– CHECK AGAINST DELIVERY –
Keynote speech by CEO, James Schultz at the 2024 ALCA Private Land Conservation Conference, Darling Harbour, Sydney
“Fake solution to a fake problem”
This is the view being advanced by 270 NGOs and civil society organisations going into COP16 in Bolivia.
But what are they referring to? – They are talking about using environmental markets – payments for ecosystem services – to advance nature repair.
“Fake solution to a fake problem.” This is the narrative that is increasingly taking hold in the public consciousness
So as we sit here and discuss all the amazing innovative ideas for financing nature repair and building a nature-positive economy, outside this room, the support we need to bring these ideas to fruition is in real danger of unravelling.
There are several reasons for this:
The first – many markets have fallen well short of expectations and have delivered perverse outcomes.
Second – there have been genuine failures and bad actors.
And the third – We are facing an existential climate crisis: we have bound our markets to repair and restore nature to the very forces that are eroding them, thus creating an unending legitimacy challenge.
This does not provide a strong basis to build public support.
But I think there is a deeper issue we face – while we have all been busy working on projects and designing policy, we have left behind the task of explaining WHY we need to do this in the first place.
Perhaps we assumed we had already made the case. Perhaps we assumed it was obvious. Whatever the reason, I am increasingly convinced that most people have little understanding of the reason we have arrived at this point of trying to utilise markets to value nature.
We have not explained the concept of the contract we are in with the environment, which has been supplying its ecosystem services at ever increasing rates to us since time immemorial. We have not explained the concept of finding a way to make payment for these ecosystem services, so that the environment can repair and recover and flourish despite our use of it. We have not spelled out the many decades of failures of trying to solve this problem with legislation and public finance.
We have not made crystal clear the enormous funding gap we face to finance the task of nature repair – that is, the public funds we can supply and the enormous cost to achieve this outcome effectively.
If you’ll stick with me for a couple of minutes, I want to refresh all of our memories on some of the numbers.
Let’s look at ourselves first – Australia – as an example, we have taken our place among both the very highest levels of land clearing in the world and the highest extinction rates in the world. Australia has lost 50 per cent of its forests since European colonization. It is the only developed nation to sit among WWF’s 24 identified global deforestation hotspots, and on a number of assessments we have the highest mammal extinction rate in the world. Internationally, WWF’s 2022 Living Planet Index – which tracks populations of mammals, birds, fish, reptiles and amphibians – reveals an average 69% decrease in monitored wildlife populations since 1970.
This is the extent to which we have exploited our country’s ecosystem services. And the concurrent point is that, demonstrably, our traditional approaches to conserving nature have not worked.
Let’s start by establishing the economic cost of failing to conserve nature.
In 2022, a report by the Australian Conservation Foundation found that 49% of Australia’s GDP, or $896 billion, has a moderate to very high direct dependence on nature. It found Western Australia is the state at greatest risk from nature destruction, with 67% of its gross economic value having a moderate to very high direct dependence on nature, followed by the Northern Territory and Queensland.
A 2020 report by WWF found that Australia is number five on a list of the countries whose economies would be worst affected by the loss of nature over the next 30 years – after the US, Japan, the UK and India – and we would have $US20 billion wiped off our economy every year by 2050 if the world carries on with “business as usual”.
Australia is projected to lose at more than twice the global average. And it’s the loss of coastal protection provided by nature which accounts for 98% ($US19.5 billion) of the projected decline in Australia’s GDP.
Zooming out to the global picture, in 2020, according to the World Economic Forum’s 2020 New Nature Economy Report, more than half the world’s GDP – that is, $US44 trillion – was dependent on nature and the services it provides. A 2023 report by PWC – just three years later – found this figure had increased to 55% – equivalent to an estimated $US58 trillion – moderately or highly dependent on nature.
The PWC report found that the health of natural ecosystems and biodiversity have far reaching implications, with more than half (50.6%) of the market value of listed companies on 19 major stock exchanges exposed to material nature risk.
Without a change in action, the World Bank estimated that by 2030, losing wild pollinators, marine fisheries, and timber from tropical forests – only a fraction of ecosystem services – could cost 2.3% of global GDP – or $US2.7 trillion – annually.
The 2021 Final Report of the Independent Review on the Economics of Biodiversity led by Professor Sir Partha Dasgupta, commissioned by the UK Government, found that our demands on nature now exceed nature’s capacity to supply them, putting biodiversity under huge pressure, and future generations at “extreme risk”.
It’s hard not to see the take-away point here – the cost of failing to protect nature is astronomical and will only increase.
So let’s look at the funding that would be required if we are to be in a position where we can fund the restoration of nature – of our environment.
Research published in Nature Sustainability journal in 2023 found that, over three plausible terrestrial area-based conservation scenarios, the gross costs of conservation basic income (CBI) required to achieve internationally agreed targets to halt biodiversity loss, restore degraded land and mitigate climate change, vary from $US351 billion to $US6.73 trillion annually. CBI is a poverty alleviation through cash transfer concept of providing alternative financial opportunities for Indigenous Peoples and Local Communities (IPLCs) in order to reduce dependence on – for example – extractive economies such as cash-crop production, illegal logging, poaching and waged labour in extractive industries.
More directly, in 2023, a report by a coalition of 19 environmental organisations found that restoring biodiversity-rich land across 10% of Europe’s territory could cost more than $167 billion.
In 2022, the EU Commission estimated the cost of restoring a broad range of EU peatlands, marshlands, forests, heathland and scrub, grasslands, rivers, lakes, alluvial habitats and coastal wetlands to be 154 billion EUR.
In 2021, researchers from the University of Queensland described and costed a pathway to achieve 30% native vegetation coverage of almost all (99.8%) Australia’s degraded terrestrial ecosystems on marginal farming land. They estimated that this restoration would cost approximately AU$2 billion annually (0.1% of GDP) for 30 years, or a net present value of $41 billion for the life of the project.
In 2019, The Paulson Institute, Nature Conservancy and Cornell Atkinson Center for Sustainability estimated financial flows into global biodiversity conservation in 2019 as between $US124 and $US143 billion. This represented a near-tripling in funding since 2012. But, in context, spending on agricultural, forestry, and fisheries subsidies that degrade nature was at least two to four times greater. And that did not include subsidies for fossil fuels. At the same time, it found we needed to be spending an additional $598-824 billion annually to reverse the biodiversity crisis by 2030.
The point here is that all these approaches arrive at a figure that is BIG – the message being that reversing biodiversity loss is an extremely expensive exercise.
To further make the point, we can drill down into more specific costs to save particular species or ecosystems.
In 2019, research published by a number of esteemed scientist in Conservation Letters estimated the cost of effectively recovering Australia’s listed threatened species to be close to AU$1.69b/year. By comparison, at that time in Australia: Australians spent more than double this amount on pet cat care in 2019, and the government forewent AU$980m in tax revenue through fuel tax credits to coal mining companies in 2018.
A 2016 report by the Water Science Taskforce, appointed by the Queensland Government, projected it would cost $8.2 billion to save The Great Barrier Reef.
Saving the world around us – the world we rely on for life and business – is not a low budget enterprise. But how well do we recognise this? And if we do, how close are we coming to putting our money where our mouth is – to taking it seriously and spending the money that is really required?
Let’s look at where our governments spend their money.
For the 2022-23 financial year, Australia’s federal budget allocated around – wait for it – $100 million for protecting Australia’s biodiversity – remember this had been costed at AU$1.69 billion per year in 2019! That same year, the federal government provided $155 million for sport.
A barrage of numbers can be mind numbing. So let’s not lose sight of the fact that one billion is one thousand million.
In stark contrast, the agriculture sector in Australia contributes approximately $155 billion annually to our economy – 12% of GDP. The comparative spend is frighteningly low, my point being that if we are trying to make an impact, this can only ever do the smallest amount of tinkering at the edges.
In 2023-24, this became an allocation to the Nature Positive Plan of $214.1 million over 4 years – or $53.5 million per annum. In 2024-25, it added $35.6 million over two years from 2024-25 to continue developing the processes and systems needed to administer the Nature Repair Market scheme – that’s under $18 million a year. There was also $307 million for improvements in our laws and institutions, almost 45% of which is to “to strengthen and streamline environmental approval decisions on priority projects, including renewables and critical minerals projects”.
Let’s look pre-covid. In the 2019-20 federal budget, the Australian Conservation Foundation’s analysis found that it represented a 39.7% per cent cut to the environment budget since 2013. It included $100 million over forward estimates for an environmental restoration fund to provide grants for on-ground restoration and protection projects, and $28.3 million for community-led environment projects.
If I sound frustrated or incredulous, let me compare this to what the government is and has been spending its money on in that same budget.
In 2019-20, the government allocated $32.2 billion to defence, $36.4 billion to education, $81.8 billion to health and $180.1 billion to social security, with broadly $128 million allocated to environmental restoration. The budget for agriculture, forestry and fishing was over $2.58 billion and for mining, manufacturing and construction, over $2.8 billion.
In the 2024-25 budget, government investment in the mining sector was $7 billion, plus a further $1.7 billion for ‘green’ metals and fuels.
Indeed, a report released by 30 By 30 in May found that:
– Australian federal government biodiversity annual expenditure has averaged A$475m over the last decade, with a recent increase in 2023/4
– Federal government spending over the last decade is only about 30% of OECD levels, less than 8% of the estimated annual need, and less than 3% of the risks posed to the economy
– The federal government is spending 16 times more on subsidies for oil and gas companies than it is on protecting biodiversity
– And it found that, while information on state and territory spending on biodiversity is outdated, available data shows it is still far less than required benchmarks
You might also be thinking that Philanthropy might be helping the environment to a significant degree. There is some good and some bad news here.
Firstly, research released by Philanthropy Australia in March this year showed that Australian donations and bequests to charities working on climate and environment grew from $148 million in 2018 to $270 million in 2021 – an increase of 82%. So that is extremely heartening and encouraging.
But the second point is that philanthropy in Australia is nothing like the size of industry it is in the United States, so the amount we are talking about is still falling far far short of what is required – particularly if you were to remove the amount apportioned solely to climate change matters.
So, what is all this financial and budgetary information telling us?
It is very clearly illustrating that there is a very very significant funding gap when it comes to what is needed and what is available to secure the future of our environment and its plants and animals.
This is important because government spending also influences public perception about the gravity of certain issues.
This is not just a one way street like the messages coming from the community about the cost of living. It’s low budgetary spend can mask the seriousness of the problem. In a manner, it is like the perspective presented on matters of equality – “you can’t be what you can’t see”.
If government is making environmental repair and the extinction crisis low priority in their budgets, it is conveying that low level of urgency to the general public – keeping it as a fringe of left issue. Except that it is not. It is an issue that affects absolutely everybody.
In fact, a global report on Government environmental protection expenditure and national ESG performance, published in Science Direct in June, essentially bore this out. It found that optimising government environmental protection spending has a significant and positive effect on national ESG performance, and that the allocation of funds towards environmental protection not only bolsters the ecological and societal performance of a nation, but also elevates its governance standards.
And as I’ve said, Australia is not alone in this glaring discrepancy – this is a similar picture around the world. For example in 2024 the European Commission reported that expenditure on ‘environmental protection’ ranged between 0.2 % of GDP and 1.4 % of GDP in 2022. In 2022, the Netherlands devoted the highest ratio of GDP to ‘environmental protection’ (1.4 % of GDP), followed by Belgium (1.2 % of GDP), France and Malta (1.1 % of GDP each).
So the picture is clear that the funding gap between what is needed to secure our biodiversity and what governments and philanthropy can provide, is very significant indeed.
But I acknowledge that to make my point, I have pitted the spend on environmental protection against that on other sectors, such as Agriculture.
The terms of trade for agricultural enterprises continue to decline year after year. Money back through the farm gate has gone down. We can see this if we look at specific agricultural sectors – dairy, cane, wool, livestock, grain, cotton. An ABARES report this year on Australia’s farm productivity slowdown stated that Australian broadacre farm productivity has slowed to an average annual growth rate of 0.72% from 2000 to 2023, compared to a much higher rate of 2.18% throughout the 1980s and 1990s.
Producers are finding it harder and harder to produce, and there is immense pressure to reduce costs – just look at the current supermarkets inquiry.
But at the same time, agricultural land managers are expected to make a contribution to conservation on their land, which makes up 60 per cent of the land outside legally protected areas (23 per cent) such as national parks and world heritage areas – and is where most of our wild species, and therefore vulnerable and endangered species, live.
Yet, there is no incentive for them to make their own investment to protect these environmental assets. We have to remember, it costs these people to make conservation investments on their land. We’ve seen the evidence that times are hard and getting harder. People working the land have to weigh conservation investments up against investing in clearing land for wood, pasture and cropping. And it’s not difficult to understand where the decision most often falls.
But what would it look like if the markets we are talking about really delivered?
In 2022, the World Economic Forum found that, if we internationally stall nature loss and make investments with nature positive outcomes, it could create new business opportunities to the scale of $10 trillion annually and create 395 million new jobs by 2030.
And in 2019, the OECD estimated that achieving the Bonn Challenge target of restoring 46% of the world’s degraded forests could generate $US7-30 (EUR 6-25) for every euro spent.
More directly, in 2023, a report by a coalition of 19 environmental organisations found that the $167 billion to restore 10% of Europe’s territory, I mentioned earlier, would generate benefits valued at around $2 trillion, resulting in a cost-benefit ratio of 1:12.
The 154 billion EUR to EU Commission cited to restore grassland and wetlands etc would deliver monetary benefits of 1,860 billion EUR.
And that brings me to a set of questions.
If we stick with the status quo – of relying on government funding and legislating protected areas – of how it has always been – where will it get us? Where did this get us? Then what do we think will happen from here on in?
Whatever way we come at it – whatever data source you choose, the conclusion must be the same – we must engage markets to solve these problems.
So what are we going to do about it?
If we continue on the same track, we are in real danger of building more “amazing tools” that continue to fail to scale and continue to solve little.
Why?
Because the public mandate to do so will not be there.
Because we need to advocate for the tools we need much more widely than we have.
Because we need to show – we need to spell out – why this is important: explain why we are proposing these tools – spell out exactly why the alternatives haven’t worked.
And we need to keep doing this – and keep doing this – and be prepared to fight for the space we need.
We need also to be much more transparent in the way we communicate – we need to acknowledge we don’t have all the answers, that there will be uncertainty in the outcomes, that we understand this and take steps to mitigate for it
The bottom line here – in more ways than one – is that there simply is no other choice. Because no other solution – save those we have been using up until now – has presented itself.
In conclusion, what I’m saying is that all you of you here today – and your colleagues – have to go out and tell the world why we are doing this and why it matters.
