Could a Forest be Worth More than a Gold Mine?

Yerevan, Armenia–As Armenia was celebrating twenty years of independence in September, local and international experts came together to discuss youth, maturity, and transitions at the TEDx Yerevan event on September 24, 2011.

The twenty speakers came from diverse backgrounds, including a former U.S. ambassador, a correspondent for Bloomberg and ABC News, renowned artists, photographers, and intellectuals.

Among them was Jason Sohigian, Deputy Director of the Armenia Tree Project (ATP). National Geographic NewsWatch profiled ATP in 2010.

Sohigian’s presentation raised the question “could a forest be worth more than a gold mine,” which was intended to stir some controversy because the country’s economy is heavily dependent on extractive industries like copper and gold mining.

According to recent valuation estimates, the answer may be yes. Sohigian focused on forests and didn’t go into specifics for mining, presumably because of the emphasis on short ten minute talks for the TEDx format, but his point came through and got a few of the invitation-only guests asking for more information.

Forest cover in Armenia has declined from 25 percent at the turn of the 20th century to less than 8 percent today based on satellite data, and the country’s Red Book of Endangered Plants and Animals is two volumes and more than 950 pages long, noted Sohigian. In addition, the South Caucasus region is one of the world’s most endangered “hotspots for biodiversity,” which makes the region worthy of such global attention.

This issue is of particular importance because of the vast range of values a forest can provide to this small landlocked country. Here, forests provide building material, food products, firewood, scenic beauty, protection of topsoil, and habitat for plants and other wildlife including the endangered Caucasian Leopard.

Furthermore, Armenia relies on hydropower for more than a third of its energy, and Sohigian pointed out that a nation’s strategic water resources can be protected by improved forest management strategies.

While forests are still often undervalued and overexploited, Sohigian emphasized, the concept of sustainability has evolved and gained momentum in the business community. Harvard Business Review summarized these developments on three fronts: “First, ‘prices’ are now being calculated for many things that had been considered priceless; second, capital is flowing into companies known to manage those costs well; and third, indices are being established that allow disparate contributors in a supply chain to converge on sustainability standards.”

As prices are now being calculated for things formerly considered priceless, UNEP’s program on The Economics of Ecosystems and Biodiversity, or TEEB, recently estimated that temperate forest have a range of values between U.S.$30 and $5,000 per hectare per year. This estimate would make Armenia’s forests worth between $7 million and more than $1 billion per year.

If the value of Armenia’s forests could be worth more than $1 billion a year, is this worth protecting? Sohigian ended his presentation with a call to “redefine our economic systems” to do three things: understand the true value of “natural capital” and forests; understand our relationship with nature, at both the individual and at the economic level; and finally, save money by investing in natural like forests, especially in places like Armenia where it can be critically endangered.

He quoted from the environmental advocate Robert F. Kennedy, Jr.:It’s really a matter of thinking in the long-term about our national wealth, rather than of treating the earth and its resources as if it’s “a business in liquidation.”