Environmental Damage Costs

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The United Nations in a new report on biodiversity has assigned a monetary value to environmental assets that are not usually considered in cash terms. It has estimated a between $2.1 and $4.8 trillion dollars as environmental damage and species loss costs every year.

The dollar value of clean water, healthy soil, protection from floods and soil erosion, natural medicines, and natural sinks that store greenhouse gases such as carbon dioxide and methane have been calculated in the report.


Why should I be aware of this?

Man’s well being is totally dependent upon a vast diversity of benefits such as food, fibers, fuel, clean water, healthy soil, protection from floods, protection from soil erosion, medicines, storing carbon (important in the fight against climate change) and many more. Due to the pressures of population growth, changing diets, urbanization and also climate change, biodiversity is declining, our ecosystems are being continuously degraded and everyone is suffering the consequences. As there are no markets and no prices for these goods, they are often not detected by our current economic compass.

All about environmental damage costs

Environmental economists have for long recognized the failure of the market to protect the environment. Efforts have been made to correct this failure by incorporating the environment into the market through the use of economic instruments and the monetary valuation of costs and benefits.

Where there is no existing market for things such as air quality or the ozone layer, environmental economists want to set up artificial markets so as to establish a monetary value for environmental costs and benefits. Such artificial markets can be established through the creation of property rights (for example tradable pollution rights) or they can be imaginary as in surveys of people's willingness to pay for environmental benefits.

Ignored in policy decisions

Because ecosystem services are not fully ‘captured’ in commercial markets or adequately quantified in terms comparable with economic services and manufactured capital, they are often given too little weight in policy decisions. This neglect may ultimately compromise the sustainability of humans in the biosphere.

Monetary valuation to environmental damage is carried out primarily to have a bearing on decision making that has implications for environmental services/damages. The valuation may not be intended to be the basis for setting a price that anybody will actually pay, but to provide pure informational input to social decision making.

Monetary valuation is undertaken to include the cost of environmental impacts into the counting of total costs and benefits along with, and in an exactly equivalent way to, all of the other consequences.


  • By 2050, eleven percent of the natural areas remaining in 2000 could be lost, mainly as a result of conversion for agriculture, the expansion of infrastructure, and climate change
  • 40 percent of the land currently under low-impact forms of agriculture could be converted to intensive agricultural use, with further biodiversity losses
  • 60 percent of coral reefs could be lost through fishing, pollution, diseases, invasive alien species, and coral bleaching due to climate change. [1]


For many environmentalists, and even individuals, putting a price on nature is as abhorrent as putting a price on family and friendship. It represents the further creep of the market and economics into areas of life that have traditionally been considered above material concerns. They consider such practices almost as unsavory as the packaging and marketing of religion and body organs.


  • Environmental Damage Costs Trillions Each Year
  • Environmental damage costs $4.8 trillion annually
  • Monetary valuation