Greening the Economy: ‘Selling Nature to Save it’ is not a solution!

In this interview, Development author Kathleen McAfee talks about the problems connected to the use of market instruments applied to nature. In particular she discusses the difficulties of putting a price on nature, the risk of commodification of nature and the emergence of growing global inequalities due to the workings of uneven markets.  

Q.:  In your article you question the idea that market instruments can achieve optimal allocation of the benefits of nature and the burden of pollution and resource depletion. Why do you think the use of market instruments in this field is problematic? 

A.: The idea of putting price tags on nature arose in the 1980s as a way to illustrate the importance of conservation by showing what it would cost, in money, to do without certain endangered species and landscapes. But 'selling nature to save it' soon took on a life of its own. Economics had a set of methods based on the notion that 'externalities', such as environmental assets and damages, can be brought into 'the economy', as if economy and nature were separate! In theory, if ecologists can measure precisely what needs to be saved, economists can calculate the monetary values of those assets.Then, if governments clarify property rights to ecosystems and species, making sure that somebody owns and can choose to sell them, then 'market forces' will send environmental 'investments' to wherever they can buy the most conservation. These methods appear, deceptively, to offer objective, non-political guidelines for complex problems that existing institutions have failed to solve. One major problem is that nature's functions are too dynamic to be measured precisely. Another is that it is impossible for even the most sophisticated experts to ascribe values to things without make use of one or another set of value judgments. A third, huge problem is that, if the fate of anything is determined solely by its market price, then whoever can spend the most money can get greatest amount of that thing, be it beans, safe water, or dumping grounds and storage sites for pollution in the atmosphere, oceans, and forests. It should have come as no surprise that, in almost every scheme for market-based management of ecosystem services in low-income regions, efforts to make projects more 'market-efficient' conflict with project criteria meant to reduce poverty. That's why it behooves use to avoid scaling up a 'market-based' model of PES as a framework REDD+.

Q.: Can you give us some practical examples of market instruments that have led to the commodification of nature?

A.: Take bio-prospecting. The strategy of selling nature was built into the Convention on Biological Diversity in the form of the obligation of rich countries to 'share the benefits' of the 'commercial utilization of biodiversity'. The idea was that buyers of so-called genetic resources - the rights to make use of, say, rainforest medicinal plants to develop drugs - should pay a portion of their profits to the communities or individuals who provide the plants. This would create an incentive, which presumably wouldn't exist otherwise, for forest dweller not to destroy their own surroundings. Obviously the value of what is sold in such deals is a tiny portion of the values of a forest ecosystem, especially to the people who depend on it directly. And, since buyers such as pharmaceutical firms are in a much stronger bargaining position, most payments have been merely token. But treating plant samples and shaman's recipes as tradable property - as commodities - has brought a different way of thinking about what's important and has often created divisions over who is the rightful 'owner' of things that were not own-able before.

Q.: In your article you use the phrase 'selling nature to save it'. This paradox is very telling of the problems of the green economy in general. Do you think there are examples where 'selling nature' can actually be beneficial?

A.: Since our ancestors first traded fruits or roots for game or a nice spot to camp, people have been 'selling nature'. Markets can be very useful ways to distribute things we produce and things we need. But markets work best when trade takes place among groups or individuals who are relatively equal, or at least a lot more equal than in today's world, where markets tend to redistribute wealth toward those who already have it. In real life - as opposed to the imaginary 'market-world' - even in advanced capitalist societies, few actions are based strictly on market transactions and market prices. Factors we classify as 'social', 'cultural', and 'political', rather than 'economic', carry more weight in determining who does what for whom and how most resources are distributed, especially on local and national levels. These factors include history - how some became 'haves' or 'have-nots' - traditions, loyalties and obligations, regulations, and what people accept as rights, whether formal, legal rights or not. We need to recognize these ethical and power dimensions of our values and choices up-front, not pretend that 'the market' can supersede politics and guide decisions in some neutral way.

Q.: What has been the effect of market-led initiatives in ecosystems on the poor in the Global South and their livelihoods? And have they achieved anything in terms of global equality?

A.: Can markets in nature foster global equality? We can expect the opposite, especially when trade in greenhouse-gas offsets becomes a source of profit in itself! There's also no evidence that PES as a whole has resulted in net environmental gains, rather than distracting attention from places and processes where ecosystem destruction continues: logging, fossil-fueled power plants, etc. The same problem applies to REDD. People should be compensated for their work, wisdom, and sacrifices in stewarding nature. But, while there are many examples of PES schemes that have transferred resources to cash-poor people, there's little basis for expecting that these transfers will have long-term effects. That will happen only where  compensation arrangements are linked to locally-determined development strategies that reinvest wealth in all forms within the locality and region, to increase productivity by working with nature to meet people's needs. Trade - in nature or anything else - can play a role but can't be the centerpiece of a sustainable development strategy. Interview by Laura Fano Morrissey


See Kathleen McAfee’s article in Development 55.1 'Nature in the Market-World: Ecosystem services and inequality'

94Kathleen McAfee is an Economic Geographer whose research concerns connections among ecology, agriculture, globalization and development. She has been a policy analyst for Oxfam, taught at Yale’s School of Forestry and Environmental Studies and consulted for NGOs, the FAO and other agencies.

Photo: Joost J. Bakker IJmuiden/flickr