Put Africa’s natural resources in balance sheet

Economic and social costs and values are still excluded from the system of national accounts

The International Monetary Fund recently estimated the monetary value of ecosystem services — especially carbon sequestration — provided by one whale to be about $2  million over its lifetime. 

This underlines the significance of ecosystem restoration, biodiversity, wildlife conservation and ecotourism in Africa and elsewhere. These elements are crucial in the continent’s efforts to adapt to and mitigate climate change. They are also integrally connected to the problems of food and water insecurity and poverty, the solutions to which sometimes threaten biodiversity preservation efforts.

Mainstream economics’ growth models were, until the late 1980s with the adoption of the sustainable use paradigm, dominated by efforts to quantify the economic value of factors of production — entrepreneurship, labour and capital, without accounting for the negative externalities from production that were offloaded on the natural environment. 

Natural ecosystems were seen as resources to be exploited for production, the environmental costs of which were externalised through the system of national accounts (SNA), which still counts GDP today absent of ecological and social costs.

While efforts have been made by economists and biologists to quantify environmental value and subsequently any damage to ecosystems, the SNA still treats the environment as a secondary priority, not integral to how economies are built and sustained. 

For example, the valuation of ecosystems often occurs in the aftermath of an oil spill or major industrial environmental disaster. Even then, damage to the natural environment is often considered merely part of the cost of doing business.

This thinking remains pervasive, despite the increased attention paid to nature and the effect of climate change entering the corporate zeitgeist. Consider, for example, the effect on the environment of soy farming or cattle ranching in Brazil and its contribution to the destruction of the Amazon rainforest, or how the destruction of mangrove forests contributes to the reduction in water quality and increased flood risks.

But if a blue whale can be reliably valued at about $2  million in terms of carbon absorbed over its lifetime, and the estimated global population or “stock” of blue whales at the time was almost $1  trillion, then there is an argument for resource economics and pursuing sustainability and biodiversity preservation considering the climate crisis. 

If we are to meet net zero carbon emissions by 2050, the Paris Agreement and sustainable development goals, businesses and countries need to pay significant attention to the economic value and risks connected to nature, in addition to the implementation and achievement of the goals of the Global Biodiversity Framework. Or we risk having them as some la-la land dream sequence.

One may ask what whales and biodiversity have to do with Africa. All these things are easy for the Global North to worry about because their basic needs are met. After all, Africa has serious issues limiting development, from crippling national debt to food, water and energy insecurity and loss and damage caused by climate change. 

Africa is disproportionately affected by climate change. The continent experiences severe droughts, floods and other extreme weather events, exacerbating socio-economic problems.

Rising temperatures and unpredictable rainfall threaten agricultural productivity, leading to food insecurity and displacement of people. Climate-driven migration may also fuel conflict. Pollution caused by commercial, agricultural and industrial activities further limits accessibility to clean and safe drinking water, and contaminated water sources damage vulnerable ecosystems that individuals depend on for their livelihoods. 

This further increases the natural environment’s fragility and reduces countries’ already limited fiscal capacity to fund climate adaptation strategies.

While Africa faces some of the worst effects of climate change and lacks the fiscal capacity to respond, the continent’s rich biodiversity and ecosystems are vital for the global carbon cycle — even as they are degraded by climate change fuelled by human activities. 

The Congo Basin, for instance, is crucial for regulating the global climate, despite being highly vulnerable to deforestation.

Africa has forests and other marine and terrestrial ecosystems that are essential to realising net zero emissions. These are assets, the value of which needs to be credibly quantified to encourage their conservation, even as other problems remain.

In addition to the Congo Basin being one of the “lungs of the Earth”, the continent has some of the world’s most effective ocean carbon capture ecosystems. 

The continent is also home to wetland, grassland, dryland and other ecosystems of plants and animals, all critical for carbon storage. These ecosystems have the potential to absorb and store significant amounts of carbon dioxide and support the natural achievement of net zero.

Yet, the spectre of climate change looms large over Africa’s natural carbon sinks, with increased temperatures contributing to desertification, erosion and ocean acidification. Human activities, including overfishing, illegal timber and wildlife trades and usage of certain fertilisers and industrial activities, further reduce the continent’s ability to act as a carbon sink.

Preserving and protecting Africa’s carbon sinks are critical to the global future. But we must also be cautious of the slow and steady creep of potential green colonialism — the ignorant do-gooding in the name of the global good, which preys on power imbalances and results in false solutions that are dangerous distractions.

Mass tree planting of a single species is considered a great solution to natural carbon storage. But, without adequate planning, understanding of the land and consultation with the local residents, these efforts create “green deserts” — a monoculture of trees with limited ecosystem and biodiversity value.

Green deserts are a manifestation of climate colonialism and greenwashing that must be avoided. Instead, promoting ecosystem restoration through integrating and indigenous knowledge systems and practices is critical, because people have coexisted with the land for generations and possess knowledge and insights on maintaining them.

International cooperation and support are critical for successfully quantifying the value of Africa’s biodiversity and achieving net zero while promoting sustainable development on the continent. 

Moreover, people’s inclusion provides an opportunity for job creation through activities such as ecotourism, creating benefits for the local residents and a stake in the ownership of an asset that has been demonstrated to have tangible value.

Given the challenging fiscal conditions faced by many African countries, debt-for-nature swops offer a promising approach to harness the economic value of their biodiversity and ecosystems while achieving fiscal sustainability. 

These arrangements involve debt forgiveness in return for commitments to environmental conservation. 

By alleviating financial pressures and supporting sustainable practices, debt-for-nature swops provide a viable method to combine debt relief with ecological and biodiversity preservation.

Given the economic value of blue whales and other natural assets highlights that the factors of production that are measured and given value can no longer simply be capital, non-environmental assets, labour and entrepreneurship. 

Biodiversity and nature must factor into the equation. 

Africa’s unique challenges and opportunities make it a critical player in the global effort to achieve net zero and build a sustainable future. 

Through global collaboration, avoiding green deserts and green colonialism, while promoting investments in the continent’s natural capital, there is an opportunity for a climate-resilient, prosperous and sustainable Africa.

Vincent Obisie-Orlu is a researcher in the natural resource governance programme at Good Governance Africa.