Should we start including environmental services in the expenses column?
The US exports (as of 2010) $115bn worth of agricultural products to the rest of the world, a result of a positive agricultural trade balance. In the 21st Century the US enjoys a rich and varied diet that includes fruits, vegetable and a wide array of animal products. This is part of what makes the quality of life so high and the money to be made from agricultural produce is a big driver in the American economy: while only 2% of the workforce is employed directly in farming, a full 15% is in employment, logistics, supply, retail, because of a successful agricultural industry.However, there is a hidden helping hand that is all too often taken for granted – the environment. The value of environmental services is often overlooked and not included in the profit-loss statements of any enterprise. This is despite the fact that they are immensely important, providing services such as flood protection, pest control, and pollination, and increasingly under threat.
Indeed worldwide, it is estimated that about 40% of all agricultural land is degraded in some way or another due to desertification caused by soil erosion, the build-up of salt due to bad irrigation practices, or the loss of animals and insects to pollinate crops. In fact, the loss of pollinators in particular is a huge threat to the production of many crops, from apples and aubergines, to tomatoes and peas.
Currently it is not included in the expenses column due to its current status as a ‘free’ service provided by the environment, for our benefit. However, the recent decline in bees – a primary pollinator in the US – and other pollinating insects due to widespread use of pesticides and diseases like colony collapse disorder means this may not always be the case. The increased pressure placed on the remaining natural habitat will only speed up the pace of this decline.
Simple things can be done to remedy the situation. By leaving intact areas of natural forest or grassland, or by leaving the edges or strips of a field to ‘wild’ and produce shrubs and wildflowers, natural habitat can co-exist with development to the benefit of both human and animals. This not only provides a home for pollinators but also predatory species who feed on pests – reducing our reliance on pesticides.
It is estimated that if humans were to replace bees as pollinators in the United States it would cost a staggering $90,000,000,000. With this in mind, it is clear the only sensible economic option is to ensure the protection of the environment, and thus the services it provides. Spending a little extra now – and it need not be a huge amount – is an ‘investment’ in future crop yields. Currently many ecosystems are on the verge of collapse – leaving us without the rich soils, consistent water supply, and vibrant food-chains that ensure a healthy agricultural output. There is not just an ethical dilemma to contend with when thinking about environmental issues but in many cases a heavy financial one too.
By: Adam Faust
Founder Deep Blue Financial, Northbrook IL