Rory Fraser is Professor of Forest Economics and Policy at Alabama A & M University, and has spent 36 of the last 40 years in the UK, Canada, Jamaica, USA, and Guyana either attending or teaching at universities and working in forestry related fields
By Rory Fraser
Guyana’s future is inextricably linked to its greatest asset, a global leading, 59.75 global hectares (gha) per person of biocapacity. The second country is Gabon, with 27.88 global hectares (gha) per person, less than half of Guyana’s capacity. In a world with an increasing ecological deficit – ecological footprint exceeds biocapacity – this declining resource is becoming increasingly more valuable. The following discussion draws liberally from the Global Footprint Network’s analyses and their 2011 publication, Ecological Wealth of Nations.
Biocapacity is the capacity of ecosystems – i.e. a biological community of interacting organisms and their physical environment – to produce useful biological materials and to absorb waste materials generated by humans, using current management schemes and extraction technologies. “Useful biological materials” are defined as those demanded by the human economy. Hence, what is considered “useful” can change from year to year. A country’s biocapacity depends on the availability of natural capital – i.e. the stock of natural ecosystems that yields a flow of valuable ecological goods or services into the future. For example, a stock of trees or rivers provides a flow of new trees or fish, a flow that could be sustained indefinitely. Natural capital also allows for processing wastes, fresh water collection and erosion control, i.e. a flow of services from ecosystems. However, the provision of these goods and services require that ecological systems function as whole (eco)systems, wherein the structure and (bio)diversity of the system are important components of natural capital. The biocapacity of an area is calculated by multiplying the actual physical area by the yield factor and the appropriate equivalence factor. Biocapacity is usually expressed in global hectares. There were 12 billion hectares of biologically productive land and water on this planet in 2008. Dividing by the number of people alive in that year, 6.7 billion, gives 1.8 gha per person. Guyana’s biocapacity is estimated at 62.13 gha per person.
Ecological footprint is a measure of human demand on the Earth’s ecosystems. It is a standardized measure of demand for natural capital. It represents the amount of biologically productive land and sea area used to supply the resources a human population consumes, and to assimilate associated waste. Using this assessment, it is possible to estimate how much of the Earth (or how many planet Earths) it would take to support humanity if everybody followed a given lifestyle. The world-average ecological footprint in 2007 was 2.7 global hectares (gha) per person which was 1.5 times earth’s (1.8 gha) biocapacity, which means, humanity used ecological services 1.5 times as quickly as the Earth could renew them. This is termed global overshoot i.e. when humanity’s demand on nature exceeds the biosphere’s supply, or regenerative capacity. Such overshoot leads to a depletion of Earth’s life supporting natural capital and a build up of waste. The problem of global overshoot is estimated to have been growing since the 1980s. In 1961 we used approximately half the earth’s biocapacity, by the mid 2030s we would require at least two earths’ capacities to meet global needs, if we continue on our projected path of population growth and consumption. In 1961, the vast majority of countries around the globe had ecological surpluses. Today, more than 80 percent of the world’s population lives in countries that use more resources than what is renewably available within their own borders. These ecological debtor countries rely on resource surpluses concentrated in ecological creditor countries, which use less biocapacity than they own. The number of ecological creditor countries have slowly dwindled; meanwhile, the pressure on the remaining few (ecological debtor countries such as Guyana) increases. Guyana’s ecological footprint is estimated at 2.38 gha per person. Less than the world average (2.7) but still greater than average requirement (1.8).
The economic invisibility of nature in dominant economic models is both a symptom and a root cause of this growing global ecological deficit. Biodiversity and ecosystem goods and services usually fit the conventional definition of public goods: enough for everyone, available to everyone, and one’s enjoyment does not impede another’s. Ecological goods such as clean air, fresh water, fish from their mangrove nurseries, carbon storage by forests are usually public goods, not traded in markets, not priced, and mostly available free to beneficiaries. There is little if any recognition of the contribution of ecosystem services to regional GDPs, or of their larger significance in maintaining human well-being. This leads to a constant depletion of natural resources. We value what we price, but ecosystem services – clean air, fresh water, soil fertility, flood prevention, drought control, climate stability, etc – are, mostly, not traded in any markets and not priced. This leads most often to nature being allotted a “zero value” and destroyed. This deep-seated and widespread market-centric mindset was most evident in the 2008 global financial crisis which was headline news every day for over a year. The International Monetary Fund estimated the loss of financial capital to the Wall Street and City of London firms to be in the order of $US 2.4 trillion. Around the same time, TEEB (The Economics of Ecosystems and Biodiversity – a global study of the economics of biodiversity loss) estimated the value of the earth’s natural capital losses to be from US$2 trillion to US $ 4.5 trillion – in other words, greater than the losses suffered through the financial crisis. However, financial crisis got the headlines – and even got bailed out!
Recognising the values of biodiversity and ecosystem services and representing them in decision making allows for comprehending the full magnitude of the trade-offs being made: between different ecosystem services (food provision or carbon storage), between different beneficiaries (private gain by some, public loss by many), at different scales (local costs, global benefits) and across different time horizons. In one of the first efforts (1997) to calculate a global number, a team of researchers from the United States, Argentina, and the Netherlands put an average price tag of US$33 trillion a year on these fundamental ecosystem services, which are largely taken for granted because they are free. That is nearly twice the value of the global gross national product (GNP) of US$18 trillion.
In making the case for renting Guyana’s forest stock for its carbon sequestration capability, the McKinsey and Company’s 2007 estimates (in Creating Incentives to Avoid Deforestation) were used to determine the overall and tradable values of Guyana’s forests. The value (EVW) of Guyana’s ecosystems services were estimated at US$25,000+ per ha, i.e. a total value of about US$460 billion for the 18.39 million ha of forests, or approximately US$40 billion a year contribution to the global economy. However, in determining the value (EVN) to be traded they used US$300 to $3,500 per ha, to end up with a total value ranging from US$4.3 to $23.4 billion.
This is a huge spread in estimates from US$4.3 – 460 billion. The big difference is based on whether Guyana cuts down the forest and sells it (as either a whole or in pieces over time) or keeps it relatively intact and rents out its services (in parts or as a whole). The EVN numbers are in the range of the US$31.3 billion World Bank’s 2005 estimates of the value of Guyana’s subsoil, timber, non-timber, protected areas, cropland, pasture land, and natural capital. Whatever the numbers, these estimates provide a glimpse of Guyana’s enormous current and future wealth and why it is Eldorado Verde – the green land of gold.
The World Bank’s 2011 publication The Changing Wealth of Nations (the source of the estimate quoted earlier) shows a clear link between careful management of natural capital—forests, protected areas, minerals, energy and agricultural land—with increasing levels of wealth and economic well-being. The study took a comprehensive look at the wealth of over 150 countries between 1995 and 2005. The authors took the definition of “wealth” well beyond what is traditionally measured in the Gross Domestic Product of a nation. It included natural capital, produced or manufactured capital and intangible wealth assets like strong institutions, human skills, education, innovation and new technologies. A key finding is that in low-income countries, where natural capital averages between 30 and 50 percent of total wealth, development is about leveraging natural capital for growth. When a country has strong institutions that reaffirm the rule of law, ensure government accountability and help control corruption, investment follows and grows. Botswana is presented as a success, which was attributed to two factors: recognition by Transparency Intern-ational for consistently having the best ranking in Africa on its Corruption Perception Index; and a long-time commitment to ensuring that income from its mining sector is re-invested in the country’s development—especially in education and health. Of special note the government has had a Sustainable Budget Index in place that monitors the extent to which revenues from mining are put back into the government’s budget. An environmental accounting programme provides the proof that mining income is indeed benefiting Botswana’s long-term development. Maybe, Guyana needs to take a page or two from Botswana’s approach.
In these contentious times Guyanese should give pause to think about three quotes from Alfred North Whitehead: “a clash of doctrines is not a disaster—it is an opportunity”, “not ignorance, but ignorance of ignorance is the death of knowledge”, and “the future belongs to those who can rise above the confines of the earth.” Guyanese should also give some consideration to what medical practitioners term the Dunning–Kruger effect – a cognitive bias in which unskilled individuals suffer from illusory superiority, mistakenly rating their ability much higher than average. This bias is attributed to a metacognitive inability of the unskilled to recognize their mistakes.
Let’s hope Guyana is not remembered as Eldorado de Tontos.