Conserving Indonesian natural capital
By now we must be aware that we, humans, are part of nature and consequently, our life is absolutely dependent on natural conditions. Despite experiencing natural disasters, in general, we are fortunate to be blessed with rich natural resources.
Our terrestrial and aquatic ecosystems with their biological and geological resources constitute our natural capital upon which our success and even survival as a nation depend. Our natural capital provides ecosystem services essential to our well being.
The Millennium Ecosystem Assessment (2005), written by many experts from reputed international institutions such as FAO, UNEP, World Bank, UN University and many universities, classifies ecosystem services into four categories, namely provisioning services (producing food, fiber, fuel, water, etc.), regulating services (regulating climate, air quality, water purification, pollination, etc.) cultural services (providing spiritual, educational, aesthetical values, etc.) and supporting services (soil formation, photosynthesis, water cycling and nutrient cycling).
All services are important and interrelated. For example, the presence of pollinators (regulating service) and soil nutrient (supporting service) are important for the maintenance of food crop productivity (provisioning service).
However, most resource management decisions are determined mostly by provisioning services because they yield marketable goods. Other services usually are not traded on the market and therefore have no price or are at least undervalued.
Fortunately, our government legally recognizes the many services of the ecosystems. We have designated some of our terrestrial and aquatic ecosystems as conservation areas.
Law No. 41/1999 on forestry explicitly defines a forest as an ecosystem. Realizing that a forest ecosystem has many functions, we have designated more than 30 percent of our forests as conservation forests and protected forests. No logging is allowed in these two forest categories.
In practice, however, we perceive forests mainly as timber producers and seas as fish producers. As a
result, our forests and seas have been exploited excessively, legally and illegally, which jeopardizes their sustainability.
Our market-driven economic system fails to value other ecosystem services. In developed countries and in Java, the cultural services in the form of recreation and tourism have resulted in monetary value, but in many areas in Indonesia, most cultural values have not yielded money.
To some degree, the regulating services are beginning to get a global market value through carbon trading. But the implementation of carbon trading may take a long time and its beneficial impact to a local community remains to be seen.
Attempts have been made to make an economic valuation of ecosystem services. Costanza et al in 1987 published an article in the British journal Nature stating that the estimated economic value of the world’s ecosystem services was in the range of US$16 trillion to $54 trillion annually, with an average of $33 trillion per annum.
Because of the nature of the uncertainties, this must be considered a minimum estimate. Global GNP at that time was around $18 trillion per year. Most of those values, however, are not economically measured because they have no price.
At the national level, economic valuation of conservation areas has been done. For example, the total economic value of Leuser National Park over the period of 2000-2030, with a 4 percent discount rate, is: $7.0 billion under the “deforestation scenario”, $9.5 billion under the “conservation scenario” and $9.1 billion under the “selective utilization scenario” (Vanbeukering et al., 2003).
Although the conservation scenario has the highest value and benefits all stakeholders, the park is still under serious threat of illegal logging and encroachment, because the economic value in the conservation scenario is not in the form of cash money but mostly in the form of water supply, flood prevention and supporting services for agriculture. Those values are not direct, while cutting timber or converting the forest into plantations will yield cash.
The failure of our market-driven economic system to value non-marketable ecosystem services has caused degradation of our natural capital, which may jeopardize the flow of ecosystem services.
At the global level, according to the Millennium Ecosystem Assessment, 60 percent of the ecosystem services are being degraded or used unsustainably.
If the trend continues, the degradation of ecosystem services may grow significantly worse and prevent the achievement of the Millennium Development Goals.
Former World Bank economist Herman Daly believes that at present, economic development is not limited by lack of human-made capital, but of natural capital (Hawken et al., 2010).
To achieve sustainable development, it is imperative that we conserve our natural capital in order to maintain the flow of ecosystem services. Several measures must be taken.
To prevent excessive use of natural resources we can increase tax on the exploitation of natural resources and reduce subsidies, giving a signal to the market that our natural resources are getting scarcer. On the other hand, we must give incentives for the development of technologies and management practices to use resources more efficiently and to reduce pollution.
But most important is to educate businesspeople and policymakers of the intangible benefits of ecosystem services. Although at present they have little economic value, in fact their total value is infinite. For without the continuing flow of ecosystem services, our economies will come to a halt.
Conserving our natural capital is essential for the sustainability of economic development to ensure the well-being of our growing population
