Valuing our Environment

The economic utilisation of wildlife resources on commercial and communal land contributes about N$400 million per year to Namibia’s GDP, reports James McGregor, an economist contracted by the Directorate of Environmental Affairs to research the contribution of wildlife to the national economy.

Namibia has been cast as a pace-setter for researchers to study environmental, conservation and social issues due to the high value placed on the country’s environment, the high social dependence of rural dwellers on the land and the low population – all of which have great potential for innovative land uses.

An area of increasing importance is that of resource economics. Since the environmental degradation of a country will ultimately undermine its economic development, the Namibian Environmental Economics Unit within the Ministry of Environment and Tourism is aimed at encouraging the sustainability of national development while preventing resource wastage, environmental degradation and poverty. This highlights the vital link between environmental conservation and Namibia’s long-term socioeconomic health.

Established in 1993 to ensure sustainable development by providing policy- and decision-makers with information about the value of national assets such as natural resources, the unit seeks to show that investment in the environment is essential for the country’s economic and social welfare. It also targets development planners and local communities, particularly those residing in communal areas.

Game in Damaraland

Contribution to the national economy

Resources such as water, trees, wildlife, and plants are often seen by communities and decision-makers as “free” resources. Hence many of these resources are either underpriced or not priced at all. Consequently resource economics is aimed at valuing natural resources to create awareness that they need to be conserved, or, even if there is no perceivable “price tag”, that it is to the country’s ultimate benefit to invest in them.

For example, it is estimated that the economic contribution of wildlife enterprises on commercial and communal land, along with their indirect value in supporting the booming tourism sector, indicates that wildlife contributes about N$400 million per year to the national economy. This total excludes ecological functions of wildlife and the values that people place on the continued existence of wildlife and biodiversity. Additional benefits include the provision of wages, earnings and other local revenues gained from resource use – in addition to net economic value.

This adds to the tools available for decision-makers, as it places the emphasis on the direct economic benefits from policy options and local decisions. Price tags can also be put on losses through land degradation. Preliminary estimates of the economic costs of desertification have shown that commercial farmers lose a potential income of about N$140 million per year (at 2000 prices) due to bush encroachment of farmland.

Hoada communal campsite in Damaraland.

This figure has motivated the agricultural sector to conduct research into creating markets with different options for utilising cleared bush.

Creating incentives for optimal use of resources

An EEU objective is to ensure that environmental decisions result in efficient allocation of scarce resources to the benefit of the people living in the area. This is done by valuing the use of natural resources and assessing and providing recommendations for optimal land use. Research and analysis is used to identify the economic causes of unsustainable use, and to create incentives for optimal use. Key tools employed to achieve this aim are the dissemination of information and developing economic utilisation of the resources.

Markets need to be analysed and policies that are slowing down economic and sustainable development need to be pinpointed and eradicated to increase the options for economic development. The growing staff of the EEU has established links with other economists and policy units in government departments, NGOs and the private sector. These are vital in ensuring that efficiency levels are upgraded in all sectors.

While most activities have ad-dressed a number of these objectives and priorities simultaneously, there are five broad area

• Assessment of economic values for use of land and natural resources,
• Assessment and recommendations for optimal use,
• Assessment of economic incentives for optimal use,
• Creating incentives, and
• Research.

Economic principles for Namibia’s resource managers

Resource economics assist managers to put basic principles or assumptions into practice. An example is the principle that all natural resources have a value, even if they are not priced. Another is that resources should be used sustainably to enhance both development and conservation. Furthermore, people use resources according to a rational assessment of costs and benefits, and these can be influenced.

Elephants bathing in the Caprivi by Ron Swiling

Since the development of a tool for improved resource management is vague, there is no single method for resource economics. The appropriate approach depends on skills and resources, and whether results are needed to create awareness, raise the perceived value of the resource or make appropriate decisions to use the resource. However, given the range of tools and principles available within the discipline, using economic principles is generally a good route to follow when addressing questions such as:

• What is the value of resources?
• Who gains and who loses from a resource use?
• How can benefits gained from a resource be increased?
• How can incentives (distribution of costs and benefits) be changed to encourage sustainable use?

Advantages of resource economics

Resource economics has several strengths. Firstly, putting environmental concerns in “dollar” terms increases awareness of environmental values and hence the importance of sustainable use.

Use of natural resources promotes development, but resource economics is aimed at identifying more efficient use of resources. The programme addresses the issues of fairness and the distribution of costs/benefits, as well as underlying causes of environmental degradation. It seeks to provide incentives for sustainable use by enhancing values and concentrates on finding and expanding the link between development and conservation.

Economists warn that if non-cash values such as fairness, aesthetics, diversity and cultural integrity are ignored, analysis is incomplete and if values are estimated, they are likely to be complex and based on meaningless assumptions. Reliable valuation of ecological functions depends on good ecological information, while dollar concerns should not become more important than intrinsic environmental and other non-cash values. Furthermore, analysis and results are only useful if the necessary institutions, skills, and links are in place to turn such findings into decisions.

Tools to promote both conservation and development

Recent steps towards a brighter future for Namibia through economics and the deployment of economic tools for sustainable use include:

• A new course in Environmental and Resource Economics at the University of Namibia;
• Development of tools to aid communities, facilitators and policy makers in their work and to expose everyone involved to the importance of assessing economic impacts alongside more traditional social and conservation considerations;
• Demonstrating the value of natural resources within Namibia’s regional and national economies;

• Encouraging national planning that takes the economic value of environmental resources into account;
• Ensuring an equitable and sustainable distribution of the benefits of natural resource utilisation; and
• Enabling policy-makers, implementers, government staff and communities to recognise and optimise the value of natural resources.

This article appeared in the 2001 edition of Conservation and the Environment in Namibia.