Crunch may put price tag on environment

By Alister Doyle, Environment Correspondent

BARCELONA, Spain (Reuters) - The worst financial crisis since the 1930s may be a chance to put price tags on nature in a radical economic rethink to protect everything from coral reefs to rainforests, environmental experts say.

Farmers know the value of land from the amount of crops they can produce but large parts of the natural world -- such as wetlands that purify water, oceans that produce fish or trees that soak up greenhouse gases -- are usually viewed as "free."

"Most of our valuable assets are not on the books," said Robert Costanza, professor of ecological economics at the University of Vermont. "We need to reinvent economics. The financial crisis is an opportunity."

Advocates of "eco-nomics" say that valuing "natural capital" could help protect nature from rising human populations, pollution and climate change that do not figure in conventional measures of wealth such as gross domestic product (GDP) or gross national product (GNP).

"I believe the 21st century will be dominated by the concept of natural capital, just as the 20th was dominated by financial capital," Achim Steiner, head of the U.N. Environment Program, told Reuters at the International Union for Conservation of Nature congress in Barcelona earlier this month.

"We are reaching a point...at which the very system that supports us is threatened," he said.

Conventional economists often object it is impossible to value an Andean valley or the Caribbean. "We have struggled with nature-based services: how does a market begin to value them?" Steiner said.

Costanza helped get international debate underway a decade ago with a widely quoted estimate that the value of natural services was $33 trillion a year -- almost twice world gross domestic product at the time.

INFINITY

Some economists dismissed Costanza's $33 trillion as an overestimate. Others pointed out that no one would be alive without nature, so its value to humans is infinite.

"There is little that can be usefully be done with a serious underestimate of infinity," economist Michael Toman said at the time.

But with the seizure of world money-markets bringing -- for some, at least -- an opportunity to rethink modern capitalism's basic tenet that greed and self-interest can counterbalance each other, more environmental experts hope to revisit nature's role in producing food, water, fuels, fibers or building materials.

"The financial crisis is just another nail in the coffin" of a system that seeks economic growth while ignoring wider human wellbeing, said Johan Rockstrom, executive director of the Stockholm Environment Institute.

Under standard economics, nations can boost their GDP -- briefly -- by chopping down all their forests and selling the timber, or by dynamiting coral reefs to catch all the fish. A rethink would stress the value of keeping nature intact.

Rockstrom said bank bailouts totaling hundreds of billions of dollars might "change the mindset of the public...if we are willing to save investment banks, why not spend a similar amount on saving the planet?" he said.