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Episode 21: Mangrove Action Project Enabling Biodiversity

# Mangrove Action Project Enabling Biodiversity 

The age of industrialization has brought colossal damage to Planet Earth. As the war cry for Climate Change gains momentum, the societal destruction and negative externalities associated with the Biodiversity crisis are often overlooked. According to WWF, around a million animal and plant species face extinction, causing natural imbalances within our habitat. The eradication of biodiversity has far overreaching consequences for our ecosystem both in the short and long run than what meets the eye. Preservation of natural ecosystems helps in sequestering carbon footprints, territorial ecosystems store three times the amount of carbon dioxide found in the atmosphere (IUCN), linking both climate action and biodiversity together. As global urbanization increases to ~50%, humanity is fast losing its touch with mother nature. The social costs associated with loss of the biodiversity-ecosystem are difficult to measurable with IMF estimates of global subsidy from undercharging for energy and its environmental costs in 2017 alone a staggering $5.2 trillion, or 6.5 percent of world GDP.

Chat with Alfredo Quarto —  Aha moment.  

 

Recently, Nishant Malhotra, Sole Founder of The middle Road platform interviewed Alfredo Quarto, Program & Policy Director/ Co-founder of Mangrove Action Project (MAP)a thought leader US-based nonprofit enabling social change and impact by conserving, and restoring our world’s mangrove forests. Mangrove Action Project is educating coastal communities on many aspects of Mangroves trees significantly one of the positive externalities of attracting bees leading to beehives for processing honey and honey-based products. 

Mangrove Action Project is educating coastal communities on many aspects of biodiversity especially Mangroves trees significantly one of the positive externalities of attracting bees leading to beehives for processing honey and honey-based products. Alfredo discusses the importance of preserving and nurturing marine ecosystems significantly mangroves for societal good. His chance meeting with a fisherman in Thailand changed his perspective on saving the Mangroves ecosystem by educating the coastal community using the Community-Based Ecological Mangrove Restoration (CBEMR) technique. Key insights emerge example Mangroves survive in brackish water i.e. a mix of sea and freshwater. Alfredo discusses how mangroves help coastal communities through beekeeping and honey harvesting. The honey products increase the income of the coastal communities (refer to Externalities for Social Impact) and protects them against hurricanes and tsunami, and provides an alternative livelihood measure.

What are Externalities and their Social Impact? 

Externalities are Third-party effects: Costs associated with entities not involved in the transaction between producers and consumers. These costs or benefits are hidden or not accounted for by the producers of goods and categorized as indirect costs. Externalities arise due to a lack of property rights leading to the tragedy of commons. * IMF terms many of these externalities as technical externalities; that is, the indirect effects have an impact on the consumption and production opportunities of others, but the price of the product does not take those externalities into account.  
FIGURE: THE MIDDLE ROAD | ACADEMIC REFERENCE ECONOMICS LIPSEY AND CRYSTAL
 
Externalities play a paramount role within our society. Climate change and passive smoking are excellent examples of negative externalities. The harmful emissions from factories release carbon dioxide and methane gas that cause global warming. WHO studies estimate that every year more than 8 million people die due to Tobacco use? About 1.2 million deaths are of non-smokers (passive smokers) exposed to tobacco smoke. The costs associated with these externalities are colossal. Negative externality doesn’t measure the cost of healthcare to the society example medical, emotional costs, etc. Negative externalities add external costs to the society that don’t reflect in the cost of goods or services consumed. Social costs are the sum of private costs and costs related to society. Negative externalities increase social costs by increasing costs related to society. On the other hand, positive externalities increase social benefits to the society.
THE FIGURE SHOWCASES THE EFFECT OF NEGATIVE EXTERNALITY ON OPTIMAL EQUILIBRIUM. THE MARGINAL EXTERNAL COST I.E. THE ITERATIVE EXTERNAL COST DUE TO THE ADDITION OF A UNIT OF GOOD OR SERVICE SHIFTS THE EQUILIBRIUM TO THE LEFT TO POINT B FROM A. THE HIDDEN COSTS DUE TO NEGATIVE EXTERNALITIES REDUCE THE NUMBER OF GOODS TAKING THE NEW OPTIMAL QUANTITY TO Q*. 
  • Social Costs are Sum of Private Costs and Costs related to the Society

  • Social Benefits are Sum of Private Benefits and Benefits related to the Society

 

# Mangrove Action Project 

The Mangrove Action Reforestation Project in a coastal village in Thailand is one such intervention. To stop the removal of Mangroves by people for shrimp farming, researchers exemplified the use of these trees among inhabitants showcasing the importance of beehives for a sustainable livelihood. Mangroves attract bees and through informed training sessions, the Mangrove project educated inhabitants to nurture beehives for honey. This improved skill set led to an alternative source of livelihood hitherto unknown to the coastal community. With more than 300 beehives in the village, the revenue from the sale of honey and honey-based products from the beehives increases income level, strengthens community links leading to more learning concentric skillsets example marketing of the products, etc. About 10 percent of the income from the sale of honey is invested into a community conservation fund leading to a halo effect (a positive externality) in attracting nearby communities from villages to learn new talent and forge alliances for best practices for conserving nature. Positive externalities must be promoted and subsidized for generating social wellbeing in society. In the figure, the social marginal benefit is the additional benefit you receive when you consume an iterative or additional unit of goods or services. The graph can also be depicted using the social benefit. The demand curve is the additional benefit that consumers are willing to pay while the supply curve can be termed as the marginal cost or private cost. Due to many positive externalities, the optimum level of the social marginal benefit exceeds the private benefit by the marginal external social benefit. The private benefit curve does not highlight the true benefit of the intervention and the optimal value is the new social optimal equilibrium. The marginal external benefit is the subsidy (p-p*) per unit herein. Goods or services with positive externalities need to be subsided.

FIG: THE MIDDLE ROAD | IN THE ABOVE FIGURE, THE TOTAL DEMAND CURVE SHIFTS TO THE LEFT LISTING THE INCREASE IN THE TOTAL BENEFIT TO THE SOCIETY. THE OPTIMAL LEVEL B IS HIGHER THAN THE EQUILIBRIUM A. TOTAL SOCIAL BENEFIT IS SIUM OF MARGINAL EXTERNAL SOCIAL BENEFIT AND PRIVATE BENEFIT. THIS INCREASE IN THE MARGINAL EXTERNAL BENEFIT IS THE SUBSIDY (P-P*) PER UNIT. HERE P* IS THE PRICE AT THE EQUILIBRIUM, THE OPTIMAL PRICE IS P.  

 

Refer to the questions of the podcast below.

How did this idea about preserving and nurturing Mangroves and coastal habitats originate? ✓Mangrove Action Project is educating coastal communities on many aspects of Mangroves trees significantly one of the positive externalities of attracting bees leading to beehives for processing honey and honey-based products. Do talk about your splendid work in Thailand, Sri Lanka, and other countries using the Community-Based Ecological Mangrove Restoration (CBEMR) technique.

Listen to Podbean here.

How does the community-building model work through the CBEMR model?

What is hydrology technology and why is it important in preserving the coastal ecosystem. Do talk about the resistance and acceptance you find from the local communities when you speak about how preserving Mangroves rather than cutting them for shrimp farming will help in increasing their incomes through such alternative, sustainable livelihoods as beekeeping in the mangroves, the sale of honey, and honey-based products?

Hear on iTunes here.

# EU Taxonomy An Overview 

The EU is working to build a resolute sustainable financial framework for transiting to a Sustainable Economy. Sustainable Financial framework three pillars are taxonomy that enunciates on sustainable activities, disclosure guidelines for financial and non-financial companies with investment tools as the final pillar for achieving the 2030 sustainable development agenda. The going ahead for EU ambitious climate action will not be easy. Based on the Communication from the Commission to the European Parliament, The Council, The European Economic and Social Committee and the Committee of the regions Strategy for Financing the Transition to a Sustainable Economy report, the EU will alone need EUR 350 billion per year this decade to achieve its ambitious 2030 emissions target within energy systems notwithstanding an additional EUR 130 billion per year to achieve other environmental goals.

# Levers for Sustainable Economy

The work to improve on the existing EU taxonomy is laudatory in bringing in more themes example biodiversity, sustainable agriculture, natural gas, etc. Under the Multiannual Financial Framework (2021 to 2027) and Next GenEU (NGEU), a total corpus of EUR 100 billion will be invested in biodiversity projects. NGEU plans to raise 30% of its EUR 750 billion capital through the issuance of green bonds showcases a huge focus towards the green label. The idea of various measures by the EU is to impact 23 million SMEs within the EU through enhanced access to sustainability advisory services. The pandemic makes it more difficult for micro and small enterprises to raise capital but at the same time, judicious use of digitalization has helped to improve productivity. The report builds on enhancing and understanding the impact of digitalization services including artificial intelligence, blockchain, big data, and the Internet of things within the gamut of sustainable finance tools. European Single Access Point (ESAP) and the Open Finance Framework, will help to unleash sustainability-related information for a common good. An impetus within the climate adaption is given through increasing insurance coverage through a natural disaster board insurance dashboard European Insurance and Occupational Pensions Authority (EIOPA) fortifies companies against rising natural calamities due to climate change.

An effort to strengthen corporate governance with green budgeting incorporation to better track and monitor climate and biodiversity spending under the 2021-2027 Multiannual Financial Framework and its alignment with the EU’s ambition. Public-private partnership is a key mandate within the seventeen sustainable development goals, the EU EUR 1 trillion mobilization Sustainable Europe Investment Plan aims to attract capital in green label through public and private actors over the next decade. There are many more reformistic enablers for setting the way for ESG focused world. 

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