by Ciro Zanin
Email: cirozanin@gmail.com
Email: cirozanin@gmail.com
Rev.09 - 03/24/2008.
CONTENTS
The economic interactions.
The five classes of man-to-man interactions.
The 8 levels of ecological complexity.
Ecosystem value. part one. A physical value, not a market value.
Example. Part one.
Ecosystem value. Part two. Measuring the ecological effects of human actions, those effects that are produced within levels of ecological complexity higher than the level of population.
The guiding principle for decion makers.
Basic concepts on ecosystems.
Ecosystem value. Part three. A formula for calculating the value of ecosystems.
Example. Part two.
How to make liquid the monetary value assigned to ecosystems. Part one. The problem.
Example three.
How to make liquid the monetary value assigned to ecosystems. Part two. The solution.
THE ECONOMIC INTERACTIONS.
Man can procure the resources he needs to live either by withdrawing from ecosystems or by interacting with other men.
If he procures the resources from ecosystems –for example: harvesting, hunting and fishing, but then later (to the law of “first come, first served”) also quarry materials (rocks, marbles, pebbles, sands, clays), oil, gas, minerals, fibers and timber - he does not have to interact with other men but only with the Ecosphere which does not speak or protest; he is not obliged to indebt himself nor does he have to pay anything to anyone.
If instead he procures the resources by interacting with other men he can do so by three different patterns:
1) begging and relying on the charity of others;
2) using violence against others: theft, exploiting people, slavery, and war;
3) through economical interaction.
Economic interaction, institutionalized through the creation of economic systems, is the answer given by men in response to the need of obtaining resources from other men in order to avoid begging and violence.
When violence is used one abandons the economic interaction. War is not an economic interaction even though many tycoons have tried to portray it as such. Avoiding wars is just one of the reasons for men to create the regulated exchange, which is the economic exchange.
But the economic interactions have been created by man only and solely to respond to a particular need: obtaining resources from other men refusing the use of begging and violence. The economic interactions must be limited to satisfying this need and should not influence other aspects of human life.
THE 5 CLASSES OF MAN-TO-MAN INTERACTIONS.
The economic interactions have produced economic systems and economy as a whole. Today we observe a worrying phenomenon: economic interactions rule human life. However we must consider that these interactions are only one of the five classes of man-to-man interactions. What are the other four classes of man-to-man interactions? They are ethical, religious, political and social interactions. These five classes encompass all human life, for life can be analyzed as a set of interactions.
Among these interaction classes an order relation exists. Man’s life should be regulated by ethical standards (Ethic’s Supremacy), and then by religious and political norms. Religious and political norms, consistent with ethical standards, together define the norms that rule economic interactions. Economic interactions then not only should not substitute other interactions, but they should also be consistent and subjected to the religious and political interactions used to define human behavioral patterns.
Ethics, Religion and Politics are concerned with defining the norms which orient and govern human life as individuals, organizations, nations, international and global communities.
These are all man-to-man interactions or interactions at the level of the human population.
THE 8 LEVELS OF ECOLOGICAL COMPLEXITY.
In order to correctly analyze interactions, we must get used to assigning interactions to their level of ecological complexity.
Interactions can be assigned to the following 8 levels of increasing ecological complexity:
1. Population,
2. Community,
3. Environmental System (differentiated in Ecosystems and Anthroposystems[i]),
4. Landscape,
5. Watershed,
6. Mountain Range,
7. Islands (Continents = Large Islands) and Ocean,
8. Ecosphere.
Therefore: economic interactions are within the level of population. The interactions between men and other living organisms are interactions within the level of community, which is a higher level in respect to the population level. Within an even higher level there are man-to-ecosystems interactions, man-to-landscape interactions, man-to-watershed interactions, man-to-mountain range interactions, man-to-continents, islands or ocean interactions. Finally human emission of CO2 are man-to-ecosphere interactions or interactions within the level of ecosphere.
Now it is crucial to comprehend the following two points:
· when it has been stated that man can obtain resources through direct withdrawals from ecosystems, these interactions have not been included among economic interactions because the latter are within the population level while the former are within the environmental system level;
· besides, even if the interactions of withdrawal from ecosystems and the interactions of waste disposal into ecosystems, are not economic interactions, these interactions still have a value, but not an economic value, like the current dominant ideology states, rather an ecological value. This value is given by the variation of the ecosystem value calculated before and after the withdrawal or the disposal. Then in order to calculate the value of withdrawals and disposals (insertions) it is necessary to define how to assign a value to ecosystems.
ECOSYSTEM VALUE. PART ONE. A PHYSICAL VALUE, NOT A MARKET VALUE.
And how can such a value be calculated? It can be calculated easily like every other real phenomenon, be it a chemical reaction or the discharge of a bolt of lightning: in terms of the energy necessary to produce that phenomenon.
For ecosystems, in particular, this value is calculated as the sum of the energetic inputs, expressed in Joules [J], required to build the ecosystem.
The value of ecosystems, expressed in terms of Joules [J], can then be converted into monetary units through a rate of exchange [€/J]. The first exchange rate that comes to mind is the product of three factors: the inverse of the energy quantity, expressed in Joules, contained in an barrel of oil [Bbl/J], the international price of a barrel of oil expressed in [US$/Bbl], and the inverse of the exchange rate American Dollars vs. Euro expressed in [€/US$].
It is just like when an entrepreneur calculates the cost of production of a product. This product has a cost given by the sum of all the costs incurred for its production.
But while goods produced by an entrepreneur will also have a selling price, an ecosystem, on the contrary, will never have a selling price.
An entrepreneur’s product will have a price determined by the market and it could be higher than, equal to or lower than the production cost according to the expectations of the supply and demand of that product.
For ecosystems, which are the “product” of the Ecosphere, there exists a value, measurable in energetic terms, corresponding to a production cost, but, differently from human products, for ecosystems there is not a selling value because the man-to-ecosystem interactions are not economic interactions where there exists a sense in defining a market.
The interactions at levels of complexity higher than population, are interactions within which the concept of market is inconsistent. It is not possible to ask the ecosphere how much it is willing to pay for the maintenance of an ecosystem or how much it is willing to accept for the destruction of an ecosystem. It is not possible to trade with the ecosphere like it is possible to trade among men.
The ecosystem value, then, for intrinsic reasons, cannot be considered a selling price and so all the methods of the type ” willing to pay or to accept”, whether revealed (market Price Method, Productivity Method, Hedonic Pricing Method, Travel Cost Method), imputed (Damage Cost Avoided, Replacement Cost, Cost Substitute) or expressed (Contingent Valuation Method, Contingent Choice Method)[ii], being based on market simulation, are not applicable to the ecosystem’s evaluation.
Ecosphere production does not respond to any market law of supply and demand: if men were not on Earth anymore, the ecosphere would continue to produce (to supply) ecosystems despite the absence of a human demand.
Man can only subtract for a more or less durable time terrestrial surface to the ecosphere through the realization of anthroposystems, limiting or stopping evolution, reducing biodiversity and, within a higher level, ecodiversity. But by doing so man does not regulate a market, simply alters the function of biogeosphere system, which will position itself on a new omeorhetic equilibrium point which could not be apt for the maintenance of human life on planet Earth.
Man can create an artificial market for ecosystems considering them like plastic bags. But this type of operation is inconsistent, contrary to logic, not corresponding to the physical reality of the phenomena we want to measure. Ecosystems are not produced by man, but they are systems of living organisms to which even man belongs and depends. Ecosystems are positioned within a higher level of ecological complexity with respect to that of population. To apply economic logic to a higher level than that of population would bring on unforeseeable and maybe fatal consequences for the human species and ecosphere as we know and love.
What has been stated above is fundamental. To comprehend it fully means to solve the environmental and human problems of our age.
EXAMPLE. PART ONE.
Let us consider an example of unreasonable political action: the concession of financial aids from a national government in order to substitute virgin rainforests with soybean cultivation. Since in economic terms the ecosystem’s value is zero, today Brazil promotes the substitution of virgin rainforests with soybean cultivation in the aim to increase its GDP. Brazil adopts this exploitative policy because GDP take into account the value added by soybean cultivation but not the value subtracted by virgin rainforest deforestation. If monetary values readily liquidable were assigned to ecosystems, and if nations should take into account the losses generated by ecosystem destruction, then these exploiting actions would immediately cease because GDP would not only collapse rather than increase, but would become deeply negative.
ECOSYSTEM VALUE. PART TWO. MEASURING THE ECOLOGICAL EFFECTS OF HUMAN ACTIONS, THOSE EFFECTS THAT ARE PRODUCED WITHIN LEVELS OF ECOLOGICAL COMPLEXITY HIGHER THAN THE LEVEL OF POPULATION.
It is important to understand that the economic calculation measures the effects of only a part of human actions. It is important to understand that the economic calculation measures only the economic production. But in order to make sound decisions it is necessary to measure not only the economic effects, within the level of population, but also all the ecological effects , those that are produced within higher levels of ecological complexity.
The ecological calculation must be added to the economic calculation. The ecological calculation measures the variation of ecosystem values due to human actions (and natural events too like: earthquake, floods, landslides, hurricanes, fires, …) . Only by taking the sum of the two calculations is it possible to correctly measure the damage/advantage produced to the ecosphere by human actions.
Thinking for a moment to Mars and Earth, the most impressive difference between the two is that Earth is a living planet while Mars is a dead planet. Mars has no value at least until there is life on it. On the contrary, Earth is really valuable and the Earth’s value is generated by all the organisms living on it.
Man can procure the resources he needs to live either by withdrawing from ecosystems or by interacting with other men.
If he procures the resources from ecosystems –for example: harvesting, hunting and fishing, but then later (to the law of “first come, first served”) also quarry materials (rocks, marbles, pebbles, sands, clays), oil, gas, minerals, fibers and timber - he does not have to interact with other men but only with the Ecosphere which does not speak or protest; he is not obliged to indebt himself nor does he have to pay anything to anyone.
If instead he procures the resources by interacting with other men he can do so by three different patterns:
1) begging and relying on the charity of others;
2) using violence against others: theft, exploiting people, slavery, and war;
3) through economical interaction.
Economic interaction, institutionalized through the creation of economic systems, is the answer given by men in response to the need of obtaining resources from other men in order to avoid begging and violence.
When violence is used one abandons the economic interaction. War is not an economic interaction even though many tycoons have tried to portray it as such. Avoiding wars is just one of the reasons for men to create the regulated exchange, which is the economic exchange.
But the economic interactions have been created by man only and solely to respond to a particular need: obtaining resources from other men refusing the use of begging and violence. The economic interactions must be limited to satisfying this need and should not influence other aspects of human life.
THE 5 CLASSES OF MAN-TO-MAN INTERACTIONS.
The economic interactions have produced economic systems and economy as a whole. Today we observe a worrying phenomenon: economic interactions rule human life. However we must consider that these interactions are only one of the five classes of man-to-man interactions. What are the other four classes of man-to-man interactions? They are ethical, religious, political and social interactions. These five classes encompass all human life, for life can be analyzed as a set of interactions.
Among these interaction classes an order relation exists. Man’s life should be regulated by ethical standards (Ethic’s Supremacy), and then by religious and political norms. Religious and political norms, consistent with ethical standards, together define the norms that rule economic interactions. Economic interactions then not only should not substitute other interactions, but they should also be consistent and subjected to the religious and political interactions used to define human behavioral patterns.
Ethics, Religion and Politics are concerned with defining the norms which orient and govern human life as individuals, organizations, nations, international and global communities.
These are all man-to-man interactions or interactions at the level of the human population.
THE 8 LEVELS OF ECOLOGICAL COMPLEXITY.
In order to correctly analyze interactions, we must get used to assigning interactions to their level of ecological complexity.
Interactions can be assigned to the following 8 levels of increasing ecological complexity:
1. Population,
2. Community,
3. Environmental System (differentiated in Ecosystems and Anthroposystems[i]),
4. Landscape,
5. Watershed,
6. Mountain Range,
7. Islands (Continents = Large Islands) and Ocean,
8. Ecosphere.
Therefore: economic interactions are within the level of population. The interactions between men and other living organisms are interactions within the level of community, which is a higher level in respect to the population level. Within an even higher level there are man-to-ecosystems interactions, man-to-landscape interactions, man-to-watershed interactions, man-to-mountain range interactions, man-to-continents, islands or ocean interactions. Finally human emission of CO2 are man-to-ecosphere interactions or interactions within the level of ecosphere.
Now it is crucial to comprehend the following two points:
· when it has been stated that man can obtain resources through direct withdrawals from ecosystems, these interactions have not been included among economic interactions because the latter are within the population level while the former are within the environmental system level;
· besides, even if the interactions of withdrawal from ecosystems and the interactions of waste disposal into ecosystems, are not economic interactions, these interactions still have a value, but not an economic value, like the current dominant ideology states, rather an ecological value. This value is given by the variation of the ecosystem value calculated before and after the withdrawal or the disposal. Then in order to calculate the value of withdrawals and disposals (insertions) it is necessary to define how to assign a value to ecosystems.
ECOSYSTEM VALUE. PART ONE. A PHYSICAL VALUE, NOT A MARKET VALUE.
And how can such a value be calculated? It can be calculated easily like every other real phenomenon, be it a chemical reaction or the discharge of a bolt of lightning: in terms of the energy necessary to produce that phenomenon.
For ecosystems, in particular, this value is calculated as the sum of the energetic inputs, expressed in Joules [J], required to build the ecosystem.
The value of ecosystems, expressed in terms of Joules [J], can then be converted into monetary units through a rate of exchange [€/J]. The first exchange rate that comes to mind is the product of three factors: the inverse of the energy quantity, expressed in Joules, contained in an barrel of oil [Bbl/J], the international price of a barrel of oil expressed in [US$/Bbl], and the inverse of the exchange rate American Dollars vs. Euro expressed in [€/US$].
It is just like when an entrepreneur calculates the cost of production of a product. This product has a cost given by the sum of all the costs incurred for its production.
But while goods produced by an entrepreneur will also have a selling price, an ecosystem, on the contrary, will never have a selling price.
An entrepreneur’s product will have a price determined by the market and it could be higher than, equal to or lower than the production cost according to the expectations of the supply and demand of that product.
For ecosystems, which are the “product” of the Ecosphere, there exists a value, measurable in energetic terms, corresponding to a production cost, but, differently from human products, for ecosystems there is not a selling value because the man-to-ecosystem interactions are not economic interactions where there exists a sense in defining a market.
The interactions at levels of complexity higher than population, are interactions within which the concept of market is inconsistent. It is not possible to ask the ecosphere how much it is willing to pay for the maintenance of an ecosystem or how much it is willing to accept for the destruction of an ecosystem. It is not possible to trade with the ecosphere like it is possible to trade among men.
The ecosystem value, then, for intrinsic reasons, cannot be considered a selling price and so all the methods of the type ” willing to pay or to accept”, whether revealed (market Price Method, Productivity Method, Hedonic Pricing Method, Travel Cost Method), imputed (Damage Cost Avoided, Replacement Cost, Cost Substitute) or expressed (Contingent Valuation Method, Contingent Choice Method)[ii], being based on market simulation, are not applicable to the ecosystem’s evaluation.
Ecosphere production does not respond to any market law of supply and demand: if men were not on Earth anymore, the ecosphere would continue to produce (to supply) ecosystems despite the absence of a human demand.
Man can only subtract for a more or less durable time terrestrial surface to the ecosphere through the realization of anthroposystems, limiting or stopping evolution, reducing biodiversity and, within a higher level, ecodiversity. But by doing so man does not regulate a market, simply alters the function of biogeosphere system, which will position itself on a new omeorhetic equilibrium point which could not be apt for the maintenance of human life on planet Earth.
Man can create an artificial market for ecosystems considering them like plastic bags. But this type of operation is inconsistent, contrary to logic, not corresponding to the physical reality of the phenomena we want to measure. Ecosystems are not produced by man, but they are systems of living organisms to which even man belongs and depends. Ecosystems are positioned within a higher level of ecological complexity with respect to that of population. To apply economic logic to a higher level than that of population would bring on unforeseeable and maybe fatal consequences for the human species and ecosphere as we know and love.
What has been stated above is fundamental. To comprehend it fully means to solve the environmental and human problems of our age.
EXAMPLE. PART ONE.
Let us consider an example of unreasonable political action: the concession of financial aids from a national government in order to substitute virgin rainforests with soybean cultivation. Since in economic terms the ecosystem’s value is zero, today Brazil promotes the substitution of virgin rainforests with soybean cultivation in the aim to increase its GDP. Brazil adopts this exploitative policy because GDP take into account the value added by soybean cultivation but not the value subtracted by virgin rainforest deforestation. If monetary values readily liquidable were assigned to ecosystems, and if nations should take into account the losses generated by ecosystem destruction, then these exploiting actions would immediately cease because GDP would not only collapse rather than increase, but would become deeply negative.
ECOSYSTEM VALUE. PART TWO. MEASURING THE ECOLOGICAL EFFECTS OF HUMAN ACTIONS, THOSE EFFECTS THAT ARE PRODUCED WITHIN LEVELS OF ECOLOGICAL COMPLEXITY HIGHER THAN THE LEVEL OF POPULATION.
It is important to understand that the economic calculation measures the effects of only a part of human actions. It is important to understand that the economic calculation measures only the economic production. But in order to make sound decisions it is necessary to measure not only the economic effects, within the level of population, but also all the ecological effects , those that are produced within higher levels of ecological complexity.
The ecological calculation must be added to the economic calculation. The ecological calculation measures the variation of ecosystem values due to human actions (and natural events too like: earthquake, floods, landslides, hurricanes, fires, …) . Only by taking the sum of the two calculations is it possible to correctly measure the damage/advantage produced to the ecosphere by human actions.
Thinking for a moment to Mars and Earth, the most impressive difference between the two is that Earth is a living planet while Mars is a dead planet. Mars has no value at least until there is life on it. On the contrary, Earth is really valuable and the Earth’s value is generated by all the organisms living on it.
Life and only life is the spring of value.
If, for historical reasons, men have assigned value only to human production (economic value), it does not imply that men must persist in this mistake. There can be a moment in which men realize that they must take into account also all other organisms‘ production (ecological value), eventually assigning a value to ecosystems which are the output of all other organisms’ production.
THE GUIDING PRINCIPLE FOR DECISION MAKERS.
In the future, human actions, within all levels, should be selected not on the basis of the principle of economic profit maximization, but on the basis of the principle of global profit maximization, given by the sum of the economic profit and the ecological profit.
The maximization of global profit implies as a matter of fact the minimization of the ecospheric damage produced for satisfying human needs. According to this principle the human development choices would change gradually and totally: from a different respect towards ecosystems, to a different planning of anthroposystems.
A different land use, the definition of new urban models, different choices about the use of resources, a different way of doing agriculture and industry should be derived adopting this new guiding principle.
Together with this renewal we would be tempted to ask for an ethical renewal of religion, politics and society, in order to live in a better way.
BASIC CONCEPTS ON ECOSYSTEMS.
When solar radiation hits the Earth’s surface, it can be:
· either reflected back to space,
· or converted into heat that warms directly or indirectly living organisms,
· or trapped within chemical bonds by photosynthesis.
Ecosystems are the result of the effect of the solar radiation used by living organisms. Living organisms either absorb directly or indirectly (from soil, water, atmosphere) solar radiation for warming themselves, or, those who are able to carry on photosynthesis, absorb solar radiation for trapping it into chemical bonds.
Then photosynthetic organisms (primary producers) transmit the chemical energy contained in their cells to the adjacent nodes of the trophic chain: herbivores and detritivores which, in turn, transmit the chemical energy contained in their cells to the adjacent nodes of the trophic chain: carnivores and detritivores, and so on (for simplicity the existence of chemiosynthetic organisms is neglected here).
Therefore everything starts from the solar radiation that hits an area. Clearly it is important not only that the solar radiation hits a surface but also that the solar radiation be utilized by the organisms living on that surface.
Hypothetically speaking, if in a desert area there were no living organisms, all solar radiation would be reflected back to space or used to warm rocks, soil, water and air, and to produce phase changes, but would not be utilized for the production and the maintenance of living organisms. In this case there would be locally no ecosystem production or maintenance and the ecological value of that desert surface would be zero.
Naturally, only the solar radiation reflected back to space would be lost, while the solar radiation transferred
- as latent heat absorbed by water molecules, or
- as heat transmitted by conduction among adjacent molecules, by vertical convection by buoyancy and by vertical and horizontal advection (winds),
to other areas of the ecosphere, could be utilized by the organisms living there.
ECOSYSTEM VALUE. PART THREE. A FORMULA FOR CALCULATING THE VALUE OF ECOSYSTEMS.
Having established the basic concepts, a first formula of my invention for an approximate calculation of the value of an ecosystem Ve can be the following expression:
Ve = [[ (1 – a) x E ] x [LAI : LAImax] x t x A] x [ k x P x t€/US$ ],
where the first part of the expression [[ (1 – a) x E ] x [LAI : LAImax] x t x A] is the energy in [J] necessary to realize the ecosystem object of evaluation on the surface A, and the second part of the expression [ k x P x t€/US$ ] is the exchange rate in [€/J] which converts the value expressed in units of energy [J] in Euro [€]. In this formula a[iii] is the albedo, E[iv] is the solar energy in [Jm-2s-1], LAI is the leaf area per squared meter of land, LAImax is the maximum LAI reported in scientific literature for ecosystems, equal to 15 m2 of leaves per squared meter of land[v], t is time in seconds, A is the area in squared meters, k is the inverse of the energy contained in a barrel of oil expressed in Barrel Of Oil per Joules, P is the international price of a barrel of oil in [US$/Bbl] and t€/US$ is the inverse of the exchange rate US$ vs Euro in [€/US$].
This formula does not take into account:
· the energetic contribution due to chemiosynthetic organisms living in the ecosystem object of evaluation;
· the energy exchange among elements of the ecosphere due to energy transport phenomena like cloud formation, wind, precipitation.
With a little bit of common sense and scientific knowledge it is possible to remedy these shortcomings and with time and practice it will be possible to make this formula more precise.
This formula indirectly takes into account the biodiversity and the ecodiversity of the ecosystem object of evaluation because these diversities are strongly correlated to time (t) and surface (A).
EXAMPLE. PART TWO.
Using the formula above it can be calculated, as a first estimate, the ecological value of an hectare of Amazon rainforest with a LAI of 8.0 and an age of 200 years, converted to a monetary value using the exchange rate defined above, given by the product of three factors: the inverse of the energy contained in a barrel of oil equal to 1.60 x 10-10 [Bbl/J][vi], the international price of a barrel of oil equal to 50 US$/Bbl and the inverse of the exchange rate US$ vs Euro equal to ( 1:1.32 = ) 0.76 €/US$:
Ve /ha = [[ (1 – 0,30) x 340 Wm-2 ] x [8.0 : 15] x 200 yr x (3,15 x 107 sec yr-1) x 10.000 m2/ha] x [1.60 x 10-10 Bbl/J x 50 Us$/Bbl x 0.76 €/Us$] = 48.620.544 €/ha,
where, for simplicity, a = 0.30, which is the average global albedo for planet Earth, E = 340 Wm-2, which is the solar constant, W is the Watt, yr is the number of years and ha is the hectare: 1 ha = 10.000 m2.
Returning to the first example, estimating the added value of an hectare cultivated with soybean equal to 1.000 €/ha, it is immediately evident which is the correction that should be made to Brazil GDP, as a result of the policy of substituting primary rainforests with soybean cultivation: - 48.620.544 + 1.000 = - 48.619.544 €/ha deforested.
In 2006 the Brazilian GDP was equal to 735 x 10-9 €. If the primary rainforest destruction would correctly be taken into account, the Brazilian GDP would become negative after the destruction of a little bit more than 15.000 ha/yr covered with primary rainforests.
Brazil, a country with 478 millions of hectares of forests, of which 416 millions of hectares are primary forests, in the five years between 2000 and 2005 has registered a net annual forest loss of 3.103.000 ha/yr, about from 100 to 200 times its GDP[vii] 2006.
HOW TO MAKE LIQUID THE MONETARY VALUE ASSIGNED TO AN ECOSYSTEM. PART ONE. THE PROBLEM.
Once designed the solution to the problem of assigning monetary values to ecosystems, another problem arises: how to make these monetary values liquid? How can these values be readily converted into cash?
To understand the problem that must be solved, it can be helpful to return to the example.
EXAMPLE. PART THREE.
Brazil is a country with something like 400 million hectares of primary forests. If we assign to these primary forests an average monetary value of 10.000.000 €/ha, Brazil, only considering primary forests, would possess an immense natural capital equal to 4.000.000 billion €, corresponding to about 5.400 times its GDP 2006. How can then Brazil monetize this natural capital?
HOW TO MAKE LIQUID THE MONETARY VALUE ASSIGNED TO AN ECOSYSTEM. PART TWO. THE SOLUTION.
The problem can be solved as follows.
An international Organism, called World Wide Organization for Ecosphere Protection (WWOEP), with the mission of preserving primary ecosystems and protecting the ecosphere from human actions, can be created.
(Alternatively, as many national organizations as are the world nations (some 190 - 200 nations) can be created for ecosystem preservation, and an international organization for the standardization of the evaluation procedures and the technical control of each and every national organism).
How will WWOEP pursue its own mission? WWOEP will pursue its own mission following a double way: buying the property of portion of ecosystems in exchange of funds for financing the realization of anthroposystems (development projects) under the condition that these anthroposystems respect the principle of the maximization of the global profit.
Using which criterion will WWOEP select the portions of ecosystems to buy from nations? WOOEP will select the portions of ecosystems to buy, ranking them according to whether they are areas with no visible past or present trace of human actions (virgin areas) and according to their position along the steps of the hydrological cycle, starting from mountain ranges and ending at the ocean.
Remembering that a landscape is a mosaic whose patches are ecosystems and anthroposystems, and that these environmental systems are mutually exclusive and totally covering the landscape, the beauty of this idea is that, on one side, WWOEP will look after the maintenance and restoration of ecosystems to their primeval splendor, and, on the other side, nations will be engaged in the development and restoration of anthroposystems consistent with the principle of maximization of the global profit. This joint action will lead slowly and continuously to the cleansing of ecosphere from pollution, and, in the long run, to the transfer of all ecosystems under the control of WWOEP, leaving only the property of anthroposystems to the members of the human population.
How will WWOEP manage the portions of ecosystems transferred under its property? These areas will become Ecospheric Heritage and will constitute the main assets of WWOEP’s balance sheet. WOOEP will preserve, protect and restore the purchased areas, allowing to every member of the human species access to these areas under convenient prescriptions.
How will WWOEP obtain the funds necessary to purchase the portions of ecosystems and, at the same time, to finance the national developing projects? Here the central banks of each country come into play. The basic idea is simple as central banks pour new liquidity in the economic systems in the face of the development of the economies through many small enterprising businessmen and some big public or private macro subjects, so central banks can inject new liquidity to fund the gradual implementation of the development projects approved by WWOEP itself. The distinguishing characteristic of these inputs of liquidity in the economic systems is that they will be made at zero rate because they are injected in exchange of purchases of ecosystems’ portions.
EXAMPLE. PART TWO.
Using the formula above it can be calculated, as a first estimate, the ecological value of an hectare of Amazon rainforest with a LAI of 8.0 and an age of 200 years, converted to a monetary value using the exchange rate defined above, given by the product of three factors: the inverse of the energy contained in a barrel of oil equal to 1.60 x 10-10 [Bbl/J][vi], the international price of a barrel of oil equal to 50 US$/Bbl and the inverse of the exchange rate US$ vs Euro equal to ( 1:1.32 = ) 0.76 €/US$:
Ve /ha = [[ (1 – 0,30) x 340 Wm-2 ] x [8.0 : 15] x 200 yr x (3,15 x 107 sec yr-1) x 10.000 m2/ha] x [1.60 x 10-10 Bbl/J x 50 Us$/Bbl x 0.76 €/Us$] = 48.620.544 €/ha,
where, for simplicity, a = 0.30, which is the average global albedo for planet Earth, E = 340 Wm-2, which is the solar constant, W is the Watt, yr is the number of years and ha is the hectare: 1 ha = 10.000 m2.
Returning to the first example, estimating the added value of an hectare cultivated with soybean equal to 1.000 €/ha, it is immediately evident which is the correction that should be made to Brazil GDP, as a result of the policy of substituting primary rainforests with soybean cultivation: - 48.620.544 + 1.000 = - 48.619.544 €/ha deforested.
In 2006 the Brazilian GDP was equal to 735 x 10-9 €. If the primary rainforest destruction would correctly be taken into account, the Brazilian GDP would become negative after the destruction of a little bit more than 15.000 ha/yr covered with primary rainforests.
Brazil, a country with 478 millions of hectares of forests, of which 416 millions of hectares are primary forests, in the five years between 2000 and 2005 has registered a net annual forest loss of 3.103.000 ha/yr, about from 100 to 200 times its GDP[vii] 2006.
HOW TO MAKE LIQUID THE MONETARY VALUE ASSIGNED TO AN ECOSYSTEM. PART ONE. THE PROBLEM.
Once designed the solution to the problem of assigning monetary values to ecosystems, another problem arises: how to make these monetary values liquid? How can these values be readily converted into cash?
To understand the problem that must be solved, it can be helpful to return to the example.
EXAMPLE. PART THREE.
Brazil is a country with something like 400 million hectares of primary forests. If we assign to these primary forests an average monetary value of 10.000.000 €/ha, Brazil, only considering primary forests, would possess an immense natural capital equal to 4.000.000 billion €, corresponding to about 5.400 times its GDP 2006. How can then Brazil monetize this natural capital?
HOW TO MAKE LIQUID THE MONETARY VALUE ASSIGNED TO AN ECOSYSTEM. PART TWO. THE SOLUTION.
The problem can be solved as follows.
An international Organism, called World Wide Organization for Ecosphere Protection (WWOEP), with the mission of preserving primary ecosystems and protecting the ecosphere from human actions, can be created.
(Alternatively, as many national organizations as are the world nations (some 190 - 200 nations) can be created for ecosystem preservation, and an international organization for the standardization of the evaluation procedures and the technical control of each and every national organism).
How will WWOEP pursue its own mission? WWOEP will pursue its own mission following a double way: buying the property of portion of ecosystems in exchange of funds for financing the realization of anthroposystems (development projects) under the condition that these anthroposystems respect the principle of the maximization of the global profit.
Using which criterion will WWOEP select the portions of ecosystems to buy from nations? WOOEP will select the portions of ecosystems to buy, ranking them according to whether they are areas with no visible past or present trace of human actions (virgin areas) and according to their position along the steps of the hydrological cycle, starting from mountain ranges and ending at the ocean.
Remembering that a landscape is a mosaic whose patches are ecosystems and anthroposystems, and that these environmental systems are mutually exclusive and totally covering the landscape, the beauty of this idea is that, on one side, WWOEP will look after the maintenance and restoration of ecosystems to their primeval splendor, and, on the other side, nations will be engaged in the development and restoration of anthroposystems consistent with the principle of maximization of the global profit. This joint action will lead slowly and continuously to the cleansing of ecosphere from pollution, and, in the long run, to the transfer of all ecosystems under the control of WWOEP, leaving only the property of anthroposystems to the members of the human population.
How will WWOEP manage the portions of ecosystems transferred under its property? These areas will become Ecospheric Heritage and will constitute the main assets of WWOEP’s balance sheet. WOOEP will preserve, protect and restore the purchased areas, allowing to every member of the human species access to these areas under convenient prescriptions.
How will WWOEP obtain the funds necessary to purchase the portions of ecosystems and, at the same time, to finance the national developing projects? Here the central banks of each country come into play. The basic idea is simple as central banks pour new liquidity in the economic systems in the face of the development of the economies through many small enterprising businessmen and some big public or private macro subjects, so central banks can inject new liquidity to fund the gradual implementation of the development projects approved by WWOEP itself. The distinguishing characteristic of these inputs of liquidity in the economic systems is that they will be made at zero rate because they are injected in exchange of purchases of ecosystems’ portions.
[i] Anthroposystems are:
· Agrosystems (agricultural areas),
· Technosystems (industrial areas),
· Sociosystems (commercial and residential areas) and
· Connecting Infrastructures.
[ii] http://www.ecosystemvaluation.org
[iii] The albedo is the ratio of total reflected to total incoming solar radiation and it is a function dependent on position, time, and characteristics of the surface hit by solar radiation.
[iv] The solar energy per square meter per second is a function dependent on position, time, and characteristics of the crossed atmosphere.
[v] Asner, G.P., Scurlock, J.M.O., Hicke, J.A.: Global synthesis of leaf area index observations: implication for ecological and remote sensing studies. Global Ecology & Biogeography (2003) 12, 191-205.
[vi] Data are from Odum, H. T.1996. Environmental Accounting, Wiley. In practice, taking the inverse of 1,60 10-10
[BblJ-1] and divide by 4.186 [J kcal-1], we get a number equal to about 1.500.000 [Kcal Bbl-1], which is the approximate heat produced by combustion of 1 barrel of oil corresponding to 42 American gallons or 159 liters.
[vii] Forest Data are from Global Forest Resources Assessment 2005.
