The Problem with Making Nature Pay for Itself

Trying to make nature valuable has had a disappointing track record.

By R. David Simpson

Illustrations by Daniel Horowitz

In the early 1990s, pharmaceutical giant Merck entered into a “bioprospecting” agreement with Costa Rica’s National Biodiversity Institute, known by its Spanish acronym INBio. Merck would receive exclusive access to test INBio’s extensive collections of indigenous organisms for their therapeutic potential in exchange for a million-dollar up-front payment, in-kind contributions to research, and a promise of royalties in the event that commercial products were identified.

The mood bordered on euphoria. Nature, the deal brokers promised, is a vast storehouse of chemical compounds that can fight off infections and cure diseases. Evolution, through eons of trial and error, has produced molecular compounds more ingenious than synthetic chemists could ever imagine. Indigenous organisms are genetically coded to metabolize miracle drugs.

The logical place to bioprospect is where biodiversity is most abundant. Tropical rainforests cover about six percent of the world’s land area, but they shelter more than half of its living species. While biological wealth is greatest in the tropics, material wealth isn’t. So bioprospecting might raise the standard of living for people in desperate need. These were the same desperately poor people who were diminishing biodiversity by carving farmland from forests. Bioprospecting seemed to hit the trifecta: life-saving drugs, new income sources, and a halt to deforestation.

I don’t think ecosystem services are underappreciated. What is underappreciated is basic economics. This is the common thread running through all the disappointing experiences to date with finding ways to make nature pay for itself.

INBio’s director predicted that research samples would soon displace coffee in Costa Rica’s export rankings. The nation began training teams of parataxonomists, rural workers who would continue the work of classifying Costa Rica’s biota.

Other companies followed suit, expanding their natural-products research operations. United States government agencies combined to sponsor an International Cooperative Biodiversity Groups (ICBG) program under whose auspices pharmaceutical researchers were paired with source-country partners. Bioprospecting even inspired a movie. In the 1992 film Medicine Man, Sean Connery, then only three years removed from having been named People magazine’s “sexiest man alive,” played an ethnobotanist racing to find a cancer cure before the rainforest was felled around him.

As the enthusiasm for bioprospecting grew, so did tensions over splitting the spoils. Colonial powers have long exploited the Global South for its labor and raw materials. Now tropical nations faced a new form of expropriation, biopiracy. Google Scholar lists more than 150 works published before 2000 on “access and benefit sharing” for genetic resources.

Such concerns might have been well founded had the case for bioprospecting stood on solid ground. Regrettably, however, bioprospecting didn’t make economic sense. David Kingston, a chemistry professor at Virginia Tech who participated in an ICBG in Suriname, characterized the repository of research leads in nature as “so vast as to seem unlimited.” This might seem to underscore how valuable biodiversity is to pharmaceutical researchers, but if you think about it, it really makes the opposite case. How much would you pay for something whose supply seems “unlimited”? Probably not much. Things that are in short supply command high prices; things that aren’t, don’t. This is a hard economic lesson, but a solid one.

Bioprospecting was an early example of an appeal to an “ecosystem service” in an effort to motivate conservation. The conservation community has since turned its energies to other ecosystem services that place more emphasis on the benefits that preserving relatively undeveloped habitats would bring to the communities living in or adjacent to them. These include services such as water purification, pollination, pest control, flood protection, global climate moderation, ecotourism, and a host of others. Considerable effort has gone into studying these services in hopes of finding some that will prove more effective in motivating conservation than did bioprospecting.

Bioprospecting disappointed because advocates hoping to align economic forces with conservation didn’t appreciate how economic forces work. This has been true of many other initiatives. When development pressures are high, it tends to be more cost-effective to rely on artificial substitutes for ecosystem services than to forgo converting land to agricultural or residential uses. Even when the argument can be made to retain some remnant areas of natural habitat to provide ecosystem services, it’s not clear that much meaningful conservation results. Trying to make nature valuable, it turns out, has had a disappointing track record.

How much would you pay for something whose supply seems unlimited? Probably not much. Things that are in short supply command high prices; things that aren’t, don’t. This is a hard economic lesson, but a solid one.

What went wrong? Here we need a bit of history. And 1980 is a good place to begin. That was the year that the International Union for the Conservation of Nature (IUCN) issued its influential World Conservation Strategy.

“Too often,” it said, conservationists “had allowed themselves to be seen as resisting all development.” The self-criticism was well taken. Many of the world’s protected areas had been established by fiat and maintained by force. Perhaps desperately poor people threatened the biodiversity that parks were established to protect, but a solution that ignored their legitimate interests would prove self-defeating—as well as immoral.

Going forward, the emphasis was to be on finding ways in which those poor populations themselves might benefit from conservation. The key was to demonstrate the myriad ways in which nature could benefit people. Conservation and development should be integrated. Rather than simply conserving resources for traditional uses, new industries based on natural assets were envisioned: collection, processing, and export of natural products; bioprospecting; ecotourism.

Like many other young researchers, I was motivated by the desire to help save nature in the fall of 1991 when I took a position at Resources for the Future, a nonprofit research institute dedicated to environmental and resource economics. The term “biodiversity” had been coined a few years earlier, and the idea of a sixth extinction crisis perpetrated by humans was entering the popular lexicon.

By then, the IUCN approach to conservation had also been picking up steam as more and more conservation advocates and scholars gravitated toward the idea. Since calls for altruism hadn’t worked, perhaps appeals to tangible self-interest would. Integrated conservation and development projects (or ICDPs) embodied these hopes. ICDPs often focused on schemes to market the products or services of tropical rainforests and other biodiversity hotspots to would-be consumers around the world. The most exciting ICDPs were the ones focused on mining genetic resources for pharmaceutical research. Cancer drugs had been developed from the rosy periwinkle and the Pacific yew, diabetes medication from Gila monster spit, heart drugs from foxglove, quinine from the bark of the cinchona tree. If pharmaceutical researchers could be compelled to pay for access to genetic resources, the argument went, the rainforests could be saved.

The problem of biopiracy remained, however. That was the question to which I turned at the start of my career. I tried to approach the question logically: if the difficulty lay in compensating providers for the value of the genetic resources they offered, the first thing to think about was the value of genetic resources.

That led to my epiphany. Biodiversity wasn’t scarce—at least, not with respect to the needs of pharmaceutical researchers. Economists argue that value is determined by scarcity. If there isn’t much of something relative to the demand for it, people will pay a lot for more of it. If it’s relatively abundant, they won’t. So the argument I often heard as I began my work—that we should save the rainforests because they are home to millions of as-yet-undiscovered species, and each one of those species might be the source of the next miracle drug—actually cut the other way. If there were literally millions of undiscovered species, pharmaceutical researchers would have lots and lots of different places to look for their next blockbuster. No one would be willing to pay a lot for access to samples from Costa Rica if she could explore equally promising leads from Nicaragua or Bolivia, Cameroon, or Malaysia. Nor would she be willing to pay much to preserve one hectare of rainforest in Costa Rica if identical or similar samples could be found in thousands of other hectares of rainforest.

In 1996 two colleagues and I translated these intuitions into a mathematical model and published our results in the Journal of Political Economy. From there, a typical pattern unfolded: people argued over our claim. A couple of authors revisited our calculations and said they were flawed. Another pair of researchers revisited our critics’ calculations, argued that they’d made a serious error and that our original results were actually pretty close to the truth. Researchers continued to cite and dispute this growing body of work, and the academic-industrial complex went on spinning out research on bioprospecting and genetic resources.

But an interesting thing was happening in the real world while we academic scribblers were squabbling amongst ourselves: nothing.

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This is the ecosystem services paradox. If our collective objective is to keep nature abundant, we can’t achieve it with strategies that will work only when it’s rare. 

Bioprospecting didn’t take off. The Merck-INBio agreement was abandoned in 2011, and Costa Rica’s earnings from research samples never came anywhere near matching the $300 million per year it makes from coffee exports. By 2013, INBio was appealing for public donations to pay employee salaries. Eli Lilly, Bristol-Myers Squibb, and other large multinational companies also abandoned their international bioprospecting ventures.

Not long ago, I gave a talk about the economics of bioprospecting. After I spoke, a man in the audience sought me out to set me straight. Just that week, he informed me, the Washington Post had reported on a promising new compound that might meet the urgent need to treat antibiotic-resistant infections. What did I have to say about the fact that an immensely valuable new compound had just been isolated from a soil sample?

I thought for a moment before responding. “Are you familiar with the phrase ‘cheap as dirt’?”

In the decades since I first wrote on bioprospecting, I have continued to study the broader and evolving field of ecosystem services. I’ve served as an author in the Millennium Ecosystem Assessment, a review editor for the United Nations–sponsored project on The Economics of Ecosystems and Biodiversity, and an advisor to the World Bank’s program on Wealth Accounting and the Valuation of Ecosystem Services. I’ve continued to research topics such as the pollination, storm protection, and pollution-treatment services of natural systems; and I served for several years as director of ecosystem economic studies in the US Environmental Protection Agency’s National Center for Environmental Economics.

The question that has dogged me is: Will the continuing search for instances in which economic forces are aligned with conservation identify more promising possibilities? Or did the bioprospecting experience reveal a more pervasive disconnect? I’m afraid the general answer may be that it did. There are certainly many instances in which preserving natural assets is economically justified. What I have much graver reservations about is whether there are enough such instances to motivate conservation on the scale that will be required to maintain anything like the diversity of nature the planet now supports.

Bioprospecting fizzled spectacularly. Other forms of ICDPs have fared better. Take ecotourism. Gorilla-viewing excursions in Rwanda, cloud-forest tours in Costa Rica, and cruises retracing Darwin’s voyage in the Galápagos have, by and large, been win-win propositions for conservation and development. Some natural-product ventures have also prospered. Indigenous artisans have exported more than 6 million pounds of figurines and jewelry crafted from “vegetable ivory,” the seeds of tagua palms. Sustainably grown coffee, cocoa, and rattan also compete in world markets.

But the success comes with caveats. Too many ecotourists can “love an area to death,” and too much emphasis on harvesting tagua, coffee, cocoa, or rattan can transform natural habitats into de facto farms. A 2008 study of World Bank projects intended both to alleviate poverty and protect biodiversity found that fewer than one in six achieved both objectives.

I suspect, though, that the limitations of ICDPs as conservation vehicles all involve variants of the bioprospecting problem. When you try to scale them up, you bump up against the laws of supply and demand. Uniquely beautiful destinations attract visitors willing to pay a lot to see them; however, unique destinations are, by definition, relatively rare—whereas run-of-the-mill “nice places to visit” just aren’t in short supply. Similarly, domestic and international markets for nontimber forest products can be self-limiting because, well, scaling up floods the market. This is the ecosystem services paradox. If our collective objective is to keep nature abundant, we can’t achieve it with strategies that will work only when it’s rare.

I think many conservation advocates were also disappointed to discover the economic limitations of ICDPs. So, they began to shift their focus again. With ICDPs, the idea was to identify some product or service that large areas of extant habitat could provide to international markets. In more recent years, conservation advocates have touted more local benefits of ecosystem services. Maintaining vegetation in watersheds can prevent erosion and landslides; patches of habitat can support native pollinators; and wetlands, riparian buffers, and coastal vegetation may retain pollution and prevent flooding.

The problem with bioprospecting and some other types of ICDPs was that the marginal value of the habitats it was hoped they would preserve was negligible. They remained so extensive globally that they were not scarce relative to demand. The opposite problem can beset ecosystems preserved to provide local services. Ecosystem services may be valuable, yes; but they may be most valuable when it would also be most expensive to set aside land to provide them. If ecosystem services are valuable enough to justify setting aside some land to provide them, then it may be because it’s not necessary to set aside much land to provide them.

Pollination, an ecosystem service that has been studied extensively, illustrates this point. Wild insects still pollinate crops in some areas, but many farmers whose crops require pollination rely on rented European honeybees (Apis mellifera). The rented bees are moved from farm to farm as crops flower and require their services. In the US, 1.7 million hives of honeybees—85 percent of all commercial bees in the country—are trucked to California every February to serve the state’s almond crop.

Some biologists and advocates have argued that those farmers should instead set aside land to support native insects that could pollinate almonds.

Whereas honeybees are currently trucked away to serve the next crop that comes into bloom, native pollinators need habitat maintained for them year-round. Land in California’s almond-growing areas can sell for $25,000 an acre or more, and almond farmers pay about $450 per acre to rent bees to pollinate their crop. In deciding whether to maintain remnant areas of natural habitat on her land or to instead rent honeybees, the almond farmer must ask herself, “How much $25,000-per-acre land am I willing to take out of almond production so I can save $450 per acre every year?” The economically rational answer is probably “not much.” Intuitively, farmers wouldn’t be willing to take much land out of almond production if their reason for doing so was to enhance almond production. In a recent paper published in Environmental and Resource Economics, I calculated that, under generous assumptions, an almond farmer who decided to rely on wild pollinators rather than honeybees would devote no more than about one-eighth of the area she might farm to sustaining them.

In many instances, producers may find that employing substitutes such as European honeybees rather than native insects to pollinate crops, levees rather than riparian vegetation to control floodwaters, and wastewater-treatment plants rather than wetlands to treat pollution is more cost-effective than setting aside extensive areas of expensive land to provide such services. When natural measures are cost-effective, on the other hand, it’s likely either because not much land is required to provide them, or because development pressures are low anyway.

There are two conclusions one might draw based on the history of ecosystem services thus far. The first is that ecosystem services are systematically underappreciated, and if we just keep looking, we’ll identify values that will convince decision-makers to save far more of the natural world.

I would offer an alternative conclusion. I don’t think ecosystem services are generally underappreciated. What is underappreciated is, rather, basic economics. This is the common thread running through all the disappointing experiences to date with finding ways to make nature pay for itself.

So what’s to be done?

I don’t want to have to confess to my grandchildren that my generation sat idly by while a sixth extinction crisis swept the planet. That means that our urgent task is to find ways of averting the crisis, ones that really work. Since the 1980s, we’ve been looking for ways to make nature valuable. What if we turned the problem on its head? Linus Blomqvist at the Breakthrough Institute, where I’ve done consulting work, has argued that the key to saving wild biodiversity isn’t by showing that it’s useful. Rather, it’s by making it useless. I suspect this formulation was chosen because it’s memorably provocative. The underlying argument, however, is worth considering.

Perhaps the key to saving wild biodiversity isn’t by showing that it’s useful. Rather, it’s by making it useless. 

Ecosystem services were intended to promote conservation by demonstrating that people would realize more value by retaining areas of natural habitat than they would from converting them to farms. If people realized less value from converting habitats to farms than they would from retaining them as forests, wouldn’t that also promote conservation?

In the 1980s, poor farmers in the developing world were clearing forests at rates that imperiled biodiversity. That motivated a transformation in conservation policy. Circumstances have changed dramatically since then. When the IUCN report was published in 1980, world population stood at a little less than 4.5 billion people. There are now more than 7.5 billion on the planet. If one looks into the figures more carefully, though, revealing details emerge. Urbanization is advancing much faster than population is growing. About 60 percent of the people on Earth in 1980 lived in rural areas. About 45 percent of those who now share the planet live outside cities. While the earth’s population will likely continue to grow, the rate of growth is slowing. Urban families tend to be smaller than those reared to provide farm labor. The UN’s Revision of 2018 World Urbanization Prospects predicts that we’re now near peak rural population: the number of people living outside of cities will soon decline.

Wherever they live, people need to eat. And producing food requires land. Again, the trends offer grounds for optimism. The amount of agricultural land per person worldwide has declined by more than a third since 1980, even as population has grown by about two-thirds over the same period. The net result has been a modest increase in land devoted to agriculture across the globe. While Jesse Ausubel’s assertion (that the world is also near peak farmland) has not been universally accepted, a future decline in the area of crops and pasture is not out of the realm of possibility. If nothing else, it is clear that technological improvements in agriculture have allowed the Earth to support far more people by farming far less land than might have been predicted two generations ago.

In short, the data show that people are, by and large, moving away from marginal agricultural lands and into cities, a trend accompanied by intensification of agricultural production, greater crop yields, and—all in all—less human appropriation of the landscape in per capita and, perhaps soon, absolute terms.

If you’re thinking this all sounds too good to be true, you’re right. Much could go wrong without effective guardrails.

Even if more crops can be grown on less land, additional quantities of food might be fed to meat and dairy animals rather than consumed directly. Farming might also shift. Perhaps increasing agricultural yields will mean that less land needs to be farmed overall, but we might be wary of farms shifting from biologically depauperate temperate zones to biodiverse tropical ones.

Other consequences of agricultural intensification aren’t necessarily benign, either. Modern farming relies on synthetic fertilizers and pesticides, some of which end up in the air or water. It also employs machinery powered by fossil fuels. Selective breeding and, increasingly, trans-specific genetic transfer have expanded yields. While many scientists are not worried about novel crops, a portion of the consuming public is averse to such “unnatural” products.

This last observation underscores what may be the most important point. Nature might be rendered “useless” and left to go its own way in a world with fewer peasant farmers, more industrial agriculture, and larger and denser cities. But is that the world we want to live in? It’s a valid question, and one to which there’s no right answer.

If the world we want to live in is one that supports nearly its full complement of biodiversity, though, we need to think realistically about what it will take to sustain that endowment. A vision of the world’s hinterlands populated by farmers working in harmony with, and dependent on, nature and its services may not work on a planet of 10 billion. Moreover, Marx and Engels may have been on to something when they grudgingly credited the bourgeoisie with having “rescued a considerable part of the population from the idiocy of rural life.” No one should be forced to abandon a lifestyle she treasures. By the same token, though, no one should be trapped in a lifestyle she does not treasure to realize someone else’s preconception of what rural life should be. The less romantic alternative may be a world in which the rural poor transform into an urban underclass with less contact with nature but, one hopes, with the possibility of upward mobility.

For all these reasons, such a transformation should be managed. Environmental consequences call for mitigation. While more productive agriculture can be organized to reduce pressures for land conversion, landscape planning will be required to lay out reserves large enough to maintain complex ecosystems—as well as to map the corridors and connections required for seasonal migrations and adaptation to a changing climate. Finally, the teeming metropolises of the developing world are hardly workers’ paradises. The exodus from farms to cities won’t improve lives unless it’s accompanied by investments in sanitation and education.

This is a tough bill to fill. We won’t make progress, though, if we start from the wrong assumptions. Conservation advocates had the right idea 40 years ago when they recognized the need to unite conservation and development goals. They acted from the best of impulses in insisting that the most vulnerable populations not bear the burden of preserving nature. The prescription of relying on ecosystem services both to motivate the preservation of natural habitats and improve the lot of the poor has not worked out well, though. Too often the economics don’t make sense, and when they do, the conservation incentives may not amount to much. The world has changed markedly in four decades. The challenge we face now is not so much to find ways for the rural poor to live in harmony with nature. It is, rather, to manage the transition from a world of small farms to one of big cities in a way that realizes the conservation potential of that trend.

This transition is well under way. While we face a host of daunting social, political, economic, and environmental problems, we should not lose sight of an astounding fact. I think the single most remarkable contrast between the world of 1980 and today is the decline in extreme poverty. World Bank statistics show that only about 700 million people, fewer than ten percent of a much larger population, now try to subsist on less than US$1.90 per day. That’s still appalling, but it’s a huge improvement over the two-billion plus in extremis 40 years ago.

If the objective of conservation in the Anthropocene is both to enhance human quality of life and save nature—and I believe it is—then it will be easier to swim with, rather than against, demographic or technological currents. Perhaps it is time to ease up on the search for ways to make nature pay for itself and instead look for ways to let nature flourish . . . without us. 

_________________

R. David Simpson is a consultant on environmental and resource economics. He has served in government, taught at Johns Hopkins University’s School of Advanced International Studies and at University College London, and was a senior fellow at Resources for the Future. He was a coordinating lead author in the Millennium Ecosystem Assessment and has advised several other biodiversity conservation initiatives.

This article borrows from, and builds upon, ideas in an earlier article he wrote for The Breakthrough Journal.

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