Ecosystem Services and Global Trade of Natural Resources

Ecology, Economics and Policies

Thomas Koellner

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781136723520
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The utilization of natural resources to satisfy worldwide growing consumption of goods and services has severe ecological consequences. Aside from the projected doubling of food consumption in the next fifty years, the growing trade of biofuels and other commodities is a global challenge as the economic activities in the primary sector (i.e. mining, fisheries, aquaculture, forestry and agriculture) can damage biodiversity and ecosystem services. This should be taken into account in the decision-making affecting the global value chains linking consumer, retailer, processor, and producer in the North and the South.

To cover the topic of ecosystem services and global trade this book is organized into four major parts. Part 1 gives the theoretical framework from an ecological, economic and political perspectives. Part 2 explores how internationally traded biophysical commodities from agriculture, forestry and fisheries translates into a virtual flow of land, freshwater, and marine ecosystems. Part 3 describes how two widely used accounting tools (i.e., Life Cycle Assessment and Green National Accounts) deal with international aspects of ecosystem services, and Part 4 shows how instruments like labelling, bans, or payments for ecosystem services in the private and public sector can influence trade patterns and the management of ecosystem services.

This collection is a valuable contribution to the global change science dealing with ecosystem services. It illustrates the consequences of international trade on global ecosystem services and provides an overview of accounting tools and of market-based policy instruments to address negative and positive externalities. The book is certainly innovative, because it brings together research findings from distinct disciplines especially Industrial Ecology and Ecosystem Sciences, as well as Environmental Economics and Political Science.

1 Ecosystem Services and Global Trade of Natural Resources: An introduction

Thomas Koellner

Aims of the Book

The utilization of natural resources to satisfy worldwide growing consumption of goods and services has severe ecological consequences. Increasing intensity of resource extraction, land use, freshwater use and use of marine environments will cause large impacts on biodiversity, ecosystems and their services. Besides the projected doubling of food consumption in the next 50 years (Tilman et al. 2002), the growing demand for biofuels and other biophysical products will challenge ecosystem managers worldwide, because of the need to optimize ecosystems with respect to multiple needs.

Such growing demand for biophysical products is closely connected with increases in trade volume and the sophistication of supply chains. For example, fishmeal used in farms in Thailand to produce shrimps for the European and North American markets is mainly sourced from Peru with negative consequences for the marine fish population there (Deutsch et al. 2007). International trade is certainly not uniformly harmful for global ecosystems, because countries can have comparative advantages to produce certain biophysical products only due to climatic reasons. However, the case of the global shrimps value chain makes explicit that due to international trade of commodities, ecosystems are not damaged only in the countries where goods and services are manufactured or consumed. Ecological damage with negative socio-economic consequences occurs also in those parts of the world where terrestrial, freshwater or marine ecosystems are used to feed the global value chains with timber, fibers, palm oil, soy bean, corn or fishmeal.

Especially in developing countries with weak environmental legislation and enforcement, the activities of the primary sector (agriculture, forestry, fisheries and aquaculture, but also oil, gas and mining) lead to deforestation, cause severe damages to biodiversity and, finally, limit the capacity of ecosystems to deliver bundles of services at the landscape scale (i.e. supporting services, provisioning services, regulating services and cultural services in sensu (MA 2005)). This is especially delicate if biotic resources are produced unsustainably in poor countries in the South and exported to rich countries in the North which actually have strict environmental regulation, but only for the own territory. On a global scale the Millennium Ecosystem Assessment (MA 2005) found that 60 percent of global ecosystem services (ES) surveyed are currently being degraded or used unsustainably. Until now, such damages to ecosystems services have not been sufficiently taken into account in the environmental decisions along the global value chains linking consumer, retailer, processor and producer in the North and the South. Fair trade is a first step into this direction, but still global trade basically conceals the constraints of regional ecosystems. The best option to address this problem would be to correct for externalities, either through national policy (e.g. subsidies for environmental friendly agriculture) if ecological impacts are within the country, or international policies (e.g. an international green tax) if impacts occur outside the national borders. The question now is how single actors in the private sector or national policy makers can react if such international agreements are difficult to achieve and do not exist. To increase the ecological transparency and foster sustainable ecosystem management, the involved public and private actors need to develop, improve and use instruments for ecological assessment and management of global value chains.

The aim of this book is to show how the increase in international trade of biophysical commodities can damage global ecosystems and their services, how those damages can be accounted for in Life Cycle Assessment and Green National Accounting and, finally, how instruments in the public and private sector can help to achieve a more sustainable global trade. Thereby we focus on the global ecosystem impact of traded products due to land use, freshwater use and use of marine environments.

Organization of the Book

The book is organized as follows into four major parts (see Figure 1.1). Part I gives the theoretical framework on the issue of the book from ecological, economic and political perspectives. This part stresses the societal relevance of ecosystem services provided, poses the question of under which economic conditions trade can be harmful for ecosystems, and underlines the importance of international trade policies framing the sustainable development of trade of natural resources. Based on that it develops a framework of human-environment systems in the global context useful to foster the global governance of ecosystem services.

Figure 1.1 Organization of the Book.

Part II explores how internationally traded biophysical commodities from agriculture, forestry and fisheries translate into a virtual flow of land, freshwater and sea which are used to produce the traded goods. It also analyzes the global (ecological) consequences of increased trade for biodiversity and services from terrestrial, freshwater and marine ecosystems.

Part III describes how two widely used accounting tools (i.e. Life Cycle Assessment and Green National Accounts) deal with global aspects of ecosystem services and can increase the awareness about the use and the limits of ecosystems.

Part IV discusses how instruments in the private and public sector can influence trade patterns and the management of ecosystem services. Finally, in the conclusion it is shown how public policies and private sector instruments can be linked to sustainably manage global ecosystem services. Furthermore the authors strive for an innovative synthesis of the material covered in the book.

Part I: Foundations for Understanding the Trade of Natural Resources and its Implication for Ecosystem Services

Part I provides basic knowledge with respect to global trade of natural resources and the consequences for ecosystem services. It starts with Chapter 2, by Jordan Levine and Kai M. A. Chan, which provides the foundation of the ecology of ecosystems services and the dependence of society upon them. Such societal benefits by ecosystems range from biophysical goods like timber or seafood to the protection of cultural identity and aesthetic value. The authors describe kinds of ecosystem services, briefly survey the state of the field, and provide multiple examples of both globally relevant ecosystem services and some repercussions of their degradation. Finally, they discuss how an ecosystem services perspective can help inform both resource management and debates surrounding trade and social justice. They focus on global linkages throughout, providing context for the following chapters.

In Chapter 3, David Zilberman explores the economics of global trade and ecosystem services. He discusses the economic forces which have led to international trade patterns where some countries are engaged in activities that generate negative global externalities and endanger the global commons, while others under-engage in activities that may provide global benefits. International agreements and government policies should be modified by introducing policies that will incentivize countries to reduce globally damaging activities and to encourage global public goods. These policies should assign liability for environmental mismanagement and incorporate payment for environmental services (PES) as part of international, bilateral or multilateral agreements to protect the global environment and sustain natural capital. Private groups with particular environmental preferences should also be engaged in cross-border PES arrangements. Effective PES systems require establishment of reliable monitoring and enforcement arrangements.

The important field of international trade policies and its implication for ecosystem services are detailed in Chapter 4 by David Blandford. The chapter shows that current schemes of trade regulation, especially the WTO agreements, do not contain any explicit reference to ecosystem services, but do refer to the environment and related issues such as the protection of human and animal health. A critical policy question is whether a WTO member can correct for market failure associated with unpriced externalities or public goods without violating its WTO obligations. Currently, substantial complexity and uncertainty attaches to the WTO-compatibility of policies designed to promote the supply of ecosystem services. The use of domestic subsidies and trade measures in this context is not necessarily inconsistent with international trade law, but the situation is unclear. Further efforts may be required through the WTO or through other international fora to clarify the legal status of domestic and trade policies that address environmental issues.

In contrast to the more disciplinary views in the previous chapters, Roland W. Scholz provides in Chapter 5 an interdisciplinary view on the global governance of ecosystem services. The quality, intensity and scale of ecosystem services and the appropriation of nature have fundamentally changed in the course of human phylogenesis and the history of humankind. By utilizing the Human-Environment System (HES) framework, he explains fundamental aspects and critical points in HES, in particular of unintended multiple rebound effects due to a lack of awareness of the impacts on the material-biophysical and the social environments. Specifically, he reveals that the current push to transition to biofuels is linked to a multiple set of rebound effects on a global scale. This is demonstrated by the case of Sweden’s policy to become an oil-free society by 2020.

Part II: Ecosystem Impacts of Global Flows of Virtual Land, Water and Sea in the Physical Economy

Part II focuses on the physical economy of global trade and its consequences for biodiversity and ecosystem services worldwide. The three chapters comprising this part show how global trade and the sophistication of supply chains changed over time and how this triggered the intensification of the use of terrestrial, aquatic and marine ecosystems.

Global trade of products increased heavily in the last decades and can further grow due to shifts in production and consumption patterns worldwide. In Chapter 6, Thomas Koellner and Manel van der Sleen explore the ecosystem impacts of virtual land use embodied in traded goods. They develop a method to quantify the virtual land use embodied in the agricultural commodity trade by the European Union (EU). The research reveals that virtual land use of the EU for agricultural commodities changed considerably between 1995 and 2005 with respect to exporting world regions. Particularly, a shift towards increasing imports from countries in the South with high deforestation risk was observed. We conclude that the “greening” of EU environmental and agricultural policies shall not only focus on domestic land use, but expand its focus on land area used in the hinterland.

Issues relating to virtual water trade and its socio-economic and ecosystem impacts have drawn much attention in the scientific community and the political sphere since the mid 1990s. Chapter 7, by Hong Yang, Junguo Liu, Alexander J. B. Zehnder and Johan Rockström, addresses the impacts of global trade of agricultural commodities on ecosystems, in particular water systems. The study shows that the virtual water flows primarily from countries of high crop water productivity to countries of low crop water productivity, generating a global saving in water use. Meanwhile, the global virtual water trade is dominated by using soil water from infiltrated rainfall, which constitutes a low opportunity cost of water use, as opposed to blue water, for irrigation. For individual countries, the ecosystem impact of virtual water trade differs depending on natural resources endowments, and socio-economic and technological conditions. The findings of the study call for a greater emphasis on rain-fed agriculture to improve global food security and ecosystem sustainability.

Fisheries represent one of the last major wild extractive endeavors undertaken on a global scale. However, three-quarters of the world’s fisheries are already maximally or over-exploited and trade has a significant impact on the productive capacity of ecosystems to produce marine ecosystem services. In this context Lisa Deutsch, Max Troell, Karin Limburg and Miriam Huitric investigate in Chapter 8 the ecosystem impacts of global trade of fish products. They explain that global trade can mask the constraints of local ecosystems and thus allow producers and consumers to ignore them by enabling substitution or sequential exploitation of resources (e.g. moving to new sources when local resources decline). Presently, global trade opportunities and institutions are the main drivers of production and consumption of fishery products. Ecologically-relevant feedbacks are not only missing in the present market system, but are, in fact, blocked by current trade institutions. The future provision of marine ecosystem services depends on the ability of institutions to promote long-term stewardship of marine resources both while taking advantage of, and in spite of, the strong pressures of global trade opportunities.

Part III: Accounting Tools for Global Ecosystem Services

Part III deals with two widely used accounting tools: Life Cycle Assessment and Green National Accounts. However, until now both have taken ecosystem services into account to only a limited extent. The chapters develop frameworks for incorporating global aspects of ecosystem services into those tools. This would support decision-makers with information on product systems or nations with respect to land use, water use and resulting impacts on biodiversity and ecosystem services.

Life Cycle Assessment (LCA) is an instrument to analyze product systems with respect to environmental impacts of all involved processes, including resource extraction, production, processing, transportation, consumption and disposal/recycling. It is widely used in the private sector, but also by governmental organizations to support environmental decisions. LCA studies can show how product systems are globally distributed and allow the assessment of environmental impacts i) of substitutions among alternative product systems (consequential LCA) or ii) of one product system assuming a reference situation (attributional LCA) (Reinhard and Zah 2009). This method traditionally looked at mineral resource use, energy consumption and pollution in the impact assessment, but – as Thomas Koellner, Stephan Pfister and Annette Koehler describe in Chapter 9 – now land use, water use and even seafloor use and their impacts on biodiversity and ecosystem services are taken into consideration. Based on the outline of the required LCA methodology for land use and water use as impact categories, they discuss the overlap of the both.

Green National Accounting is important to inform policy makers about the status and development of the value of natural resources and environmental impacts; however, until now ecosystem services have not been much taken into account in this framework. In Chapter 10 Jean-Louis Weber, lays out that the European Environment Agency (EEA) currently develops “land use and ecosystem accounts” which are based on the System of Environmental and Economic Accounts (SEEA) guidelines of the United Nations. The goal is to support assessments and modeling of ecosystem goods and services and their impact on socio-economic development. This chapter will explain the current accounting system and how such national systems can be expanded with debts accounts for ecosystem services used for the production of imported biophysical products.

Part IV: Instruments for Global Governance of Ecosystem Services

Part IV explores important instruments to govern ecosystem services globally and to reduce the negative impacts of global trade. The authors analyze and suggest instruments in the private and public sectors to compensate either for the use of ecosystem services or for the loss of ecosystem services in an international context. Some such instruments, for instance environmental labeling, are well known, but innovative ones like international biodiversity offsets and international payments for ecosystem services (IPES) are also discussed.

In Chapter 11, Ulrike Grote and Pradyot R. Jena explain a number of instruments that have been suggested for governing ecosystems. These range from fa...

Table of contents

• Cover Page
• Half Title Page
• Series page
• Title Page
• Copyright Page
• Contents
• Figures
• Tables
• Contributors
• Preface and Acknowledgements
• Abbreviations
• 1 Ecosystem Services and Global Trade of Natural Resources: An introduction
• Part I Foundations for Understanding the Trade of Natural Resources and its Implication for Ecosystem Services
• Part II Ecosystem Impacts of Global Flows of Virtual Land, Water and Sea in the Physical Economy
• Part III Accounting Tools for Global Ecosystem Services
• Part IV Instruments for Global Governance of Ecosystem Services
• Index