies need
  to be found
• New technologies to reduce water intensity and
  address water quality will be valuable
• Marketing and supplying water is already a
  business opportunity pursued in some places

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Restating the Business Case

• Business can be a positive force in addressing
  ecosystem-related challenges by
• Pursuing new opportunities and markets
• Reducing operational footprints
• Developing and deploying new technologies
• Demonstrating leadership in support of poverty
  reduction, sustainable development and
  environmental protection
• Businesses which successfully address
  ecosystem-related challenges will
• Gain first-mover / competitive advantage
• Help ensure stable and secure societies,
  continued access to critical resources, and open
  markets

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What businesses can do

• Identify and understand ecosystem services used
  or affected by business operations, as part of
  strategy
• Including those important to suppliers, customers
• Manage ecosystem services through the supply
  chain and/or product life-cycle in an integrated
  way
• Increase efficiency in use and supply of
  ecosystem services
• Develop, deploy and market new technologies which
  improve operations, reduce impacts, and meet
  increasing demand
• Pursue partnerships with government and civil
  society
• Accelerate learning, leverage resources and
  expertise, build trust with stakeholders

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