Valuing the environment

Valuing our environment

Recognising the value of nature is vital to making decisions that guarantee a healthy Australian environment and economy for generations to come.

Making decisions that recognise our environment’s fundamental value underpins the very basis of our economic prosperity. Investing in environmental protection generates ecological and economic benefits, far beyond the cost to do so. Examples include:

  • Marine protected areas allows fish species to restock;
  • Investment in healthy wetlands achieves natural water filtration infrastructure;
  • Valuing mature forests is an investment in carbon storage; and
  • Expanding and protecting our green spaces allows our cities can be cooler, naturally.

Ecological economics

Ecological economics aims to better understand the relationship between ecosystems and economic systems. By better understanding all the impacts and limitations of our economy can we achieve an economy and society that protects and maintains the planet’s ecosystem.

Key to the task of ecological economics is more comprehensive treatment of:

  • The value of unpriced items not traded in the market;
  • Values that are far into the future; and
  • Values that are of benefit to species other than humans.

We released a recent study looking at the total annual economic value provided by a wetland located in Victoria, Australia. The study found that on an annual basis, the Hattah Lakes wetland is providing economic and ecosystem services to a very conservative value of $14.7 million.

Going one step further, we used the methodology and source data from a report by academics from the CSIRO and Charles Sturt University, to examine the economic value of a healthy environment across the Basin’s 19 river valleys.

Our analysis showed that healthy rivers and wetlands provide economic benefits to communities and industry in the Murray-Darling Basin worth around $2.1 billion a year.

The study shows that a business-as-usual scenario — with a further deteriorating river system — costs the community, tourism, grazing, fishing and other regional industries, especially in the face of a drying climate.

Alternatively, restoring the rivers and wetlands of the Murray-Darling Basin to health would be worth $9.8 billion to Australians.

Ecological economics as a formal area of study is still developing, but as these case studies show, it is starting to make an important contribution to the consideration of ecology in economic decision making, albeit slowly.

This has helped to begin the process of integrating environment considerations into the mainstream economics profession, as it comes to recognise the ultimate importance of protecting the environment in achieving both long term sustainability and long term economic prosperity.

We’ve made a start… [but] much more needs to be done if we are to be able to say that the wellbeing of future generations is not to be threatened by poor valuation of the environment — Dr Ken Henry, Secretary to Australia’s Treasury Department

The whole economy

ACF’s new tool The Whole Economy aims to promote new ways of thinking and public discussion about what it is that we value, and how this is reflected in our national accounting system, and therefore our national priorities.

Healthy forests

Contrasting the value of timber extracted over 80 years with the value of water and carbon, it is clear that protecting the forests in their natural state delivers superior economic value to the state of Victoria. Woodchipping our water: Victoria’s Goulburn Broken Catchment report explores the water yields of this forest catchment with and without logging.