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What are Rainforests Worth?

What are Rainforests Worth?

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and why it makes economic sense to keep them standing
March 2008

According to the Millennium Ecosystem Assessment, ecosystem services are the “benefits that people obtain from ecosystems”. Forests are like giant utilities providing ecosystem services to the world that we all benefit from but we don’t pay for. Apart from carbon storage and sequestration, they include water storage, rainfall generation, climate buffering, biodiversity, soil stabilisation and more.

Forests are cleared due in part to poverty, but increasingly due to the demands for land to produce commodities like beef, soy and palm oil. Globally, deforestation results in the annual loss of rainforest biodiversity and ecosystem services worth as much as the London stock exchange. Is this loss greater than the value of the alternative uses of the land?

This GCP report assesses the latest information on the value of rainforest biodiversity and ecosystem services and shows that in most cases rainforests are worth more alive than dead.
and why it makes economic sense to keep them standing
March 2008

According to the Millennium Ecosystem Assessment, ecosystem services are the “benefits that people obtain from ecosystems”. Forests are like giant utilities providing ecosystem services to the world that we all benefit from but we don’t pay for. Apart from carbon storage and sequestration, they include water storage, rainfall generation, climate buffering, biodiversity, soil stabilisation and more.

Forests are cleared due in part to poverty, but increasingly due to the demands for land to produce commodities like beef, soy and palm oil. Globally, deforestation results in the annual loss of rainforest biodiversity and ecosystem services worth as much as the London stock exchange. Is this loss greater than the value of the alternative uses of the land?

This GCP report assesses the latest information on the value of rainforest biodiversity and ecosystem services and shows that in most cases rainforests are worth more alive than dead.

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Published by: Global Canopy Programme on Aug 25, 2008
Copyright:Attribution Non-commercial

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What are Rainforests Worth?
 And why it makes economic sense to keep them standing 
 Acknowledgements
This document was originally prepared by the Global Canopy Programme (GCP) for the Prince’s Rainforests Project (PRP) with generous financial support from the PRPand The Rufford Maurice Laing Foundation. We thank Paul Holland, Anna Creed,Simon Rietbergen, Andrew Mitchell, and Mohammed Shah Othman for helpfuldiscussions and guidance. We thank Djuna Ivereigh (indonesiawild.com) for kindlydonating the cover photograph. We would also like to thank all the scientists uponwhose work we have been able to draw in producing this report and who provideinput to the work of the Global Canopy Programme, including Antonio Nobre,Yadvinder Malhi, John Grace and Jose Marengo.This report was conducted as a literature review but benefited greatly from long-standing collaborations with academics and friends drawn from the GCP Alliance.Special thanks are extended to Dr Antonio Donato Nobre of Instituto Nacional dePesquisas de Amazonas (INPA), GCP Chief Science Advisor.
© Global Canopy Programme 2008www.globalcanopy.org 
 
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 Executive Summary
Rainforests harbour more than half of the terrestrial species on Earth. Their destruction represents a huge loss to the planet and its people, which cannot beadequately summarised in economic terms. However, in order to prevent further deforestation, rainforests have to be shown to be worth more alive than dead.The myriad animals, plants, fungi and bacteria in the rainforest web of life contributeto ecosystem processes such as photosynthesis, carbon storage, and nutrient cycling.In turn, humanity depends on the resulting ecosystem goods and services includingfood, medicines, fibres, watershed protection, disease control, fuelwood and culturaland spiritual identity. We depend on forests to such an extent that deforestation was afactor in several previous societal collapses, including the demise of the Mayacivilisation.One reason for the continued loss of tropical rainforests is the failure of markets, andsociety in general, to adequately value rainforest ecosystem services in economic or financial terms. Going beyond carbon, this report investigates the economic value of rainforests, distinguishing between direct and indirect use values. Direct use valuesrefer to ecosystem goods and services that are used directly by humans, such as foodand fuels. Indirect use values are typically enjoyed by people residing outsiderainforest ecosystems, such as carbon storage, rainfall generation and watershed protection.Land users usually have an incentive to preserve ecosystem services that providedirect benefits to themselves. However, they have little or no incentive to preserveservices that provide indirect benefits to society even though they can be substantial.As long as local land users receive no compensation for providing indirect ecosystemservices to society, they are unlikely to conserve rainforests.The economic rationale for compensating land users for providing indirect rainforestservices is illustrated by considering the public costs associated with destroyingrainforests and the public benefits gained by conserving them.
 Benefits of rainforest conservation
Substantial direct benefits from goods such as food and fuel accrue to people living inand around rainforests. While many goods and services do not enter markets butrepresent a ‘natural subsidy’ to livelihoods and food security, some generate largerevenues when marketed. For instance, the international trade in non-timber forest products such as Brazil nuts and rattan is worth $7.5–9 billion per year, with another estimated $108 billion in processed medicines and medicinal plants.Tropical rainforests generate ecosystem services that benefit the global community.For example, they are thought to act as a carbon sink. Although there is much debateas to the extent of the sink, they could be providing a ‘free’ carbon-offsetting serviceworth up to $43 billion per year.Water is recycled by rainforests back into the atmosphere, often falling as rain indistant locations. For example, moisture recycled by the Amazon falls as rain and

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