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PART 7—
INFRASTRUCTURE FOR SUSTAINING BIODIVERSITY—SOCIETY



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Page 411 PART 7— INFRASTRUCTURE FOR SUSTAINING BIODIVERSITY—SOCIETY

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Page 413 Biodiversity: A World Bank Perspective Ismail Serageldin Special Programs, The World Bank, 1818 H Street NW, Washington, DC 20433 We live in a time of unprecedented assault on biodiversity and natural resources at global, national, and local levels. The battle for the environment is being fought between growing populations and the need to conserve natural systems in countless arenas. Solutions are attainable, but it will require our genius, commitment, and ability to cooperate if we are to secure a future that generations to come can celebrate, instead of looking back and condemning us for opportunities lost, challenges forgone. From the World Bank's point of view, however, that does not translate only into protection of pristine environments and conservation of a rare plant or animal, important as these might be. Rather, it is about the maintenance of life-support systems and people. It is about recognizing the need to conserve resources and manage them sustainably so that people have access to clean air, clean water, and fertile soils both now and in the future. Today, such access is denied to much of mankind. At the global level, we face the pervasive reach of poverty, uncertainty over food security and the resource base, and increasingly diminished if not lost natural habitats and ecosystems. Biodiversity is being eroded at an unprecedented rate, and we can only guess its ultimate impact. Of the estimated 10–100 million species on the planet, only 1.4 million have been named. Fungi are the least known (only 69,000 of the 1.6 million thought to exist have been described) and we can only imagine the complexity and wealth of the estimated 8 million arthropods. However, bacteria are the “black hole” of systematics, with only some 4,000 recognized. In a recent study in Norway, 4,000–5,000 species (virtually all

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Page 414 new to science) were indicated among the 10 billion organisms to be found in each gram of forest soil. Humanity's call on the food base is precarious. Although staple cereal and root crops will continue to feed humanity for some time to come, the jettisoning of many useful plants will bring unnecessary costs. The decrease in the number of species used in forestry and in animal husbandry has also narrowed the genetic base, greatly reducing the options for adapting to change. We continue to struggle in assessing the economic values of environmental assets, especially biodiversity. Methods are being developed to introduce conservation practices in the marketplace and to reduce the subsidizing of the mining of natural systems—full-cost accounting, green taxes, economic incentives for conservation, and internalization of environmental externalities. New ways are being used to measure well-being by looking at the contribution of natural human and social capital, not just human-made capital, which is usually considered in financial and economic accounts. Recent findings reinforce the importance of the natural-resource base of all economies and the fundamental role of human resources in determining a nation's wealth and, in turn, the opportunities for welfare gains for a nation's population. It is particularly sobering to contemplate the pervasive influence of humanity on the natural environment and the threats posed to ecosystems: marine fisheries are being harvested to extinction, land transformation and water use are pressuring every ecosystem, and modified rates of nitrogen fixation and CO2 concentrations are altering global climate. These and other human effects pose substantial threats to both sustainable development and the very quality of life. The major causes of biodiversity loss are the fragmentation, degradation, or loss of habitats (through conversion by agriculture, infrastructure, or urbanization), overexploitation of biological resources, the introduction of nonnative species, pollution, and climate change. It is estimated that extinction rates of plants and vertebrates are some 50–100 times higher than the expected natural rate and that future extinction rates will be substantially more than 1,000 times the natural rate (Reid and others 1992). For some groups of plants and vertebrates, 5–25% of identified species are already listed as threatened with extinction. The result might induce profound changes in many ecosystems and render them much less useful to people even if not less complex ecologically. The deforestation of tropical rain forests, the greatest cause of species extinction, is expected to continue. Some 50% of the world's species (estimated at 10–100 million) are harbored by rain forests, and the current rate of loss might exceed 50,000/year, 137/day, or 6/hour. The loss of old-growth forest remains a major concern in many temperate countries. Sound management of the earth's precious water resources constitutes the greatest challenge to sustainable development and the conservation of freshwater biodiversity. Freshwater fish are the vertebrate group that has suffered the highest extinction rates in both tropical and temperate regions. The productivity of freshwater ecosystems and their economic benefits are well known; if not properly managed, the competing demands of water, increasing pollution, the alteration of the hydrologic cycle, and the introduction of alien

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Page 415 species will compromise the ability of freshwater ecosystems to sustain human livelihood. Marine biodiversity is also experiencing overexploitation, habitat loss, and pollution; indeed, overfishing is the greatest threat to marine biodiversity and ecosystems. Protection of marine biodiversity is critical because the marine environment has greater diversity at higher taxonomic levels than land—coral reefs harbor over 1 million species of plants and animals and constitute the largest untapped source of bioproducts. Change and disturbance are essential features of ecosystems, but ecologists view the survival of complex systems as depending on connectivity and interdependence among their parts and on feedback among related processes. This focus is helping lead to partnerships and to the understanding and building of motivational structures to achieve desired ends. Thus, biodiversity conservation and management are not just ecological concerns; for many countries, they are also intrinsic to socioeconomic development, particularly for the poor. Biological resources provide the most important contributions to livelihoods and welfare: food, medicines, health, income, employment, and cultural integrity. Over 80% of the world's population depends partly on traditional medicines and medicinal plants, and some 60% of plant species (35,000) have potential medicinal value. About 7,000 compounds have been extracted from plants, leading to products as varied as aspirin and birth-control pills; the search for more has never been greater. Of the thousands of plant species deemed edible for humans, some 20 produce the vast majority of the world's food. Staple crops—such as wheat, maize, rice, and potatoes—are used to feed more people than the next 26 crops combined. Likewise, sheep, goats, cattle, and pigs supply nearly all land-based protein for human consumption. The same process of specialization is evident for varieties within species—humans are increasingly reliant on a narrow range of species and then on specific varieties of these species. Consequently, biodiversity conservation is equally concerned with sustaining greater varieties of specialized and nonspecialized species. To meet that challenge, two approaches are being adopted: ensuring an adequate supply of genetic diversity for such industries as agriculture and medicine, and protecting unconverted habitats for the supply of genetic diversity. Conserving biological diversity needs to address complex issues that call for a wide range of responses across many private and public sectors. All responses are necessary, with adjustments for local conditions: in situ conservation, ex situ conservation, intellectual-property rights, indigenous knowledge, human and institutional capacity, access to technology, equitable sharing of benefits, morals and ethics, and biosafety and risk. Information on those issues is becoming more readily available, and this will help to address such central problems as limits to the flow of germplasm (particularly of processed products), the debate over intellectual-property rights, and trade rules. Basic inventory and fundamental research work should be carried out simultaneously with field action, the two forms of activity reinforcing each other. High-yielding crop varieties produced during the “Green Revolution” helped to avert a food crisis in the 1960s. It has continued to save land, and its influence

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Page 416 is still spreading, but a huge agenda remains. More genetically diverse new crop varieties are needed, and we need to adopt integrated pest management to minimize the use of pesticides. Likewise, on-farm water and nutrient management combined with traditional wisdom will produce efficiencies for farmers and maintain the health and productivity of agricultural systems. And the promise of and obstacles to biotechnology continue a lively debate, but we can be confident that it too will play a seminal role in securing food on a more sustainable basis, recognizing the mutual interest of the material-rich states and the biodiversity-rich states in the development and conservation of the remaining biological diversity. The World Bank is the largest financier of targeted environmental projects, with an active portfolio of more than 170 projects at a funding level of $15 billion. Lending in biodiversity conservation itself has grown to $956 million, involving 101 projects in 56 countries. Investment has leveraged an additional $536 million from borrowing governments and donors, bringing the total commitment since 1989 to $1.34 billion. In addition to projects and project components with specific biodiversity objectives (the biodiversity portfolio), the bank has supported environmental projects that can have a favorable, although indirect, effect on biodiversity. Of these “environmental” projects, the ones aimed at improving natural-resource management (“green” projects) and those designed to strengthen environmental institutions (“institutional” projects) can help to conserve biodiversity through improved natural-resource management and development of appropriate incentives and policies. The emphasis on sustainable economic development, the better valuation of renewable natural resources, strengthening of national institutional capacity, and improvement in project preparation and implementation will all benefit the conservation and use of biodiversity. It is clear that biodiversity will not be conserved without consideration of the broader context, but improving the management of biological resources in general will not prove sufficient. Biodiversity can and should be addressed as a distinct problem although it is related to the degradation of biological resources. Sustainable use and biodiversity conservation also require understanding of the social and economic contexts. In the case of the rural poor, biological resources are often the most important source of economic and social well-being in the form of food supplies, medicine, shelter, income, employment, and cultural integrity. Successful biodiversity conservation also depends on sound policies and effective institutional and social arrangements. A wide range of national policies, laws, and regulations can create “perverse” incentives that discourage conservation even as other policies are intended to provide incentives to conserve. For example, the conversion of natural areas and loss of biodiversity have often been accelerated by economic policies that encourage production for export markets, promote population resettlement, or open remote areas to road construction and logging. Policies aimed at increasing agriculture, forestry, fisheries, and energy and industrial production can have similar effects. Appropriate policies provide the basis for national development and for meeting the economic needs of people, but inappropriate policies can result in unsustainable and inefficient natural-resource use and contribute unnecessarily to the loss

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Page 417 of biologically important natural habitats and species. Policies related to land tenure, forestry, and agriculture are particularly critical in this respect. Diverse experience has shown that the role of institutions in conservation is complex and taxing. Top-down conservation has seldom been effective except when large budgets are available for enforcement and society is willing to accept a rather undemocratic conservation process. Giving responsibility to local government and nongovernment organizations appears to create both opportunities and potential problems. To take advantage of the former while avoiding the latter, it seems that a cluster of arrangements must be made as a whole if conservation is to work well in an institutionalized setting. These arrangements include provisions for local participation, capacity-building, and incentive structures. Decentralization can increase local responsibility for biodiversity conservation, making it more relevant and useful to local people. Reforms that a country might make affecting self-regulation, tenure, and accountability will help to ensure that people who decide how to use biological resources are directly affected by the consequences of their decisions. By shortening the feedback loop between a decision and its effect, such reforms will reward cautious decision-making. In addition, changes that give authority specifically to people living in the managed environment encourage decisions that are responsive to local conditions. If other local stakeholders are encouraged and enabled to question the decisions, responsibility will be promoted and a strong force for good governance will have been created. The tools that can be used to conserve biodiversity—the protection of critical ecosystems (in situ measures) and such entities as arboretums, aquariums, botanical gardens and zoos, and seed and gene banks (ex situ measures)—all provide enormous benefits to humankind. Each conservation tool has its place in a comprehensive strategy for conserving biodiversity, including meeting human needs and maintaining the greatest possible numbers of species and genes. Most national governments have established legal means for protecting habitats that are critical for conserving biological resources; the responsibility is often shared by public and private institutions. Although accomplishments have been impressive, the amount of protected habitat and ecosystems needs to be increased substantially if these areas are to ensure the long-term conservation of the world's biodiversity. However, such protected areas will succeed only if they are effectively managed and if the management of the surrounding areas is compatible with the objectives of the protected areas. That will typically mean making protected areas parts of larger regional schemes to ensure biological and social sustainability and to deliver appropriate benefits to neighboring populations. Ex situ conservation programs supplement in situ conservation by providing for long-term storage and analysis, testing, and propagation of threatened and rare species of plants and animals and their propagules. They are especially important for wild species whose populations are severely reduced, serving as a backup to in situ conservation, as a source of material for reintroductions, and as a major repository of genetic material for future programs of breeding of domestic species. Some ex situ facilities—notably zoos and botanical gardens—offer important opportunities for public education and contribute substantially to taxonomy and field research.

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Page 418 Many of the current responses to the world's biotic impoverishment have been supported by international conventions that have fostered cooperation and partnerships in conserving biodiversity. These conventions, especially the Convention on Biological Diversity (CBD), represent unprecedented opportunities for the development of institutions concerned with fostering environmentally sustainable development. Posing unique intellectual challenges as it does, the CBD provides perspectives on a number of disciplines—its biological foundation is partnered by economics, sociology, and other social sciences to bring innovation and integration and to facilitate consensus-building. It will also help to define a systematic approach to encouraging investment in biodiversity. Current approaches to sustainable development are still rudimentary. A roug-hand-ready set of initiatives is in place, the development cycle is undergoing change (from a project orientation to one of listening, piloting, assessing, and mainstreaming), new partnerships are emerging, and the increasing accessibility to information is challenging the ownership of decision-making. But promising though these developments are, we must be sure of their selective and rigorous application. Progress has always been heralded by paradigm shifts that seemed somehow difficult and dangerous, but moved the world forward into new realms of freedom and prosperity. We need to promote a paradigm shift in how we think about development—we need to think holistically, and we need to consider what is best for the common good. We need to do that for the poor and the marginalized of the world. We need to do it for the women who are carrying the burden of continuing degradation and discrimination. We need to do it for the future generations for whom we are but passing stewards of this globe. Select Bibliography Brown K, Pearce D, Perrings C, Swanson T. 1993. Economics and the conservation of global biological diversity. Washington DC: Global Environment Facility, World Bank. Kottelat M, Whitten A. 1996. Freshwater biodiversity in Asia, with special reference to fish. World Bank Tech Pap 343. Washington DC: World Bank. Lambert J, Srivastava J, Vietmeyer N. 1997. Medicinal plants: rescuing a global heritage. World Bank Tech Pap 355. Washington DC: World Bank. McNeely JC, Miller KR, Reid WV, Mittermeier RA, Werner TB. 1990. Conserving the world's biological diversity. In cooperation with the International Union for Conservation of Nature and Natural Resources (The World Conservation Union/IUCN), World Resources Institute, Conservation International, World Wildlife Fund-US, and the World Bank. Gland, Switzerland and Washington DC: IUCN and the World Bank. Pagiola S, Kellenberg J, Vidaeus L, Srivastava J. 1997. Mainstreaming biodiversity in agricultural development: toward good practice. World Bank Environ Pap 15. Washington DC: World Bank. Reid W, Barber CV, Miller KR. 1992. Global biodiversity strategy: guidelines for action to save, study, and use earth's biotic wealth sustainably and equitably. World Resources Institute, The World Conservation Union (IUCN), and the United Nations Environment Programme in consultation with the Food and Agriculture Organization of the United Nations and the United Nations Educational Scientific and Cultural Organization. Washington DC: World Resources Inst. Rodenburg E, Tunstall D, van Bolhuis F. 1995. Environmental indicators for global cooperation. GEF Work Pap 11. Washington DC: World Bank. Serageldin I. 1996. Sustainability and the wealth of nations: first steps in an ongoing journey. Envir Sust Devel Stud Monogr Ser 5. Washington DC: World Bank.

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Page 419 Srivastava JP, Smith NJH, Forno DA. 1997. Biodiversity and agricultural intensification: partners for development and conservation. Envir Sust Devel Stud Monogr Ser 11. Washington DC: World Bank. Thrupp LA. 1998. Cultivating diversity: agrobiodiversity and food. Washington DC: World Resources Inst. World Bank. 1998. Biodiversity in World Bank projects: A portfolio review. Washington DC: World Bank.

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Page 420 Creating Cultural Diversity: Tropical Forests Transformed Olga F. Linares Smithsonian Tropical Research Institute, Apartado 2072, Balboa, Ancón, Rep. de Panamá Today, there is “an increasing realization that cultural [diversity] and biological diversity are intimately and inextricably linked” (McNeely and others 1995:767). The enormous variety that underlies the structures, beliefs, knowledge, and cultural practices of peoples around the world is a unique and valuable reservoir of environmental knowledge and know-how. During millennia of careful observation and experimentation, human groups have developed different uses for the plants and animals that make up the diverse ecosystems of the world. Distinct cultural patterns have emerged, have become specialized, and ultimately have changed in response to coevolution, coexistence, and mutual transformation along a nature-culture continuum. These cultural lifeways are increasingly threatened, as are the biological systems that support them. This essay explores the many ways in which indigenous peoples relate to each other and to components of the ecosystems in which they play an essential role.1 1 Indigenous peoples are members or communities that to a large extent follow their own cultural rules and their own social and economic practices and often also elect their own local leaders. Indigenous has been applied mainly to small-scale societies and often to New World (Amerindian) groups. The term seems to me less apt when applied, for example, to such rural farmers of Africa and Malaysia as the Ibo shifting cultivators of Nigeria or the Batak agroforesters of north Sumatra. Both those peoples are numerous and form part of large, semiautonomous political entities (they form nations within modern states). Moreover, indigenous is inapplicable to temporary or permanent migrants. Because other alternatives, such as native and tribal are even more inappropriate, I will be using the term indigenous here to refer in general to relatively autonomous tropical peoples. When possible, either the name by which certain groups are known in the literature or, even better, the name that the people themselves use (their selfdefinitional label) should be used.

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Page 421 Small-scale communities differ within themselves and between each other along several dimensions—linguistic, ideological, social, and political—and in subsistence pursuits and modes of insertion into the modern global economy. I emphasize two interrelated aspects: human ecological and economic behavior, especially with respect to physical resources, and cultural constructs, which are the beliefs and attitudes that people have toward their natural surroundings. A truism worth repeating is that the mental and material systems humans have devised to survive and reproduce are, simultaneously, responses to the environment and ways of shaping its biological diversity for human use. Thus, scholars justifiably argue that nature and culture are indivisible and that the real subject matter of human ecology should be the analysis of socionatural systems (Bennett 1996). Doubtless, they are correct; all human existence presupposes a degree of ecological involvement. To facilitate making empirical generalizations and forging comparisons, I will focus this discussion on tropical areas of the New World, Africa, and Asia. These regions have particularly high rates of biological diversity and are inhabited by diverse rural peoples who have devised highly specialized and lowenergy, as well as high-energy, adaptations to multiple resources. The Tropics: Biological Diversity Tropical forests are among the most complex and diverse of terrestrial ecosystems, having the greatest number of dynamically interacting plant and animal species (Whitmore 1992). High temperatures, abundant rainfall, and fragile soils are their general characteristics, but tropical forests differ greatly from one another in terms of their composition, dynamics, and size. Commonly, a distinction is made between climax or mature rain forests that have ever-wet environments and monsoon or seasonal secondary forests that have a marked dry period, but this is an oversimplification. In reality, all tropical forests are dynamic, subject to constant processes of natural disturbance caused by a series of biotic factors (such as insects and vertebrates), abiotic factors (for example, tree falls, landslides, storms, and droughts), and anthropogenic disturbances (usually repeated and prolonged) (Denslow 1996). About half the world's tropical areas are in the American Neotropics, including southern Mexico to Panama, the Amazon and Orinoco basins in northwestern South America, and central and coastal Brazil. Next in extent are the eastern tropics of the Indo-Malayan region, including Indonesia and continental Southeast Asia.2 The smallest block of tropical rain forest is in western and central Africa, including the Congo Basin. 2 The Indo-Malayan rain forest (also called the eastern rain forest) covers the western Ghats in India and the southwestern corner of Sri Lanka. It is centered on the Malay archipelago, in the phytogeographic region that botanists call Malesia (or Malaysia). The term includes peninsular Thailand, the Bismarck archipelago, and the northwestern corner of New Guinea (Irian Jaya). Furthermore, the IndoMalayan rain forest extends beyond the Malay peninsula into Burma, Indochina, southern China, and Vietnam. Rain forest also covers Indonesia, most of New Guinea, and Borneo (Kalimantan). See Whitmore (1992 10, [figure 2.1 11, 213 [glossary], 223 [index]).

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Page 470 abroad. Indeed, given the rapidity with which biodiversity is being lost, we, as a community of researchers and practitioners, need to move as quickly as possible to make the most of our collective resources. To do less would be difficult to comprehend and even more difficult to defend. References Jacobson SK (ed). 1995. Conserving wildlife: international education and communication approaches. New York NY: Columbia Univ Pr. 302 p. Noss RF. 1997. The failure of universities to produce conservation biologists. Cons Biol 11(6):1267–9.

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Page 471 Natural Capitalism Paul G.Hawken Gate Five Road #20 South Forty, Waldo Point Harbor, Sausalito, CA 94965 The world is entering a period of historical and economic discontinuity that will change our lives in radical ways. The discontinuity is brought about by a fundamental shift in the relationship between industrialism and living systems. Industrial systems have reached pinnacles of success and are able to muster and accumulate human-made capital on vast levels, but living systems, which are the sources of our natural capital, and on which we depend to create our industrial capacity, are all declining. Humankind has a long history of destroying its natural capital, especially soil and forest cover. The entire Mediterranean region shows the effects of siltation, overgrazing, deforestation, and erosion or salinization caused by irrigation (Hillel 1991). In Roman times, one could walk North Africa's coast from end to end without leaving the shade of trees; now it is a blazing desert. Today, human activities are causing global decline in all living systems. The loss of 750 metric tons of topsoil per second worldwide and 5,000 acres of forest cover per hour becomes critical. Turning 40,000 acres a day into barren land—the present rate of desertification—is not sustainable, either (UNEP 1996). In 1997, more than 5 million acres of forest were destroyed by “slash-and-burn” industrialists in the Indonesian archipelago. The Amazon basin, which contains 20% of the world's freshwater and the greatest number of plant and animal species of any region on Earth, saw 19,115 fires in a 6-week period in 1998, five times as many as in 1995. In the oceans, the losses are similar. Our ability to overfish oceans with 30-mile-long lines results in 20 million tons of annual bycatch—dead or entangled swordfish, turtles, dolphins, marlin, and other fish that are discarded, pushed overboard,

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Page 472 tossed back, or, in the case of sharks, definned for soup. The bycatch that is thrown overboard is the equivalent of 10 lbs. of fish for everyone on Earth (San Francisco Chronicle 1998). By now, almost all the world's fisheries are being exploited at or beyond their capacity, and one-third of all fish species (compared with one-fourth of all mammal species) are threatened with extinction. A 7,000-square-mile “dead zone”—the size of New Jersey—is growing off the coast of Louisiana. No marine life can live there, because nitrate runoff in the form of agricultural fertilizers borne by the Mississippi River has depleted supplies of oxygen. The growing marine desert threatens a $26-billion-a-year fishing industry (Yoon 1998). Each fire, each degraded hectare of crop and rangeland, and each sullied river or fishery reduces the productivity and integrity of our living planet. Each of them diminishes the capacity of natural capital systems to process waste, purify air and water, and produce newmaterials (Hawken and others 1999). It is often assumed that environmental improvements are expensive—clean water, elimination of dangerous chemicals, efficient nonpolluting transportation, a pesticide-free food supply, preserving our ancient forests, providing for the health and safety of people in nonindustrialized nations. In fact, these and most other environmental improvements can be brought about at a profit, not a cost. To put it differently, the massive inefficiencies that are causing environmental degradation cost far more than the measures that would reverse them. In energy, transportation, forestry, building, and other sectors, mounting empirical evidence suggests that large savings can be achieved by radical, even paradigmatic, improvements in efficiency—not the constant marginal improvements that industry continuously seeks, but leap-frog changes in design and technology that presage a different economic system. Industrialism was a system of organized mechanistic production that increased the productivity of human beings. It did not replace the system before it, but subsumed an agrarian society within a new framework of production and understanding. In the next century, as human population doubles and the resources available per person drop by one-half to three-fourths, a remarkable transformation of industry and commerce can occur. Through this transformation, society will be able to create a vital economy that uses radically less material and energy. This economy can diminish our use of resources and begin to restore the damaged environment of the Earth. These necessary changes can take place because they will promote economic efficiency, ecological conservation, and social equity. The change in business economics can be called natural capitalism. Natural capitalism recognizes the critical interdependence of the production and use of human-made capital and the maintenance and supply of natural capital. Natural capitalism includes four distinct yet intertwined patterns of change. The first is a shift from an economy based on incremental improvements in human productivity to one emphasizing dramatic and in some cases radical gains in resource productivity—increases of a factor of 4–10, which means getting 4–10 times as much wealth from the same resources. That is a critical message because much of this productivity revolution is available at “negative cost”, that is, profitably. Countries moving toward resource productivity will become stronger, not weaker, in their international competitiveness. The second is the use of biomimicry as the

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Page 473 means and basis of redesign of industrial systems. Reducing the wasteful throughput of materials—indeed, eliminating the very idea of waste—can be accomplished by reimagining industrial systems on biological lines, changing the nature of industrial processes and materials, enabling the constant reuse of materials in continuous closed cycles and often the elimination of toxicity. The third is a fundamental change in the relationship between producer and consumer—a shift from an economy of matter and things to one of service and flow. This describes a new perception of value, a shift from the episodic acquisition of goods as a measure of affluence to the continuous receipt of quality, utility, and performance. A fourth stage is a centuries-long reversal in ecosystem and habitat destruction wherein profitable investments will begin to maintain and increase our pool of natural capital. All four are interrelated and interdependent, and all four generate numerous other effects in the environment, finance, resources, and society. Radical Resource Productivity Radical resource productivity means getting the same amount of work or service from a product or process while using 75–90% less resources. That increases the value we can obtain from each unit of resource and will create vast new opportunities for business and society. As a society, we have become extremely productive with respect to labor and capital. Companies and designers will be making natural resources—energy, metals, cars, water, forests, and oil—work 5, 10, even 100 times harder than before. Radical improvements in resource productivity offer a new terrain for business invention, growth, and development. They are critical because resource productivity will eventually determine which countries and corporations succeed. It is a hopeful concept because it means we can increase worldwide standards of living while reducing the energy and materials we use and the impact of their use on the environment. This concept can help to dispel the misunderstanding that core business values and environmental wisdom are incompatible or at odds. For the last two decades, there has been a quiet design revolution in products, materials use, and energy. There are cars on drawing boards that can cross the country on the equivalent of a tank of gas, buildings that can create more energy than they consume, plastics that can be reused for centuries. The list is long and somewhat technical. Reading about an air conditioner that uses 90% less energy might not fascinate the average citizen, but the fact that it is utterly quiet while dramatically reducing energy costs will be compelling. As you move through life, listen to the din of daily life, the city and freeway traffic, the airplanes, the garbage trucks outside your windows and remember this: Most noises are the signs of inefficiency and will disappear as surely as did manure from the streets of 19th century London. If not in a city, then one need only look from the window of a low flying plane to see the enormous devastation and waste of living systems throughout America and other lands. Either way, the signs are everywhere. For reasons that are essentially inevitable, industry will need to redesign everything it makes and does to meet this coming efficiency revolution and in the process greatly reduce its impact on living systems.

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Page 474 Biomimicry The present industrial system is like a person with a metabolic disorder. It eats too much and gets too little exercise. Our overmature industrial system runs on machines that require enormous heat and pressure, is petrochemically dependent and material-intensive, and requires large flows of toxic and hazardous chemicals that degrade the environment in unforeseen ways. Those industrial “empty calories” end up as pollution, acid rain, and greenhouse gases. The result is bloated amounts of waste that harm environmental, social, and financial systems. Despite the reengineering and downsizing trends that were supposed to sweep away corporate inefficiency, the overall industrial system is only about 1–2% efficient, probably less. (When economists refer to efficiency, they are usually measuring a process or outcome in terms of money—how much labor or other input costs compared with what was produced. Here, efficiency refers to resource efficiency, both material and energy. In the case of energy, it means how much work is accomplished by an input of energy. In the case of materials, it means the total material flow that is required to create a given product or service. Living systems are not affected by monetary calculations. What matters is how effectively we use the flow of energy and material resources to meet human needs. That is the only measure of efficiency that matters over the long term.) Chemists, engineers, and designers are turning away from mechanistic systems requiring heavy metals, combustion, and petroleum and toward something closer to biological systems that require smaller inputs, low temperatures, and enzymatic reactions. They are moving from linear take-make-waste systems to closed industrial loops where technical nutrients, synthetic materials used in a prior product, become the raw material for successive production. In energy, this means the end of high-temperature, centralized power plants and the growth of small distributive sources feeding a grid. In transportation, it means hybrid-electric vehicles. In fuels, it means a continuing decarbonization of energy sources. In food, it will mean dramatic reductions in input of fuels and chemicals with increasing yields. To create breakthroughs in radical resource productivity, chemists, materials scientists, process engineers, biologists, and industrial designers are reexamining the energy, materials, and manufacturing systems required to provide the specific qualities—strength, warmth, structure, protection, function, speed, tension, motion—required by products and end users. Business is rapidly switching to biomimicry and ecomimesis (imitating biological and ecosystem processes, respectively): replicating natural methods of production and engineering to produce chemicals, materials, and compounds and soon maybe even microprocessors. Some of the most exciting developments come from emulating nature's low-temperature, low-pressure, solar-powered assembly techniques, whose products rival anything made by humans. Janine Benyus's book Biomimicry points out that spiders make silk, strong as Kevlar but much tougher, from digested crickets and flies, without needing boiling sulfuric acid and high-temperature extruders. The aba-lone makes an inner shell twice as tough as our best ceramics. Trees turn sunlight, water, and air into cellulose, a sugar stiffer and stronger than nylon, and bind it into wood, a natural composite with a higher bending strength and stiffness

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Page 475 than concrete or steel. We might never get as skillful as spiders, abalone, or trees, but smart designers are apprenticing themselves to learn the benign chemistry that natural processes have mastered (Hawken and others 1999). Pharmaceutical companies are becoming microbial ranchers, managing feedlots of enzymes; chemical companies are rearranging the genes in corn stalks to produce polymers as strong as nylon; biological farming, the precursor of tomorrow's industrial thinking, manages soil ecosystems to increase the amount of biota and life per acre by keen knowledge of food chains, species interactions, and nutrient flows, minimizing crop losses and maximizing yields; meta-industrial engineers are creating “zero-emission” industrial parks and their constituent tenants as an industrial ecosystem in which they feed on each other's nontoxic and useful wastes, just as farmers would intercrop, optimize yields, and nourish predators; and architects and builders are creating structures that process their own wastewater, capture light, create energy, and provide habitat for wildlife, all the while improving worker productivity, morale, and health. This revolution in thinking will cause high-temperature, centralized power plants to be replaced by smaller-scale, renewable power generation. In chemistry, it means an end to the witches' brew of compounds and nasty surprises invented in this century: DDT, PCB, CFCs, thalidomide, Dieldrin, xeno-estrogens, and so on. The 70,000 chemicals manufactured every year have ended up everywhere, as biophysicist Dana Meadows puts it, from our “stratosphere to our sperm”, to accomplish functions that can be far more efficient with biodegradable compounds and naturally occurring toxins that imitate nature's assembly techniques. In transportation, ultralight hybrid-electric vehicles will replace carbon dioxide-spewing gas-guzzlers. There will be hydrogen fuel cells to power our cars (theoretically, 5,000 miles between fillups), with onboard 20-kw generating capacity as the utility of the future. There will be printable and reprintable paper that reduces printing-fiber use and forest impact by 90%. In materials, high-strength synthetics made of biodegradable or reusable engineered compounds will become common. Weeds will be grown to make pharmaceuticals and corn stalks to make biopolymeric plastics that are both reusable and compostable; bioremediation will be intensively used for cleanup; luxurious carpets will be made from landfill scrap. Not all those technologies will succeed, and some might have side effects that are unwanted and unexpected. Nevertheless, they and thousands more are lining up like salmon to swim upstream toward a world of radical resource productivity. Service and Flow Beginning in the middle 1980s, Swiss economist Walter Stahel and German chemist Michael Braungart began to imagine a new industrial model that is now slowly taking shape. Rather than an industrial model wherein goods are sold, they imagined a service economy. This was not the often-discussed and conventional definition wherein service workers outnumber manufacturing workers. Their idea of a service economy is based on ecological models. In it, the concept of value undergoes a radical shift. In an industrial society, value is the selling price of a given product. In a service economy, value is measured by the flow of services

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Page 476 received by the end user over some period. The industrial model is static and transactional. The service model is dynamic and relational. Stahel's work focused on product life and durability. As a strategy to reduce the demand for resources and energy dramatically, Stahel proposed that manufacturers think of themselves not as sellers of products, but as providers of longlasting, upgradable durables that provide customers with services. The product would remain the property of the manufacturer primarily because the focus would shift to the service needed by the user. In practical terms, instead of purchasing a washing machine, you buy the service of clean clothes. Just as in the use of a copying machine wherein you are charged for the number of copies rather than the machine, in the service economy products are valued by the quality and extent of the services they provide. The washing machine remains the property of the manufacturer. This would apply to computers, cars, and hundreds of other durable products that we now buy, use up, and ultimately throw away. The Carrier Corporation, a division of United Technologies, is now selling warmth and “coolth” to companies while retaining ownership of the equipment. The Interface Corporation is leasing carpets. Agfa Gaevert pioneered the leasing of copiers. Stahel's focus was on selling results rather than equipment, performance and satisfaction rather than motors, fans, plastics, or condensers. In a service economy, the products are returned to the manufacturer, broken down, and then used to make new products. This concept of “cradle-to-cradle” was invented and first articulated by Stahel, who also named it “extended product responsibility” (EPR). EPR is now becoming a mandated or voluntary standard in European industry. The concept of an economy consisting of a flow of services rather than an amount of material products meshes extraordinarily well with biological concepts of ecosystem flows on which industry depends. Braungart's model of a service economy focused not on product life, but on material cycles. Even if a product lasts longer, but the materials used cannot be reincorporated into new manufacturing or biological cycles, then society is still creating cumulative waste with its attendant problems of toxicity, worker ill health, and environmental damage. Braungart, working with architect William McDonough, proposed the intelligent product system wherein products that were not compostable would be designed so that they could be completely reincorporated into technical nutrient cycles of industry. In other words, all products would become the raw material of future products. Another way to look at Braungart and McDonough's concept is to imagine an industrial system with no landfills. If you knew that nothing that came into your factory could be thrown away and that everything you made would come back, how would you design the materials and products? That is precisely how Earth works. Braungart and McDonough's system is essentially an industrial system that mimics the nutrient cycles that maintain life on Earth. Investing in Natural Capital Businesspeople are familiar with the traditional definition of capital as accumulated wealth in the form of investments, factories, and equipment. But natural

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Page 477 capital consists of the resources we use, both nonrenewable (such as oil, coal, and metal ore) and renewable (such as forests, fisheries, and grasslands). Although we usually think of renewable resources in terms of desired materials, such as wood or fish, their most important value is the services that they provide. Living systems feed us, protect us, heal us, clean the nest, and let us breathe. These services are related to but distinct from resources. They are not pulpwood, but forest cover; not food, but topsoil. They are the “income” derived from a healthy environment: clean air and water, climate stabilization, rainfall, ocean productivity, fertile soil, watersheds, and the less-appreciated functions of the environment, such as processing of waste, both natural and industrial. A capitalistic system needs all three types of capital: financial capital in the form of money, investments, and monetary instruments; manufactured capital in the form of infrastructure, machines, tools, and factories; and natural capital in the form of resources, living systems, and ecosystem services. The industrial system is a transformation of natural capital in the form of energy, metals, trees, soil, water, and so on, into human-made capital: goods, highways, cities, transport systems, houses, food, and services, such as health and education. It was an ingenious system and continues to be especially now as computer and telecommunication technologies revolutionize our lives. A system based on natural capital recognizes the critical dependence between the production and use of human-made capital and the maintenance and supply of natural capital. Costanza and others, writing in Nature (15 May 1997), estimated that the flow of ecosystem services flowing directly into society from our stock of natural capital is worth $17–54 trillion a year. World GDP in 1998 is about $39 trillion. The approximate valuation provides some measure of the value of natural capital to the economy. Former World Bank economist Herman Daly believes that humankind is facing a historic juncture in which, for the first time, the limit to increased prosperity is not human-made capital, but natural capital. For example, the limits to increased harvests of fish are not boats, but productive fisheries; the limits to irrigation are not pumps or electricity, but viable aquifers; and the limits to pulp and lumber production in many areas are not sawmills, but forests. Historically, economic development has faced a number of limiting factors, including labor, energy resources, and financial capital. A limiting factor is one whose lack prevents a system from surviving or growing. If marooned in a snowstorm, you need water, food, and warmth to survive. The scarcest one is the limiting factor. Having more of one factor cannot compensate for the lack of another. Drinking more water will not make up for lack of clothing if you are freezing, and having more clothing will not feed you. Limiting factors cannot be substituted for one another. They are complements; as with the mountaineer marooned in a snowstorm, the scarcest complement is what must be increased if the enterprise is to continue. The economy has faced limiting factors to economic development in the past—labor, energy resources, and financial capital. Industrial countries were able to continue to develop economically by increasing the limiting factor. It wasn't always pretty. Labor shortages were “satisfied” shamefully by slavery, as well as by

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Page 478 immigration and high birth rates. Energy came from the discovery and extraction of coal, oil, and gas. Labor-saving machinery was supplied by the industrial revolution. Tinkerers and inventors created steam engines, spinning jennies, cotton gins, and telegraphy. Financial capital became universally accessible through central banks, credit, stock exchanges, and currency-exchange mechanisms. When new limiting factors intervene, everything changes, nothing works as before, and a restructuring of the economy occurs. Daly (1994) believes that the current relationship between natural and humanmade capital gives rise to the following propositions or principles: 1. If factors are complements, then the scarcest one will be the limiting factor. The question is, Which type of capital is scarcest, human-made or natural? Are cars or television sets scarcest? Or potable water, salmon runs, and old-growth forests? Business is already seeking to substitute human-made capital or services for natural capital or ecosystem services. Pure bottled water is the one of the best-selling beverages in the United States (2.95 billion gallons a year) (Hays 1998). There are even “oyu” (water) bars in Tokyo. But bottled water is not a substitute for freshwater flows. The act of manufacturing, storing, shipping, and selling bottled water uses natural capital rather than replacing it, as gasoline, trucks, steel, plastics, highways, ships, stores, lights, paper, and boxes are used to deliver what was once a free good. The more “pure water” is produced, the greater the loss of natural capital. Conversely, the more polluted water becomes, the greater demand for bottled water—a positive-feedback loop. 2. This proposition, according to Daly, gives rise to the thesis that the world is moving from an era in which human-made capital is the limiting factor into an era in which remaining natural capital is the limiting factor. There is no threshold point to verify the thesis. Although the complexity of living systems defies simplistic quantification, the Nature paper totaling the value of ecosystem services provides a perspective from which to understand the dynamics better. Knowing that freshwater tables are falling in China, Africa, India, and North America, that forest cover continues to shrink by about 17 million hectares per year, that topsoil losses are about 26 billion tons a year, and that thousands of lakes worldwide are biologically dead can become numbing. Seeing the problem in the context of the whole system makes clear the need to move toward upstream solutions—resource productivity, biomimicry, service-and-flow, and restoring natural capital. As natural capital becomes a limiting factor, we need to remind ourselves what income is. In 1946, J.R. Hicks defined income as the greatest amount of goods that a community can consume at the beginning of an extended period and still be able to produce the same or greater amount at the end of the period. That requires that the capital stock used to produce income—whether a soybean farm, semiconductor factory, or truck fleet—remain in place and complete. In the past, this definition of income was applied only to human-made capital because natural capital was so abundant. Obviously, it should also apply to natural capital. That means that to retain, let alone increase, income, we have to maintain stocks of both human-made and natural capital.

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Page 479 3. Economic logic requires that we maximize the productivity of the limiting factor in the short run and invest in increasing its supply in the long run. This is common sense. If you have a distribution system and the roads are falling apart but you have abundant supplies of gasoline and trucks, you fix the roads. The only way to maximize natural-capital productivity is to change consumption and production patterns. Inasmuch as 80% of the world receives only 20% of the resource flow, it is likely that the majority will require more consumption, not less. The industrialized world will need to radically improve resource productivity, both at home and abroad, so that there does not have to be a reduction in quality of life. 4. When the limiting factor changes, behavior that used to be economic becomes uneconomic. Economic logic remains the same, but the pattern of scarcity in the world changes; the result is that behavior must change if it is to remain economic. That last proposition does more than any other to explain the despair and excitement on both sides of the issue. On the environmental side, scientists are frustrated that business does not understand the basic dynamic involved in the degradation of biological systems. For business, it seems unthinkable, if not ludicrous, that you cannot extrapolate the future from the past and continue with present methods. In this intensely uncomfortable phase, people recognize, one by one, that economic activities that were once successful can no longer lead to a prosperous future. In itself, that recognition has caused polarization, frustration, anger, and name-calling. At the same time, it is already fueling the next industrial revolution. The patterns of change that underlie natural capitalism appear to be the only known way to improve ecological health, create net economic growth, and provide meaningful employment in a world where one-third of the workforce—1 billion people and increasing—is marginalized, with no decent work or no work at all. It has been said that people are the only species without full employment. And we are also striving earnestly to make this ever more so, jettisoning people to create one more wave of short-term profits. The zeal to eliminate people is rooted in an obsolete industrialism designed for the bygone world of scarce people, general poverty, sparse technology, and abundant nature. The success of industrialism and capitalism has largely reversed those conditions. Today, continuing to deplete natural capital to make fewer people more productive and more people unemployed exhausts both the environment and society. Its logic is backward—using more of what we have less of (natural capital) to use less of what we have more of (people). The result is massive waste on three fronts: overstressed resources and hence deteriorating living systems, underworked or overworked (either way, harried and disrespected) people, and the expenditure of vast sums expended to try to cope with the costs of both. Civilization in the 21st century is imperiled by three main problems: civil societies' dissolution into lawlessness and despair, the deteriorating capacity of the natural environment to support life, and the dwindling of the public purse needed to address these problems and reduce human suffering. All three megaproblems share a cause: waste. Its systematic correction is a common solution, equally unacknowledged yet increasingly obvious.

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Page 480 Natural capitalism is the key that unlocks the reversal of that waste. A manifold reduction in resource use can increase the overall level and quality of employment while dramatically reducing harm to the environment. The economy can grow, use less material, free resources for those who need them, and start to restore living systems. We should be laying off not productive people, but rather the wasted barrels of oil, gallons of water, pounds of metals, and acres of forest, thus regenerating natural capital, hiring more people to do so, and cutting total cost. Gradually and fairly rebalancing factor inputs to substitute increasingly abundant labor for increasingly scarce nature will help to heal society and Earth. References. Costanza R, Folke C. 1997. Valuing ecosystem services with efficiency, fairness, and sustainability as goals. In: Daily GC (ed). Nature's services: societal dependence on natural ecosystems. Washington DC: Island Pr. Daly HE. 1994 Operationalizing sustainable development by investing in natural capital. In: Jansson A and others (eds). Washington DC: Island Pr. Hawkens P, Lovins A, Lovins H. 1999. Natural capitalism: creating the next industrial revolution. New York: Little Brown. Hays CL. 1998. Now, liquid gold comes in bottles. New York Times: Jan 20. Hillel D. 1991. Out of the earth, civilization and the life of the soil. New York: The Free Pr. San Francisco Chronicle. 1998. Accidental fishing called huge threat. May 21. UNEP [United Nations Environment Programme]. 1996. Poverty and the environment: reconciling short-term needs and long-term sustainable goals. Nairobi: Mar 1 press release. Yoon. 1998. A “dead zone” grows in the Gulf of Mexico. New York Times: Jan 20, p F1.