Investing in nature: A key to Myanmar's sustainable development

INVESTING IN NATURE

A Key to Myanmar’s Sustainable Development

CONTENTS

4

EXECUTIVE SUMMARY

6

12

Sustainable Development: From Wants to Needs

Social-Ecological Systems

CHAPTER 1

CHAPTER 2

image © Ranjan Ramchandani / WWF

Authors

20

30

CHAPTER 3

CHAPTER 4

Productive System and Nature’s Values

Time and Power: Stakeholder Incentives

Gustavo Nicolas Paez, Economic Advisor, WWF-Myanmar Urvana Menon, Sustainable Infrastructure Manager, WWF-Myanmar Luisa Vargas, Economic Advisor

Editing support and design

Andrea Jones Austin Kassia Wordley

Cover photography © Hkun Lat / WWF-Myanmar © Chit Ko / WWF-Myanmar © Stephen Kelly / WWF-US

EXECUTIVE SUMMARY

A HEALTHY ENVIRONMENT AND HUMAN DEVELOPMENT: IS IT POSSIBLE TO ACHIEVE BOTH OBJECTIVES? FOR DECADES, WE HAVE ENGAGED IN A DEBATE BETWEEN TWO PRIORITIES: PROMOTE HUMAN DEVELOPMENT OR PROTECT NATURAL RESOURCES? It is becoming increasingly evident that one side of this debate is driven by economic interests focused on short-run economic gains, without care for the way in which wealth is distributed, sustainable goals, or opportunities for future generations.

However, if we care about the sustainable improvement for people and their livelihoods, especially those who are the most vulnerable, we realize that healthy environments and human development are not competing objectives – they are one.

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As many countries rapidly deplete their natural resources, caring for and investing in these resources in Myanmar is imperative to create safety nets that guarantee the basic needs of its people.

WWF-Myanmar’s strategy takes a holistic approach to improving the lives and livelihoods of those living today and aims to protect the natural environments that will support the lives and livelihoods of generations to come.

This report is the first in a series of four reports in which we lay out the theoretical justification for investing in nature and the challenges to doing so. Following reports will review the current state of Myanmar’s natural resources, its governance and legal framework for protecting natural environments, and how to begin implementing solutions.

The current report is divided into four chapters that integrate economic, environmental and social elements into the development discussion and provide a framework to evaluate the importance of investing in nature to foster sustainable development. Although the examples are based on Myanmar, the concepts presented in this report are valid for any development discussion.

The first chapter discusses the inadequacy of traditional economic frameworks to assess the role nature plays in the

improvement of society and recommends analysing development projects based on their capacity to provide safety nets and basic needs. By integrating behavioural and development theories, the chapter summarizes the core development model in a pyramid of needs that can guide policymakers in identifying relevant projects.

The second chapter examines the role of nature. Based on a systems’ theory perspective, it explains how the different characteristics of natural systems affect livelihoods. The chapter discusses how nature is never static and, by aligning our processes to nature’s cycles, how we can improve our resilience to natural and economic crises.

The third chapter joins the previous two and explores how concepts such as ecosystem services and nature-based solutions can support our economic and social development. Moreover, this chapter discusses the different types of services that nature provides and how each helps communities progress through levels of development. The chapter concludes by showing how adequate environmental management is a holistic topic that requires a good understanding of ecosystems and their interactions with society.

Finally, chapter four discusses how human incentives affect environmental protections, focusing on the role of power groups and governance arrangements.

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CHAPTER 1

SUSTAINABLE DEVELOPMENT PRINCIPLES: FROM WANTS TO NEEDS 1.1 UTILITARIANISM AND OUR WANTS 1.2 THE BRUNDTLAND COMMISSION AND THE PRECAUTIONARY APPROACH 1.3 CAPABILITIES AND HIERARCHY OF NEEDS Nature is a central element of human life and as such, has intrinsic value.

Humans are part of nature, and our society has developed with the possibilities provided by the environment. In addition to providing us with resources to live and develop our capabilities, our interactions with nature have guided our approach to living.

It is by observing the cycles of nature and how living organisms interact, we have created social norms that help us understand and live our lives. For example, noting that animals hunt only to sustain life, communities have developed practices that recognize the role of the animals they hunt and ‘compensate’ nature for taking them away. Other examples, such as Catholicism’s Laudato si (Francis 2015) or the environmental ethics of the Buddhist Dhamma (Sahni 2011), show how various social systems recognize humans’ duty to protect nature (Infield and Mugisha 2013; Verschuuren and Brown 2018).

However, the lack of a unified position on the intrinsic value of nature creates logical gaps that can be used by people with economic and social interests to

exploit the environment in unsustainable ways. An instrumental value for nature emerges from the idea that if human development is our goal, the protection of nature is only relevant when it contributes to the improvement of our society.

Therefore, in acknowledging the intrinsic value of nature, this chapter will focus on its instrumentality and demonstrate that it is in the best interest of humans to invest resources in the protection of nature; adding intrinsic values will only fortify the notion that a healthy environment is critical to human existence.

The fact that the instrumental value of nature is high enough to justify its protection means that the resources allocated to its conservation and recovery are investments for our prosperity. Based on this philosophical premise, the chapter will discuss different approaches used to measure the impact changes in nature have on human development and well-being, and in doing so, develop an analytical framework by which the value of nature can be assessed.

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1.1 UTILITARIANISM AND OUR WANTS By far, the most common approach to assessing human welfare, and the one preferred by economists, is the concept of utility. Based on the utilitarian principles established by Bentham (1789), policies are evaluated on how they improve the happiness of the individuals affected. Economists have developed utility as a theoretical construct that determines inputs – things from which the individual derives value – and translates them into an overall level of satisfaction.

Other names given to utility include what social welfare economists such as Pigou (1929) called ‘desirability’, and mathematical economists such as Fisher (1918) called ‘wantabs’. Both names suggest that based on the decisions of individuals, who choose what they want or desire, it is possible to understand the benefits they derive from the selected objects and thereby develop policies that maximize those benefits. For instance, when an individual chooses apples rather than oranges and oranges rather than pears, economists have developed techniques to create a function that assigns values to pears, oranges and apples such that higher values are consistent with individual preferences.

After some technical assumptions, economists can create social utility functions to organize elements in accordance with what is better for society and then assign the highest value to one option (Dasgupta 2021).

Although practical and logical, this approach has several conceptual challenges in its different versions (Nussbaum 1997; Viner 1925; Sensat

and Constantine 1975). Two of these challenges are germane here because of their direct impact on sustainable development and environmental protection. The first lies in the ability to accurately calculate the utility value of different actions. Ecological systems are highly dynamic and therefore very difficult to predict, especially when human impacts are considered (Berryman and Millstein 1989). It is virtually impossible to calculate all scenarios in which the utility of nature would need to be estimated. Thus, although the utility of a particular case can be estimated (although controversial), the risk management between scenarios becomes unrealistic.

For example, in the late 1950s, China was pushing its production system to increase agriculture, but sparrows were damaging crops. The central government evaluated the utility of having sparrows in face of their damage to the crops and decided to kill as many sparrows as possible. Unfortunately, the policymakers did not consider the role sparrows played in the control of other pests, and thus, there was a large increase in the bedbug population. The bedbug infestation further decreased the already low production yields.

Even though the cost-benefit decision was clear for a particular event (sparrows eating crops), the complexity of the system made the calculated benefit inaccurate. The consequence of that decision was a significant factor in the famines suffered during this period (Wang and Wen 2011). Therefore, using utility theory to assess the most

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convenient ways of managing nature is not adequate (Dequech 2000).

The second challenge entails evaluating the social context in determining the utility. Individual preferences are not a static component of human nature. On the contrary, they are a mixture of individual characteristics and the social context in which an individual develops (Dasgupta and Dasgupta 2017).

Complemented by the fact that social systems are also complex and highly unpredictable (Roland 2004; Woodhill 2008; Sinha 2012), a current individual cannot know the system of preferences into which a future individual will be embedded.

History has shown in multiple cases how changing preference systems have influenced the development of groups such as ethnic minorities, women or the disabled population: through the deconstruction of the premises that support these social systems, new preferences have emerged.

Hence, the current individual will be unable to calculate the utility that the future individual will derive from the

consequences of a current action.

Assessing the utility a project in the present can have for future generations, one must assume that future individuals follow the same preference system. To evaluate projects that affect future cohorts, implies, under the utility theory, to understand their utility change and contrast it with the utility change of present cohorts, which is practically unfeasible.

When considering these shortfalls in applying utility theory, it is important to note that changes in nature have long-run impacts: extinction is forever, land conversion is usually irreversible and exploitation of non-renewable resources in the present removes them from future use.

Utility theory is highly relevant in that it presents a direct and practical approach by assigning numerical value to scenarios and making comparison and selection a straightforward process.

However, to calculate these values for nature, the policymaker needs to decide whether the cost of the assumptions can compensate for the virtues of the theory.

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1.2 THE BRUNDTLAND COMMISSION AND THE PRECAUTIONARY APPROACH In 1987, the UN presented Our Common Future, a report outlining the principles on which sustainable development movements should be built. In this report, the commission clearly expressed the deficit that will manifest if development policy is based on utility theory:

MANY PRESENT EFFORTS TO GUARD AND MAINTAIN HUMAN PROGRESS, TO MEET HUMAN NEEDS, AND TO REALIZE HUMAN AMBITIONS ARE SIMPLY UNSUSTAINABLE — IN BOTH RICH AND POOR NATIONS. THEY DRAW TOO HEAVILY, TOO QUICKLY, ON ALREADY OVERDRAWN ENVIRONMENTAL RESOURCE ACCOUNTS TO BE AFFORDABLE FAR INTO THE FUTURE WITHOUT BANKRUPTING THOSE ACCOUNTS. THEY MAY SHOW PROFIT ON THE BALANCE SHEETS OF OUR GENERATION, BUT OUR CHILDREN WILL INHERIT THE LOSSES. WE BORROW ENVIRONMENTAL CAPITAL FROM FUTURE GENERATIONS WITH NO INTENTION OR PROSPECT OF REPAYING. THEY MAY DAMN US FOR OUR SPENDTHRIFT WAYS, BUT THEY CAN NEVER COLLECT ON OUR DEBT TO THEM. WE ACT AS WE DO BECAUSE WE CAN GET AWAY WITH IT: FUTURE GENERATIONS DO NOT VOTE; THEY HAVE NO POLITICAL OR FINANCIAL POWER; THEY CANNOT CHALLENGE OUR DECISIONS.” World Commission on Environment and Development, 1987 9 | WWF-Myanmar Investing in Nature

The commission continues its report by stating that the core principle of sustainable development relies on our capacity to “meet the needs of the present without compromising the ability of future generations to meet their own needs”. This goes beyond the sphere of economics and suggests a change of focus: rather than finding actions that maximize utility, development solutions should consider actions that can improve the current situation without affecting the possibilities of future generations.

Interestingly, dynamic models on consumption and investment based on utilitarian formulations, such as the

image © Aaron Gekoski / WWF-US

Ramsey model (1928), came to a similar conclusion. These models indicate that when an individual has to decide between consumption (i.e., consuming resources) and investment (i.e., limiting consumption so that the number of available resources in the following period will increase), the optimal action path entails using the resources in a manner that the future returns of the investment compensate the reduction of resources in the current period (i.e., current consumption should not reduce potential consumption in the future).

In this line of thinking, Dasgupta generalizes this idea and shows how the

concept of “meet their own needs” cannot be considered only under the economic dimension. Indeed, the way to foster a sustainable future is to guarantee that future generations will have at least the same economic, social and environmental resources as exist in the present.

development. Indeed, as will be discussed in Chapter 3, well-managed ecosystems enable economic activities.

However, what the previous premise does imply is that impacts of irreversible actions – such as extractive economies – need to be seriously considered before being adopted.

Although it seems obvious, this last concept confronts the development dilemma between environmental conservation and economic development referred to at the beginning of this report. The argument posits that for a country to progress, it needs to use – and deteriorate – its natural resources; therefore, for developing countries, environmental policies are against the interest of the people. However, recent evidence summarized in multiple reports (Cohen 2016; Feiock and Stream 2001; Li et al.

2020), indicates that once the effects of nature’s deterioration are considered, the dilemma disappears and the conclusion is clear: deteriorating our current ecosystems significantly affects our welfare, both current and future.

It is in this context that the precautionary principle emerges. The precautionary principle is an approach to policy that recommends postponing projects where the negative consequences are not clear, as some of them might cause significant damage.

It is important to highlight that premises aligned with the Brundtland Commission do not mean that no natural resources can be used for

The Rio 1992 declaration states: “In order to protect the environment, the precautionary approach shall be widely applied by States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation” (UN General Assembly 1992; Principle 15). Hence, even without utility theory to assess societal preferences, the precautionary principle suggests that actions, where consequences are uncertain and potential outcomes can create irreversible damage, should be avoided.

DETERIORATING OUR CURRENT ECOSYSTEMS WILL SIGNIFICANTLY REDUCE OUR FUTURE WELFARE. IF WE PROTECT AND ENHANCE THEM, WE WILL ENJOY BETTER DEVELOPMENT ALTERNATIVES. 11 | WWF-Myanmar Investing in Nature

1.3 CAPABILITIES AND HIERARCHY OF NEEDS The definition of sustainability stated by the Brundtland Commission is assertive and clear, but it relies on the definition of needs. In this case, it is important to highlight the work of Nusbaum (1997) and Sen (1985) on the concept of capabilities. Their approach to welfare deviates from the utilitarian approach by presenting a set of options available to an individual and emphasizing their ability to decide freely for their personal development.

It is from this perspective that the UN development indicators and sustainable development goals were conceptualized (Leßmann and Rauschmayer 2012; Mahadi 2012).

Therefore, when discussing sustainable development, the concept of need is not limited to material possessions but rather involves an individual’s need to create environments where they can explore different possibilities for their personal development.

The psychological theory of the hierarchy of needs, as illustrated in Maslow’s pyramid of needs, is complementary to the capability approach (1970). According to Maslow’s original presentation, human needs, in increasing order, are physiological, safety, belongingness, love, esteem and self-actualization.

The theory states that the inability to satisfy needs at the base of the pyramid will affect the person’s ability to satisfy more advanced needs and

will have a direct impact on their personal development.

This idea of prerequisites to enable wider and more fulfilling options (i.e., capabilities) is central to the sustainable development indicators and goals (Walsh 2011; Clarke, Islam, and Paech 2006). The works of authors such as Kumar et al. (2017), which explore the hierarchical dependency of the sustainable development goals, highlight how healthy ecosystems (goals 14 and 15) are directly linked to responsible consumption and production (goal 12), and how decent work and economic growth (goal 8) strongly depend on reducing inequalities (goal 10) and fostering gender equality (goal 5).

Thus, the capability approach allows conceptualization of the needs individuals must satisfy to flourish and those that must be covered between generations in support of sustainable development. Moreover, the conceptual structure of Maslow’s pyramid enables the crystallization of the capability concept into a practical logic. The pyramid shown in Figure 1 merges these concepts and emerges as a framework to analyse environmental policies and actions through the lens of sustainable development. Investing in nature supports human development at each level of the pyramid.

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OUR NEEDS ARE LIKE A PYRAMID: ONLY BY HAVING A SOLID BASE CAN WE ADVANCE TO THE NEXT LEVELS AND FLOURISH. DEVELOPMENT PYRAMID PERSONAL FLOURISHING COMMUNITY DEVELOPMENT ECONOMIC INDEPENDENCE FOOD SECURITY AND HEALTHY ENVIRONMENT PROTECTION AGAINST LIFE-THREATENING EVENTS Figure 1 Figure 1: Nature-supported Human Development Pyramid Framework

The development pyramid has two interpretative dimensions. In the first, it captures the idea of enabling stages and capabilities by ranking the needs a society must satisfy to progress. The foundation shows freedom from life-threatening events: it is impossible to think of educational or economic achievements in communities that are constantly threatened by floods, landslides or other natural hazards. It is only when

these elements are satisfied that improvements in the livelihoods of the community can be explored.

The next level covers food security and health, and is aligned with Maslow’s original structure for physiological needs such as food, water and shelter. Economic independence follows. This level includes the idea of freedom to choose and highlights that for two individuals

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image © Adam Oswell / WWF-Myanmar

working the same job, the ability to choose makes the difference in their welfare levels.

To illustrate this point, consider two fisherfolk: one enjoys the activity and feels that the income received from fishing is sufficient for a good life; the other, because of modern forms of slavery, is being forced to work (Leithead 2011). In the first case, the individual’s need for economic independence is satisfied. In the second case, they are not.

Community development is the next level on the pyramid, highlighting the social component of human nature and the role the social fabric plays in improving the welfare conditions of individuals (Rockenbauch and

Sakdapolrak 2017; Klärner and Knabe 2019; Cordell and Romanow 2015). This implies a human capacity to develop social activities which, through interactions with other members of the community, generate sympathy and a sense of belonging that motivates individuals and allows them to feel appreciated and valued. Finally, the top of the pyramid represents the stage at which individuals have met their basic needs, achieved economic independence and have their social needs fulfilled. At this level, they can dedicate their energy and time to performing activities that maximize their personal happiness or satisfaction — personal flourishing.

On a second interpretive dimension, the pyramid can be used to value environmental actions by the amount

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individuals are willing to pay to advance from one level of the pyramid to the next. This fosters the interpretation of the instrumental value of nature as both the enhancement of living conditions as well as the reduction of costs.

For example, the value of a project that regulates the water flow of a river and protects a community from flooding is related, through the pyramid, to the costs that the individuals would need to pay otherwise to maintain their physical safety and the safety of their property. Considering the hierarchical structure of the needs, the pyramid also assesses the individual’s willingness to pay. In other words, the lowest level needs must be met before opportunities of the higher levels are available. Therefore, a project that covers the basic levels is valued more than one addressing upper levels; projects that solve basic needs should be encouraged as their welfare impact is higher.

This last observation is aligned with the concept of safety nets. Inspired by authors of the moral economy such as James Scott (1776), and fortified by development institutions (Paitoonpong, Abe, and Puopongsakorn 2008; Blomquist 2019), the concept of safety nets supports the idea that rather than focusing on policies that maximize aggregate measures of welfare, it is better to focus on policies to guarantee a basic set of conditions that will reduce the costs of hardship and enable individuals to improve their living conditions.

The framework provides higher value to programmes that provide larger safety nets (i.e., programmes that cover the lower levels of the pyramid). As detailed in these two interpretations, the development pyramid framework presented in this section promotes an assessment of the instrumental value of nature that will support the discussions in the next chapters.

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CHAPTER 2

SOCIAL-ECOLOGICAL SYSTEMS 2.1 2.2 2.3 2.4

OPEN SYSTEMS OBJECTIVE EVOLUTION DYNAMIC SYSTEMS

2.5 EMERGENCE 2.6 SELF-ORGANIZATION 2.7 SYNTHESIS

Since the adoption of the sustainable development goals in Rio in 1992, there has been a concentrated effort to understand the dynamic nature of social and ecological systems and how they continuously influence one another.

From these efforts, a complex system emerges in which the region – understood as both the physical space and the interactions between society and the ecosystems that constitute it – is the primary unit of analysis (Vallega 1996). To better understand the way nature and society are co-dependent and where the instrumental value of nature comes from, this chapter will introduce a framework informed by systems theory.

A previous work by Paez (2018) follows von Bertalanffy’s (1969) concepts on complex systems along with updates from Reza (2010) in analysing

socio-ecological systems. This research suggests that, beyond the dual characteristic of the social and environmental components, socioecological systems can be characterized by six elements: open systems, objective, evolution, system dynamics, emergence and self-organization. These elements will be reviewed to demonstrate how each element presents key messages regarding the instrumental value of nature and how these elements need to be considered when developing projects that use nature for the improvement of human livelihoods.

Note that throughout this chapter, the term ecosystem services, often used to assess nature’s value to human development, has been intentionally omitted. It will be contextualized in Chapter 3.

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2.1 OPEN SYSTEMS The first characteristic of open systems is that they create horizontal and vertical structures that are constantly interacting between and within regions. Horizontal interactions can be illustrated by the free-flowing rivers of Myanmar (WWF 2020) as one of the few countries where significantly large rivers still flow without dams.

For instance, the Ayeyarwady River originates in the mountains of Kachin, flows south across the dry zones of Mandalay and Magway, waters the dedicated rice lands of Bago, then meets the ocean in the mangrove forests of the delta region. Each of these regions represents a set of different ecosystems, each with their own dynamics. However, the river connects all these landscapes, and through it, different elements flow between the landscapes.

The most evident flow is the water collected in the moist forests and running down to irrigate the other ecosystems. Actions affecting the capacity of the mountain ecosystems to collectwater directly impact the water cycle of all ecosystems in and along the river. Any changes would affect the two-thirds of Myanmar’s population whose livelihoods depend on this basin (IFC 2017).

This example also illustrates why environmental analysis and management must extend beyond specific ecosystems and work within corridors, focusing on how ecosystems interact. Without considering these corridors, the potential impact of environmental programmes may be subject to activities that take place in other ecosystems (Curcic and Djurdjic 2013).

image © Hkun Lat / WWF-Myanmar

The second type of interaction between regions takes place when decisions are taken in larger regions that affect their parts and vice versa. To illustrate this concept, consider the damming of a river to produce electricity. On the positive side (from the socio-economic perspective) the energy produced will benefit the largest cities of the country as well as increase revenues through exports to neighbouring countries. On the negative side, the barriers that the dam generates affects the flow of the river’s nutrients and directly impacts rural communities along the river who only minimally benefit from the electricity generated. They will be required to increase agricultural inputs, such as fertilisers, to counter the reduction in the ecosystem’s capacity to provide nutrients (Adams 1985).

This example complements the previous one by showing how, through the ecological system (the river), two different levels of social systems (national and local) interact in a way that the benefits of investment in infrastructure will be positive for one group (Myanmar at the national level), but negative for another (vulnerable and localized farmers).

More explicitly, when placed in the development pyramid, the dam has positive impacts on national economic independence but affects the food security of local communities. Hence, while the horizontal interactions teach the relevance of corridors, the vertical interactions introduce inequalities generated at different levels of society and the importance of considering how a specific event, policy or action impacts all stakeholders.

2.2 OBJECTIVE Social and ecological systems are based on objectives. Often, especially in social systems, objectives are explicitly defined. For example, most of the lands in the delta and dry zone have been defined by Myanmar Farmland Law (Pyidaungsu Hluttaw Law, 2012) as having an agricultural vocation and, more explicitly, rice vocation. Policies encourage rice and place significant barriers to other crops (Anderson, Hu, and West 2017).

Clarity of objective allows us to understand the creation of institutions that support it, such as the Myanmar Agricultural Development Bank, and those institutions, such as the Farmland law, that limit social processes (e.g., the massification of other crops). Moreover, by understanding these objectives, it is possible to understand which natural services are valuable. For example, in this case, services related to water provision, soil fertility and pest control are highly valued because they align directly with the objectives of the region – rice production. However, other services, such as genetic diversification, are not relevant to those defining the purpose of this region.

Like social systems, ecological systems also have objectives. For example, as suggested by Meysman and Bruers (2010), the flows of energy in ecosystems organize themselves to maximize the entropy of the system.

This research is complemented by Dasgupta (2021) who described how authors such as Bowman, Hacker and Cain (2018), Kinzig, Pacala and Tilman (2002), and Tilman, Isbell, and Cowles (2014) have proven that ecosystems do

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not maximize the net primary production of biomass. These issues highlight two elements: firstly, ecosystems do not produce at their maximum capacity, thus creating an action gap in which humans can manage ecosystems and use their products without affecting them significantly; secondly, while capitalist markets are based on profit maximization – and its consequences on production – ecosystems follow a completely different logic associated with entropy maximization. Thus, there are intrinsic mismatches between these two systems that need to be considered.

Otherwise, the systems will collide, affecting the provision of the services society needs.

2.3 EVOLUTION Socio-ecological systems are evolving.

In this context, evolution refers to specific elements that allow a system to resist change: homeostasis, plasticity, context monitoring and context modelling (Martin and Sunley 2015). Homeostasis is the capacity of a system to react to changes in a way that minimizes changes to the system.

For this reason, the system is constantly monitoring the context changes, and depending on the situation, will either modify the context to avoid change, or modify itself (plasticity) to resist the changes better. Ecosystems are well known for regulating cycles of nutrients and water, and even stabilizing temperature (Smith et al. 2012). In terms of evolution, properties of the system reflect the capacity of the environment to modify its context. An example of plasticity can be found in

the social sphere when society develops different lifestyles based on resources available. For instance, if the soil is fertile and plants and animals can be domesticated, human societies develop agricultural communities. Other societies develop around trade as a way of finding alternatives for acquiring resources (Price 1995).

Another consideration when evaluating evolution is the conflict between efficiency and robustness (Jin and Sendhoff 2003). Systems that are strongly focused on developing mechanisms to resist change allocate extra resources to keep the system functioning.

In contrast, systems that are focused on maximizing performance do not allocate resources for resilience. The stock market is an example of efficiency with its explicit trade-off between risk and return: the highest return portfolios are also the riskiest (Guo 2000). Nature, however, chooses the path of robustness as ecosystems work around entropy maximization. Practically, this means that ecosystems are structured to reduce external impacts.

This being said, Gunderson et al.

(2002) studied how ecosystems impacted by humans tend to be more resilient than pristine ones. As humans provide multiple and diverse shocks, the ecosystems evolve, investing even more resources in robustness-related processes.

This ability of the ecosystems to foster resilience becomes critical for the development pyramid. Given that environmental interactions are organized in a way that the ecosystem recovers from impacts in the most efficient way, humans can manage resources such that shocks are large

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enough to increase their welfare, but small enough that the system can recover to its original state. Although basic, this is the essence of sustainability as it guarantees that the next generation has at least the same resources as the current generation, while at the same time, the current generation can use the resources of nature to improve their livelihood. The same idea of resilience supports the concept of safety nets, as nature does not aim for maximum production, but rather guarantees a regular provision of resources and services that individuals need to prosper.

2.4 DYNAMIC SYSTEMS Socio-ecological systems are constantly changing. As discussed in the previous section, these systems are constantly influencing each other and adapting accordingly. As a part of these action and reaction processes, dynamic systems emerge.

Two patterns are represented in balance and reinforcement dynamics. Balance dynamics are those in which the interactions of the system help it return to its original state. The Lotka-Volterra dynamics (1931) are a clear example of balancing dynamics in describing how the increase of prey in a food chain is

compensated by an increase of predators. Once predators outnumber prey, their numbers decrease because of food scarcity, which allows prey to recover. Hence, between predators and prey, their population dynamics counteract each other.

Conversely, reinforcement balances are those in which changes motivate larger changes. An example of this is food scarcity and resource depletion in communities that depend on the forests: when food is scarce, the pressures on the products of the forest increase. If the impact is higher than the resilience capacity of the ecosystem, the overall number of resources will decrease, worsening food scarcity and reinforcing the cycle (Smith et al. 2019).

These two feedback mechanisms create a wide range of dynamics in a system.

For example, predator and prey dynamics generate more or less regular cycles, in which the system is constantly changing but with a set of repeated patterns over time. In contrast, the food security example presents divergence dynamics where the systems move further from the initial condition over time.

The third type of dynamic process is convergence. In this case, the balancing feedback is so strong that once there is a change, it is rapidly absorbed by the system.

WELL-MANAGED ECOSYSTEMS CAN GUARANTEE THAT WE ENJOY IMPROVEMENTS IN OUR LIVELIHOODS WHILE NATURE FLOURISHES. 20 | WWF-Myanmar Investing in Nature

NATURE’S PROCESSES CAN SUPPORT THE FIRST LEVELS OF THE DEVELOPMENT PYRAMID image © Aaron Gekoski / WWF-US

It is worth noting that the geological processes of the earth are cyclical. The fact that the earth rotates around the sun and spins on its axis at seemingly regular speeds implies that processes such as temperature and wind follow similar cyclic patterns. Thus, to conserve homeostasis, ecological systems evolved even before the existence of society to incorporate these cycles into their dynamics and regulate their effects.

The changes made by humans have implications in the dynamics of the systems. Once a dynamic system is perturbed, there are two options: either the system can absorb the shock and return to its original dynamic (as discussed in the previous section), or the system changes to a different dynamic pattern.

The way ecosystems adapt in Myanmar to cope with the monsoon season is an example (Mandle et al. 2017; Min 2018; NECC and MECF 2012). In these ecosystems, areas flooded during the monsoon season offer places for fish to breed. When the water levels recede in the dry season, they provide fertile lands (Sundararaj 2016). Moreover, the vegetation is adapted to cope with both monsoon and drought seasons and protects the soil from erosion in either condition (Evans 2020; Singh and Chaturvedi 2018).

Generally, and if perturbations are small, the cyclical, divergent and convergent dynamics are relatively stable. This means that after small perturbations, the dynamics will return to their previous stage. However, there is a fourth type of dynamics known as chaotic (Socolar 2003). These dynamics are characterized by their high sensitivity to initial conditions: generally, the system will move in a seemingly regular way around some patterns. However, a small perturbation in the system can have major implications to the overall interactions (Lorenz 1963).

Human societies have also learned to adapt to the cycles of nature and behave accordingly. However, as technologies have emerged, society has sought to stabilize the cycles to gain better control over ecosystems’ productive capacity. For that reason, dams are used to regulate water cycles and crops are chosen for their ability to resist weather changes (FAO 2017).

Most socio-ecological systems are chaotic. For instance, it has been well documented that removing key predators from an ecosystem can change the overall environmental structure (Soulé and Terborgh 1999), affecting predator prey dynamics, vegetation, resources available and the instrumentally of the system for humans.

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To summarize, the homeostatic properties of ecosystems are structured in cyclical ways to regulate oscillatory processes and improve the overall resilience of the systems. This capacity is central to the creation of safety nets as it guarantees that natural resources recover, and that life-threatening events such as severe floods or droughts are buffered. Thus, natural processes can support the first levels of the development pyramid.

However, due to chaotic dynamics, nature is also susceptible; some perturbations can have unexpected and drastic effects on the ecosystem process and our relationship with them. Thus, from the perspective of a technical and complex system, the chaos dynamic highlights the importance of the precautionary principle described in Chapter 1: when there is a risk of an action causing severe damage, even if the information is not clear, it is better to avoid that action in case the perturbation strikes a highly sensitive element of the system and has dramatic effects on its composition.

2.5 EMERGENCE Emergence is commonly identified by the phrase “the whole is greater than the sum of the parts’’, and emphasizes that ecological and social processes cannot be studied in isolation, but rather by analysing all the elements as they interact (Ponge 2005). One illustration of this property is the capacity of forests to “harvest water from the clouds”. Because of evapotranspiration processes, forests can create changes in the air pressure around them that modify wind patterns and attract clouds (Bunyard 2010). Once

the clouds are near, different plants have adaptations to harvest water from the fog and increase the capacity of the ecosystem to collect water (Villacís 2017).

This example also illustrates the evolving capacity of the ecosystem to shape its context to support its internal processes.

However, this capacity cannot be explained by any one of the plants if they are studied separately. A single tree will not be able to change the air pressure or capture enough water from the fog to affect the water level of the ecosystem.

Looking at this example from a social perspective, consider a region where water is scarce and a community would like to design mechanisms to harvest water. In this case, following the ecological design and planting trees to harvest water seems like a sustainable solution. However, the emergence property illustrates that the desired outcome cannot be obtained by planting a couple of trees as the sum of the parts is not the same as the whole. Scientific and engineering studies are needed to define which interactions in nature allow the trees to attract clouds and which plants have the capacity to harvest water. For the project to be successful, the community must reproduce these structures as closely as possible (Petrosillo and Zurlini 2016; Wortley, Hero, and Howes 2013; Perring et al. 2015).

Both examples focus on emergent effects from nature; however, the social system presents examples also. For instance, communal property rights demonstrate an emerging effect of how society is organized to manage resources. In some places, common property rights imply a tragedy of the commons (Hardin 1968), in which individuals over exploit resources they do not own; other societies exhibit a large set of institutional arrangements

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image © Thomas Cristofoletti / Ruom for WWF

COMMUNITIES ARE AT THE CORE OF SUSTAINABLE MANAGEMENT STRATEGIES: ONLY THOSE PROJECTS THAT CONSIDER LOCAL CUSTOMS AND INSTITUTIONS CAN SUCCEED. 23 | WWF-Myanmar Investing in Nature

image © Green Renaissance / WWF-US

that encourage individuals to cooperate and protect resources (Ostrom 2009).

Moreover, by placing individuals in isolation from their history and institutional context, it is not possible to predict whether communal resources will be protected or destroyed.

Thus, similar to the case of a society attempting to reproduce an ecological phenomenon, land management plans must be constructed with a deep understanding of the local communities, their customs and institutions to predict key interactions that result in various reactions. This topic will be discussed further in Chapter 4 when the role and characteristics of stakeholders is examined.

2.6 SELFORGANIZATION The final characteristic of socio-ecological systems is their capacity to structure their interactions.

This means that every element of the system becomes part of a bigger structure, and its position has specific functions that need to be covered.

Consistent with the previous section, these positions are not static and will react to changes in context. To illustrate this concept, consider the cooperative fishing practices between Irrawaddy dolphins and fisherfolk near Mandalay state (Clarke 2017). Fisherfolk call to the dolphins and the dolphins swim toward the boats, pushing the fish towards the fisherfolk’s nets. By doing so, fisherfolk have a large catch, and the dolphins benefit from all the confused fish that jump out of the nets and into

their mouths. Both populations (fisherfolk and dolphins) learn from each other and adjust their behaviour.

This example has the two core elements of self-organization: it has positions – the dolphins’ role to push fish and the fisherfolk’s role to throw the net – and structure in the detailed protocol for how fisherfolk communicate with the dolphins and how the dolphins inform the fisherfolk when the fish are ready.

Self-organization is the reflection of all the previous characteristics of complex systems. This can be evidenced in issues such as impact on natural ecosystems. Several studies (Connell and Slatyer 1977; Gunderson et al.

2002; Holling 1973) have shown how small-scale deforestation inside forest can be recovered faster than deforestation of a similar sized area along the border of the forest. From the perspective of self-organization, the impacts of vegetation loss inside the forest is absorbed in the same way as loss resulting from natural hazards: the structures are aligned for the animals and vegetation to regain that territory and shape it consistency with surrounding structures.

In contrast, if the impact takes place at the border of the ecosystem, the flow of interactions between neighbouring ecosystems affects the structures that replace those lost. Thus, in some cases the original structures reappear, while in others, neighbouring ecosystems (usually grasslands) model their context in ways that favours them and hinders the forest’s re-emergence.

Defaunation has the opposite dynamic.

As described previously, the removal of strategic animals from an ecosystem will leave important positions empty in the environment. If these functions are

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not satisfied by another organism, landscapes can quickly disintegrate.

Therefore, as authors such as Redford (1992) have explained, deforestation destroys forests from the outside, while defaunation kills them from the inside.

A core principle of environmental management is embedded in all these examples: elements of the ecosystem occupy specific positions, therefore, if they are removed, the functioning of the ecosystem can change. Ecosystem recovery processes (e.g., rewilding) require both technical knowledge to understand the positions and structures that have been affected and a significant investment of time and resources to match these structures as closely as possible (Dasgupta 2021). Unfortunately, this can be both significantly expensive and, at times, unfeasible if the former structures have already been replaced by new ones that are more difficult to remove, particularly in the case of invasive species.

In this context, if humans value the services provided highly, it is more cost-effective to preserve the current ecosystems and help them expand rather than trying to recover ecosystems that have been destroyed (Benayas et al. 2009; Jones et al.

2018).). Similarly, there is a potential gap in which humans can enhance certain ecosystem traits by adding species or processes to occupy new positions in an ecosystem. However, this should be done with care; otherwise, the benefits can be outweighed by the changes in the system structure, as illustrated by invasive species such as common carps or tilapia. Because of their market values, these species have been introduced for aquaculture projects along the Mekong basin; however,

because of poor protocols, many of these organisms have invaded local rivers where they find plenty of food and no natural predators. Without structures to control them, these species expand very quickly, threatening the existence of other species and all the ecosystem functions that rely on them (Miththapala 2007).

2.7 SYNTHESIS Understanding the six elements of systems theory through a socio-ecological lens underscores how society and nature depend on each other. This provides a greater understanding of the instrumental value of nature and points to the ways in which humans can effectively manage nature. Extracting goods and services from nature is possible while still protecting its ability to regenerate.

Figure 2 provides a summary of each element and its implications for maintaining a sustainable balance between humans and the ecosystem services on which they depend.

Thus, while Chapter 1 discussed the hierarchy of human needs and the rationale behind the design of policies that benefit society, Chapter 2 concludes providing a set of analytical elements to understand our relation, meaning the relation of the societal sphere, with nature. By joining these two perspectives, Chapter 3 will explain how the interactions that take place at a regional level affect human well-being and open up a discussion on why protecting nature is necessary to improve the livelihood conditions of a society.

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OPEN SYSTEM

• •

•

OBJECTIVE

EVOLUTION

SYSTEM DYNAMICS

EMERGENCE

SELF-ORGANIZATION

• •

• •

• •

ECOSYSTEMS ARE IN CONSTANT INTERACTION WITH EACH OTHER THE IMPACTS OF DEVELOPMENT PROJECTS NEED TO BE CONSIDERED AT DIFFERENT SCALES AS THEY CAN VARY

ECOSYSTEMS ARE SHAPED TO MAXIMIZE THEIR RESILIENCE THESE STRUCTURES CAN SUPPORT THE CREATION OF SAFETY NETS THESE STRUCTURES ALSO ALLOW A SPACE WHERE HUMANS CAN SUSTAINABLY USE NATURAL RESOURCES

NATURE SYSTEMS ADAPT TO THE EXTERNAL SHOCKS THEY FACE THEY ARE STRUCTURED TO REDUCE THE IMPACT OF GEOLOGICAL PROCESSES

BY PRESENTING CHAOTIC BEHAVIOUR, ECOSYSTEMS CAN BE HIGHLY SENSITIVE TO SPECIFIC PERTUBATIONS THE PRECAUTIONARY PRINCIPLE IS FUNDAMENTAL TO ANY ENVIRONMENTAL MANAGEMENT PROCESS

•

ACHIEVING THE DESIRED OUTCOMES FROM A NATURAL PROCESS IMPLIES A REVIEW OF THE WAYS IN WHICH THE ECOSYSTEM ELEMENTS INTERACT

•

ENVIRONMENTAL PERTUBATIONS VARY DEPENDING ON THE STRUCUTRES AND POSITIONS THAT THEY AFFECT CONSERVATION IS COST EFFICIENT WHEN COMPARED TO RECUPERATION

•

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CHAPTER 3

PRODUCTIVE SYSTEMS AND NATURE’S VALUES 3.1 COMMODITIES FROM COMMODITIES 3.2 ECOSYSTEM SERVICES 3.3 MIXING AND MATCHING: THE CORE OF NATURE-RELATED SEVICES

3.4 THE VALUE OF BIODIVERSITY 3.5 RISK AND RETURN 3.6 SUMMARY

This chapter will analyse productive systems, inquiring into how goods and services humans need are produced and how nature is directly involved in these processes. While the previous chapters discussed the relationship between natural processes and human actions, this chapter focuses on the translation of these processes into goods and services useful for enhancing human life.

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3.1 COMMODITIES FROM COMMODITIES In general terms, economists define a theoretical value, understood as natural capital, and aggregate it with other values, such as physical capital and human capital, through a mathematical function to calculate a single value representing wealth that can be produced (Dasgupta 2021). Broadly, the approximation is useful to understand how, by mixing natural goods and services (natural capital) with our knowledge (human capital) and the tools we have developed (physical capital), we can develop useful products to improve our welfare.

Although fundamental to societal development, mainstream economists’ approaches to studying how raw materials are transformed into goods and services are not sufficient to capture the core elements of the processes of nature. The assumption that nature can be reduced to capital contradicts the implications of the theories developed in the previous chapters.

To begin with, because of emergent effects, nature cannot be aggregated into a single unit. Secondly, by viewing nature in a single unit of analysis, it is assumed that equivalent quantities are substitutable, which is not the case in nature. Moreover, by having all nature aggregated, it is not possible to distinguish between the processes of nature that generate value for humans and those that do not.

The works of Sraffa (1960) explain how nature is embedded in human production structures. To begin with, humans need goods and services to progress through the development

pyramid. While the lower levels of the pyramid represent basic needs such as water, food and medicine, upper levels include goods and services such as education, recreational and inspirational spaces and technological improvements. These goods and services need inputs, and these inputs need other inputs. Hence, instead of a functional form that mixes theoretical values and assumes a high substitutivity between inputs, real life production looks more like a recipe in which each ingredient is made up of other well-defined ingredients and proportions.

For example, to produce a car, one must have four wheels, a motor and seats, among other parts. The wheels need rubber that comes from the latex of the rubber trees as well as metal and other components that give the wheel shape and resistance; the motor needs metals of different types and therefore different origins; and the seats come with a long list of materials that range from foam for the cushions to the leather for the covers. The supply chain can go on and on, down to the raw materials. These elements are defined as inputs. However, there are other elements associated with production that are defined as production enablers or technologies. Technologies are not inputs, yet they add value to the process (Paez and Salamanca 2019).

To illustrate this point, consider two chefs baking cookies. Both will use the same recipe: the same units of eggs, flour, sugar, etc. However, one will use a machine to shape all cookies to a standard size and shape, while the other

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image © Hkun Lat / WWF-US

will use a manual cookie cutter.

Although both are using the same ingredients, the chef with the machine will produce more cookies as the machine helps reduce mass residuals.

Now, suppose that the economy requires 20 cookies and given the ingredients, each chef can produce a maximum of 15 cookies. Therefore, by default, both chefs need to be producing and the price needs to be defined in a way that both find it profitable to work. As the market will see cookies independent of their source, both chefs receive the same price even though the input costs of the chef with the manual cutter are higher (same material, fewer products). The machine is not required to produce cookies – it does not replace any of the inputs and the cookies can be made without it; yet, its presence improves the revenue of the chef who has it by adding value to the process.

Thus, technologies are considered those elements that are not needed for the production process, but their application improves the use of the inputs and maximizes profits. In summary, the production model presented shows a

supply chain where goods and services can be added upon with technologies that make production more cost-efficient.

It is in this context that nature plays a central role in production. In contrast to human-produced goods, nature can produce and reproduce itself. As described previously, this capacity is an emerging effect. A single tree cannot guarantee sustainable production of wood. However, a healthy ecosystem guarantees that trees are produced, and if the number of trees chopped down is less than the regenerative capacity of the ecosystem, the process can continue and continue using only the inputs embedded in the ecosystem. There is no need for external inputs.

Therefore, the role of nature in a supply chain is not only as producer of raw materials: nature is the only source of inputs that can renew itself, guaranteeing that the supply chain can continue for multiple periods. By framing nature in this perspective, production concepts and their implications for conserving nature become clear.

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image © Adam Oswell / WWF-Thailand

A SINGLE TREE CANNOT GUARANTEE SUSTAINABLE PRODUCTION OF WOOD. HOWEVER, A HEALTHY ECOSYSTEM GUARANTEES THAT TREES ARE PRODUCED, AND IF THE NUMBER OF TREES CHOPPED IS LESS THAN THE REGENERATION CAPACITY OF THE ECOSYSTEM, THE PROCESS CAN CONTINUE. 31 | WWF-Myanmar Investing in Nature

By framing nature in this perspective, it is possible to shed new light on production concepts and their implications on nature conservation:

A

B

RENEWABLE VS. NON-RENEWABLE RESOURCES

ENHANCING NATURE PRODUCTION

Nature’s goods are often categorized as renewable and non-renewable resources (Smith 2006), based on the capacity of the resource to regenerate. For example, petroleum is a limited resource, and although it comes from organic matter, it takes a long time to be generated. Hence, the resource is considered non-renewable because it takes aeons for it to reproduce. In contrast, trees are considered renewable because they can produce seeds that can be planted to produce new trees.

While nature can produce and reproduce, the current net primary production of the ecosystems is not at its maximum. It is possible to increase its output with technologies. For example, technologies can increase crop yields without increasing soil degradation or affecting other ecosystems services (Pingali et al.

2019; Jama, Kiwia, and Mutegi 2011; Pingali 2012). However, if ecosystem processes are affected to a point of degradation, regardless of technologies, the raw materials will not regenerate. At that moment, any resource becomes non-renewable.

Degradation of resources often affects basic products. This can have severe effects on the livelihoods of individuals by compromising food security as well as other potential losses.

Although reasonable, the categorization of resources into renewable and non-renewable has two weak points. First is the evaluation time span. For example, if the evaluation span is millions of years, then petroleum becomes a renewable resource. In contrast, if the time span is days, even trees become a non-renewable resource.

The second weak point is the fact that extinction is eternal. If usage exceeds reproductive capacity, or if other key elements of the ecosystem are destroyed, any natural resource can vanish. In this context, the terms renewable and non-renewable lose their meaning: any natural resource not managed prudently will disappear.

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image © Aaron Gekoski / WWF-US

3.2 ECOSYSTEM SERVICES The concept of ecosystem services has been formally standardized in the Common International Classification of Ecosystem Services (2021) in which ecosystem processes that have value for humans are divided into three groups: provisioning services, which include physical products such as crops, wood, animals and animal parts; regulation and maintenance services that focus on the capacity of ecosystems to regulate biotic and abiotic cycles such as flood control, reduction of erosion and preservation of soil fertility; and cultural values associated with the capacity of the environment to inspire us and define our identity.

Each of these categories affects humans in different ways. Provisioning services, for example, are the traditional goods that are considered as inputs – and

occasionally outputs – of the production process. Their value to humans is completely instrumental as it is derived either by the welfare we earn when we consume it – eating fruit gives us value as it eliminates hunger – or by using the good as part of a supply chain to increase its value. For instance, the value of timber is a fraction of the value of wood products.

For technical purposes, this report will also include recreational activities and services as provisioning services because they are derived from nature’s structures. In this case, activities such as fishing or walking through the forest are like services such as watching a movie or going to a gym in the sense that to enjoy the activity, there needs to be an infrastructure arrangement that meets the requirements of the activity.

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Thus, these services can be seen as outcomes of a production process and conceptually equivalent to other goods.

Regulation and maintenance services can, on one hand, be seen as production technologies. For example, soils that can recover nutrients faster can produce crops faster and with higher yields than poor soils. Although this property is not needed for production – farmers can compensate poor soils by adding fertilizers – having naturally rich soils adds value to production. A similar example is natural pesticides.

By having animals that eat pests near crops, plants can grow faster and healthier. These animals are not needed for production, but their existence adds value to the crop.

The second type of service in this group is more subtle. Thus far, we have assumed that if the inputs are available, then production is possible. However, what if floods are so aggressive and unpredictable near a factory that every time they occur, all production is lost?

Nature’s capacity to regulate the water flow is a service that goes beyond the production sphere and affects the factors that enable production. Hence, this specific service is not part of the production process, but it is fundamental to allow it to exist.

When this idea is viewed from the development pyramid, it is clear that these services directly target the base level of the pyramid and that ecosystem services associated with production support the next levels of the pyramid.

Thus, this category will be distinguished by production technologies and production enablers.

For the purposes of this report, the third group will not be considered.

Cultural services have high intrinsic values found in spiritual conceptions of nature, making the term services contradictory. They are independent in their value, regardless of our presence and use of them. However, there is a third category of services that will be considered. This is the role of nature in inspiring new goods and services and in its ability to unlock unknown potential.

Once these ecosystem services are mapped into the production model, they can be valued in economic terms.

This process is relatively straight forward. The market determines how much individuals value a final good, and then, through the input-output production structure (ten Raa 1994) and the profit premiums derived from technologies, products in the supply chain are priced accordingly. Examples of these valuation techniques can be seen in the work of Barbier (1994), who has developed protocols to valuate nature according to its contribution to final goods.

Finally, those services defined as production enablers can be valued based on the willingness of people to submit to the regulation process, or by how much they currently pay to regulate nature through other means.

For example, the value associated with the erosion control provided by mangroves is not only the cost of the mangrove plantation, but all the money the community spends on dykes and other elements to reduce erosion when nature is not present to do so.

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image © Hkun Lat / WWF-Myanmar

3.3 MIXING AND MATCHING: THE CORE OF NATURE RELATED SOLUTIONS We have seen how nature is embedded in human production and how ecosystem services enhance the production process.

Moreover, the framework presented shows the various elements of the supply chain and how it is organized between ‘recipes’ that define the inputs needed to produce the output, and the technologies that describe how to turn the inputs into

image © Shutterstock / WWF-Myanmar

outputs. However, the question remains, from where do the recipes come? Hausmann and Hidalgo (2011) present a highly innovative way to understand product diversification and ubiquity. In their work, they show how new products and technologies are more likely to emerge in those places where more diversified production is available.

NATURE-BASED SOLUTIONS ARE DEFINED AS “ACTIONS TO PROTECT, SUSTAINABLY MANAGE, AND RESTORE NATURAL OR MODIFIED ECOSYSTEMS THAT ADDRESS SOCIETAL CHALLENGES EFFECTIVELY AND ADAPTIVELY, SIMULTANEOUSLY PROVIDING HUMAN WELL-BEING AND BIODIVERSITY BENEFITS.”

A HEALTHY AND RICH ECOSYSTEM IS A SOURCE OF VALUE THAT WORKS AS BOTH A PRODUCTION ENABLER AND AS PRODUCTION TECHNOLOGY.

Understanding the functioning of several production processes allows humans to combine ideas from which new products and services emerge and to identify ways existing products can be produced better. Viewed from the perspective of nature’s role in the production process, richer ecosystems – as in ecosystems producing a wider range of services – benefit humans because they can learn from nature’s processes and develop a wider range of products and solutions.

The deterioration of ecosystems can be linked directly to a loss of opportunities for innovations along the development pyramid. The pharmaceutical industry provides an example (Hellwig 2015; Rainforest Trust 2013; Shanle and Luz 2003): the ability to identify new treatments and active principles to combat injuries and diseases is both a science and an art. It requires an in-depth understanding of the problem as well as a creative spirit to propose viable solutions. In this aspect, nature is a great source of inspiration because the wide range of chemical processes that regularly affect living beings can function as inspiration or even a cure for diseases.

Loss of biodiversity directly affects these sources of ideas for scientists, and although products can be synthetically produced, without nature as a model the time it takes to determine the desired chemical compounds increases. A healthy and rich ecosystem is a source of value that works both as production enabler and as production technology.

The International Union for Conservation of Nature (IUCN) has promoted the concept of nature-based solutions, which are defined as “actions to protect, sustainably manage and restore natural and modified ecosystems in ways that address societal challenges

effectively and adaptively, to provide both human well-being and biodiversity benefits” (IUCN n.d.). They also define two complementary terms:

NATURE-DERIVED SOLUTIONS carbon energy needs through production methods deriving from natural sources.”

NATURE-INSPIRED SOLUTIONS “Innovative design and production of materials, structures, and systems that are modeled on biological processes are nature-inspired.”

These three concepts will be referred to as nature-related solutions. Although similar, each concept has a different approach to the production processes. To begin with, a nature-based solution is an action that benefits both the ecosystem and humans in a direct way: for the current report, nature-based solutions are actions that protect, manage and restore ecosystems such that their provision services and those for regulation and maintenance are enhanced. For example, consider a project to recover the local ecosystems by protecting the riparian buffer of a river.

Besides improving the ecosystem, this activity can improve water availability and its quality for humans, control pollution, and provide habitat for species that can be consumed or commercialized (Conservation Tools 2014).

A nature-derived solution, such as a renewable energy technology, does not generate a product directly but provides the environment that allows the product to be generated. For instance, with the proper mixture of nature (sunlight) and technology (a solar panel), electricity is produced. Thus, nature-derived solutions

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can be interpreted as those ecosystem services that are intermediate inputs in the supply chains of goods that benefit human development. As such, regulation and maintenance services related to production technologies can be included in the group as they do not represent final goods from which humans derive welfare, but are parts of processes by which these goods are created. Finally, nature-derived solutions are those in which nature is the source of inspiration, such as in the pharmaceutical example given previously. This final definition is directed to Hausmann and Hidalgo’s (2011) ideas of technology development through inspiration from current technologies.

3.4 THE VALUE OF BIODIVERSITY The idea that healthy ecosystems provide different elements of the supply chain is embedded in each of the previous three concepts and demonstrates how protecting ecosystems will benefit society. These definitions can also be potentialized through Hausman’s (2011) works to express how highly diverse ecosystems have a higher potential to generate solutions for humans.

The idea of nature-based solutions encourages policymakers to actively search for links between ecosystems and societies by showing how, at the different levels of the development pyramid, human welfare depends on the welfare of nature.

Adding Hausman’s ideas to the discussion brings new insights on an uncovered topic: the unknown possibilities. The precautionary principle emerged as an element to ‘control’ the

chaotic dynamics of socio-ecological systems; being aware that our actions can have unexpectedly harsh consequences, precaution suggests stopping actions. However, Hausman and Hidalgo (2011) keenly show that the uncertainty of a positive outcome should also be considered. In this context, it becomes clear that encouraging diverse ecosystems will increase the possibility of more and better ecosystem services.

Although it is not known what could still be discovered, it is important to invest in not eliminating possibilities that may produce value in the future.

The work of John Harte (2011) provides a core link between ecosystems and production values. In his work, Harte describes the strong relationship between information entropy maximization and biodiversity, showing how biodiversity measures fit the statistical model. This statistical approach complements the thermodynamic approach mentioned in Chapter 2 in the exploration of how ecosystems tend to diversify within their context limitations. Linking these two points, under Hausman’s lens, the objectives of ecological systems are a source of value for social systems as biodiversity translates into potential new sources of value for humans.

The final point is related to the type of service that biodiversity provides.

Biodiversity is neither provisioning nor maintenance and regulation; however, it adds direct value to a supply chain by increasing the production possibilities.

This is the new category of ecosystem services introduced at the beginning of this chapter and defined as those ecological elements that currently have no direct impact on production but can inspire future improvements in the supply chain.

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3.5 RISK AND RETURN There is a final source of value that has not been incorporated into the supply chain model, but is represented in the functions of the ecosystem – the value of minimizing risk. Except for production enablers, the transformation of inputs into outputs is considered a deterministic process.

In this context, economists have highlighted the value of reducing risk and how individuals are willing to reduce the outputs to guarantee some type of stability. For example, as illustrated by Scott (1976), if the decision is to have a mid-yield crop for sure over having a high-yield crop that carries a risk of no yield under certain scenarios, many communities will prefer the mid-yield crop for the sake of food security.

However, for illustration purposes, consider crop yield. Yield depends on the rain, water levels of irrigation sources, temperatures at the different stages of the growth cycle, heterogeneous distribution of nutrients in the soil, wind patterns, potential pests neighbouring the crop and even the possibility that birds eat part of the crop. So many factors are involved that, for practical purposes, the final output of the production process is a random variable.

As expected, this risk aversion is intensified when basic needs are at risk (Kahneman and Tversky 1979). Therefore, any process that regulates the inputs of basic products – such as water availability, erosion or nutrients – is highly valued by the individuals whose production and consumption rely on their regularity.

Regulation of cycles is a fundamental value for humans, but it is not a direct part of the supply chain model. The best place to do this is to expand the definition of the

Figure 2

PERSONAL FLOURISHING COMMUNITY DEVELOPMENT ECONOMIC INDEPENDENCE FOOD SECURITY AND HEALTHY ENVIRONMENT PROTECTION AGAINST LIFE-THREATENING EVENTS

technological element to include elements that reduce the volatility of inputs and outputs and see them as a fundamental value of nature.

DIVERSE ECOSYSTEMS INCREASE THE POSSIBILITY OF MORE AND BETTER ECOSYSTEM SERVICES.

3.6 SUMMARY The intent of this chapter has been to incorporate the elements of the development pyramid and the socio-ecological systems within a framework of nature’s role in the production of goods and services.

ECOSYSTEM SERVICES PROVISIONING SERVICES + PROCESSES ASSOCIATED WITH ECONOMIC SERVICES

Figure 2 summarizes the two expanded frameworks presented in this report, the development pyramid and supply chain model, and links them with nature-related solutions and ecosystem services.

These concepts display the process by which the services from the ecosystems transform via the supply chain into the inputs required for humans to meet their pyramid of needs. Also, note that although nature-related solutions are a rebranding of ecosystem services, their key contribution is to serve as a discourse bridge between nature traits and social needs by helping us visualize how healthy environments allow humans to meet their needs in a satisfactory way. A deeper discussion is also implicit in the text: without protecting nature, all production structures are at risk of falling, and with them, the pyramid itself.

NATURE-RELATED SOLUTIONS

BASED DERIVED

MAINTENANCE AND REGULATION SERVICES MAINTENANCE AND REGULATION SERVICES

INSPIRING

INPUTS

RECIPES

(LINKED TO REGULATION OF HAZARDS)

(LINKED TO REDUCTION OF HAZARDS)

OUTPUTS

TECHNOLOGIES

(LINKED TO PRODUCTION IMPROVEMENT)

MAINTENANCE AND REGULATION SERVICES

SUPPLY CHAIN MODEL

INSPIRED

CHAPTER 4

TIME AND POWER: STAKEHOLDER’S INCENTIVES 4.1 4.2 4.3 4.4 4.5

RIGHTS AND POWERS FROM SWALLOW CAPITAL TO DUTCH DISEASE: THE TRAGEDY OF EXTRACTIVE INDUSTRIES ON RIGHTS AND THEIR ALLOCATION FUTURE COHORTS CONCLUSION

The previous chapters have confirmed that nature adds value to our lives. However, it is important to note that the term ‘our’ is not homogeneous or representative.

Resources do not only improve lives, but also give power as people are willing to exchange their time and effort for them. These efforts can be used to collect more resources.

Therefore, there is a positive feedback loop between power and resources that fosters inequality not only in the

allocation of resources but also in who makes the decisions for their management.

Unfortunately, in the same way that individuals have different resource levels, they are also placed at different levels of the development pyramid and thus have different priorities and incentives in managing resources. This chapter explores how the bargaining takes place between stakeholders and its implications for the welfare of people and the environment.

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4.1 ECOSYSTEM SERVICES As previously established, social systems self-organize and individuals occupy positions that come with rights and obligations (Lawson 2019). Those rights are not static and are embedded in historical processes: individuals with access to power in one period work to legitimize it in the next period. Once legitimized, their actions affect the way power is consolidated and resources are gathered, providing more power to the groups that make decisions (Robinson and Acemoglu 2006).

However, once the allocation of power begins to infringe upon the basic needs of a group, strong social pressure for change arises:new power groups take control and repeat the cycle on their own terms (Strasser 1980; Miller et al. 1967; Esteban and Ray 1999). Conflicts of power are costly, but society will push towards them when conditions threaten basic needs. Conversely, allocations of rights and powers that guarantee safety nets and support basic needs foster peace and promote political stability (Marc 2018; Rubenstein 2001; Vrbensky 2009).

We have established that a healthy environment is a necessary condition for progress up the development pyramid, especially at the basic levels, and that careless environmental management and degradation is a driver for conflict. This concept is the driving force behind the environmental justice movement (Schlosberg 2007).

Although the movement has many origins, one of the most remarkable promoters is Chico Mendes, a social activist from Brazil who argued that the

private interests and gains of the rubber industry not only did not improve the livelihoods of the plantation workers, but that aggressive cultivation techniques deprived them of their means of survival.

Mendes promoted workers getting a voice and vote in the allocation of economic rights so that the economic benefits of some groups (plantation owners) do not affect the needs and livelihoods of others (workers) (Rodrigues and Rabben 2007).

The environmental movement highlights how vulnerable communities tend to suffer from projects that degrade nature and seeks to promote the development of transparent participatory mechanisms that rebalance power structures.

Dynamics of power theory demonstrate how, particularly in socially unstable scenarios, access to rights is not equitable (Sikor and Lund 2009); that a right exists does not guarantee that the group exerting power respects it or that vulnerable groups benefit from it.

This is illustrated in actions taken by the Myanmar military during its last 20 years of power prior to the democratic transition in 2011. Because of economic sanctions imposed in response to the 8888 uprising, the military government’s ability to support the conflict against certain ethnic groups was reduced (Kelso 1992). They were not able to stabilize their power and their capacity to govern the territories was weakened. Hence, as the theory suggests, the government adopted several policies to compensate for their losses. Particularly, the government granted significant land concessions for agriculture and timber extraction to the private sector, mostly to companies from China and Thailand.

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Privatizing the land had three practical effects. First, it reduced the income sources of the ethnic groups and weakened their position in the conflict.

Second, the concessions were generous and lacked environmental or social safeguards. By accepting these conditions, the private sector implicitly legitimized the government’s rule in those territories and profited from the convenient rules in the field. Third, the countries benefiting from the concessions had reduced incentive to protest the humanitarian crisis that invoked the sanctions in the first place, or to support their continuance (Woods 2011; 2015).

Although two different administrations held power, both demonstrate how the institutions that control the resources earn de facto power, which they are then able to formalize. Furthermore, during transitions, access to rights can be legitimized in ways that drastically effect the welfare of others. Under both governments, these issues led to conflict and impoverishment among several population groups.

The government elected democratically in 2011 also needed to increase its resources and legitimacy. In 2012, they passed three laws: the Farm Law; the Vacant, Fallow and Virgin Land Law; and the Foreign Investment Law (Woods, Hirsch, and Scurrah 2015). As with the previous government, these three laws fostered the privatization of lands and similarly gave the government control over the land. The laws also failed to recognize community tenure of land and several communities lost lands strategic for their food security (Gelbort 2018; Ni Soe and Chin Par 2019). The Vacant, Fallow and Virgin Land Law opened the way for delicate ecosystems to be converted to agricultural use.

Private sector investment benefited the country on a federal level, but the local level suffered from the impacts of the new modes of production. Moreover, deforestation in Myanmar dramatically accelerated during these years; as individuals with the rights to produce (private sector) would not suffer from the consequences of the environmental damage, their focus was on profit maximization rather than conservation (Wang and Myint 2016).

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4.2 FROM SWALLOW CAPITAL TO DUTCH DISEASE: THE TRAGEDY OF EXTRACTIVE INDUSTRIES Because of the capitalist orientation of the world economy, private sector investment legitimizes and increases economic power for the stakeholders who own the resources. Thus, the private sector has a significant role in balancing power and becomes, in effect, a political

actor. Governments defend this relationship by arguing that private sector investment in a country or region creates employment and develops resources that can be used for social progress. However, reality often falls short: several conditions need to be met

image © Minzayar Oo / WWF-Myanmar

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before social progress is realized from private sector investment.

In Spanish, the term ‘swallow capital’, or capital golondrina, was coined to identify investors who see opportunities for rapid profit, invest enough to maximize their return, then leave the sector when benefits decrease (Gerencie 2020). While seeking opportunities is at the core of the entrepreneurial activity (Block, Fisch, and van Praag 2016), the swallows are not developing innovative ideas; rather, they target areas where local subsidies and regulations reduce their operation costs and increase their profits. Often, these enterprises are only profitable because of the support of local and national governments who provide subsidies to attract companies.

Paddy crops in Myanmar are an example of swallow capital (The World Bank 2014; Aung 2010; Ye 2017). Rice production has been of historical importance to the country and is infused with political interests. Laws, such as the Farm Law of 2012, and institutions, such as the Myanmar Agricultural Development Bank, encourage this sector to the point that other agricultural products are significantly inhibited by financial and legislative barriers (Chaudhary 2000; Kubo 2012; Than 1990), even in face of strong evidence showing that crop diversification improves farmers’ livelihoods (Reuters 2019; OBG n.d.). Rice production in Myanmar is not profitable without subsidies and risks the economic opportunities of large shares of the population.

‘Dutch disease’ is a term used to describe the results of this type of investment (Palma 2014).When presented with a strong push for a particular resource, a country focuses the economy on that resource and divests, or fails to build up diverse sectors, most often in manufacturing.

Depletion of natural resources is the most clear and infamous example of Dutch disease. The intensive use of land causes severe land degradation issues besides the already identified effects on nature; the only benefit to the local population is increased labour opportunities, which is quite cheap due to the high levels of informality in the market (Amin 2016).

Two aspects of Dutch disease are important to highlight. First, in most of these cases, the capital arrives to the country due to favourable policies, rather than by the profitability of the product itself. In some instances, the government genuinely thinks that the business will bring large benefits for the country in the future and justifies the policies to encourage initial investments. Finland is an example of this where, after decades of investing in telecommunications, the country became a major player in this sector (Chang 2008).

Unfortunately, and more commonly, power groups use their position to seek subsidies and policies that favour their businesses. When the resource is depleted, or the government is no longer able to offer subsidies, local populations are left without labour opportunities and without means of agricultural production: their food security is threatened.

The second aspect of Dutch disease is its frequent role in extractive industries. An extractive industry commonly refers to the removal of non-renewable resources without value-added processing taking place within the country (ODM 2018; The World Bank 2021).

For this report, the definition of extractive industry is expanded to include the extraction of any raw material, understood as any product that comes directly from a provisioning service of environmental impact. This definition

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encompasses traditional extractive sectors such as mineral and oil as well as projects such as land intensive agriculture that do not provide for the recovery of the soil or the irrigation systems.

In addition to the example of the telecommunications industry in Finland, there are reasons why governments encourage economic activities even if they are not necessarily profitable for the economy. For example, consider the case of bee farms. Having bee farms near orchards is ideal for the pollination of the crops. Hence, even if honey is not a profitable business, investing in bees increases the profitability of the orchards.

Although simple, this example shows the extreme opposite case of an extractive industry. In this case, even if the government is promoting a non-profitable investment, the investment is focused on the enhancement of productivity of other local business, so rent-seeking investment (i.e., swallow capital) is being used as an administrator of the bee farm project, rather than as a source of economic improvement of the country.

Extractive industries do not create linkages, which are central to economic development (Hirschman 1958). For example, backward linkages are companies that produce inputs for a given process. Hence, as the industry grows, so does the demand for these products.

Forward linkages are companies that use the product produced by the industry as input. Thus, by supplying these goods, an industry supports these forward linkages with improved access for production components and increased profit margins.

When an industry has multiple backward and forward linkages, it encourages linkages among other companies and supports the overall economic development of the country.

Understanding linkages helps a government to focus its efforts on sectors that have, or can be expected to have, strong economic linkages.

Likewise, if there is an explicit reason to encourage an extractive industry, understanding linkages assists the government in developing compensation mechanisms and establishing adequate monitoring and evaluation systems such that the resource exploitation does not affect an ecosystem’s restorative capacity1.

EXPLOITATION OF NATURAL RESOURCES LOOKS LIKE AN IDEAL BUSINESS: WE TAKE IT AND SELL IT, AS IF THERE WAS NO COST. IN THE END, THERE IS ALWAYS A COST, AND OUR CHILDREN ARE THE ONES WHO WILL PAY IT. Generally, situations in which the economic production of a sector have positive or negative effects in another sector are denoted as externalities. Although the topic is central for environmental economics, it is extensively treated by the Dasgupta review and therefore is not covered in this report

1

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4.3 ON RIGHTS AND THEIR ALLOCATION The previous sections have explored the political issues of power and control and their macroeconomic implications. This section examines the impact of rights allocations on a microeconomic level.

Assume that there is a situation of political stability where rights and access to resources are symmetrical. For example, consider the case of a beer company whose production pollutes a river used by the community as their water source. In this context, there are two possibilities: the beer company’s right to produce is prioritized over the right of the community to access clean water or the right of the community to access clean water is prioritized over the right of the beer company to produce.

In the first case, the beer company has no production barriers, and to access clean water the villagers must either pay for a water cleaning process or pay the company to reduce pollution. In the second case, the beer company must get permission from the villagers to produce, with the understanding that the company will compensate the villagers for their loss of clean water.

for reducing its pollution, the price might be too high for the community to pay. The company can demand compensation for the lower production that reducing waste implies. If the community’s right to request clean water is prioritized, the company can bargain to protect its production, most likely using a budget larger than the community can deploy to ensure its right to clean water.

There is no objective criteria per se to allocate rights; they come from a political process. Hence, aligned with the principles of environmental justice, resolution in this instance should come from public debates in which all stakeholders have an equal voice and vote, promoting transparency and accountability associated with the use, or impact, of the resources. However, in any debate where rights are prioritized on the side that can over exploit resources that can severely impact the livelihood of the other side, there is a risk of ecosystem deterioration.

In principle, once the allocation of rights is settled, the market price mechanism will determine the value of the right and parties will mutually agree, in this case, on the acceptable amount of pollution, production and compensation (Coase 1960).

Another aspect of the allocation of rights regarding natural resources comes into play when considering how rights can be exercised. A practical categorization of rights is the right to use, transfer and dispose. The right to use refers to the capacity of a stakeholder to manipulate a resource – for example, the right of a community to hunt animals (use the resource of animals available in the area near their community).

However, the community in this scenario will usually lose due to the allocation of power. For example, in the first scenario, the beer companywill not have an incentive to reach an agreement as it can continue ‘business as usual’. Even if the company is willing to accept a price

The right to transfer is the ability of a stakeholder to give an asset and all its rights and obligations to another party – for example, the right of an ethnic community to sell its traditional land to corporate firms. The final right to dispose can be understood using the example of a

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IN ANY CASE WHERE RIGHTS ARE IN CONFLICT, THE RECOMMENDATION IS TO FAVOUR THE PROTECTION OF NATURAL RESOURCES, AS IT WILL GUARANTEE THAT THE LIVELIHOODS OF THE FUTURE GENERATIONS ARE TAKEN INTO ACCOUNT.

image © Hkun Lat/WWF Myanmar

farmer who has a piece of forest on their land and wants to chop it all down to use the land for crops.

cannot be defined as the sum of its parts, organizes its members to coordinate the use of the resource.

Each case comes with its own dilemmas.

In the case of the right to use, the issue lies in how to measure when a community is hunting at levels that fulfil traditional and cultural practices and when it is using that right to legitimize poaching. In the case of the right to transfer, the challenge presented concerns cases where, because of lack of information, the community can make negative deals.

Sometimes, the coordination is weak, and the community arrangement, perhaps informal, leads to consuming the resource. However, there are many examples, signalled by authors such as Baland, Bardhan and Bowles (2007), Bardhan and Dayton-Johnson (2007), Dayton-Johnson and Bardhan (2002), Luke and Munshi (2006) and Wade (1987), that show how communities successfully coordinate and manage natural resources better than individuals as they can recognize the externalities that individual activities imply over each other.

This was one of the main issues in the amendment to the Vacant, Fallow, and Virgin Land Law, where, because of lack of information, communities could lose their land to private companies if they could not argue how communal land was not fallow land (Yeung and Dotto 2019).

Finally, the case of disposal presents one of the most difficult challenges in countries with weak land use rights. When land use rights are not clear, large areas of land can be grabbed and legitimized by private stakeholders (Martinsson and Vos 2017; Sauti and Lo Thiam 2018; Marks et al. 2015). Once the land grab is legitimized, the private sector has no barriers to how they develop the land as they have the right to dispose of its assets according to their preferences.

Rights are of special concern based on the tragedy of the common (Hardin 1968) mentioned in Chapter 2. When property rights are not clear, individuals will tend to abuse these rights. However, this argument lies in a change of scale. If a right is properly defined for a community, its analysis must be considered at that unit of study. Then, the question is not about the way in which the individuals use the common resource, but the question is about how the community, as an emergent social institution that

Hence, rather than a case of concern, the recommendation in the analysis of common property rights is to understand the social structures that can support the management of the system. In the same way, as corporations are subjects of rights, being a congregation of different stakeholders, communities should also be considered subjects of rights if they can coordinate the efficient use of the resources.

4.4 FUTURE COHORTS The case for rights between contemporaneous groups has been discussed. However, missing from these arguments is the most important case for sustainability: the rights of the future generation.

In the previous cases, there were groups whose rights and incentives were in conflict. This case is the same: taking one animal species to extinction will affect the rights of future generations or cohorts to appreciate that animal. However, the

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difference is that while policy can be settled favourably when contemporaneous stakeholders have a voice and a vote, it is impossible to give voice or vote to generations to come. The case gets worse when current decisions can affect the existence of future cohorts.

For example, if there is a policy that degrades land to a point that it is impossible to live in a region, what are the rights of those future generations who would have been born there? (Sólymon 2002; Beckerman and Pasek 2001; Gaillard 2019).

It is impossible to know the priorities, interests and desires of future cohorts.

However, important decisions need to be taken on behalf of these cohorts because using natural resources in the present, particularly if they are used in an unsustainable manner, will affect the availability of these resources in the future.

Compounding the problem, when current generations die, either they have not cared about what happens next or they assume that the welfare of the future cohorts that they care for, such as their children, can

be measured using the current parameters (Aliprantis, Brown, and Burkinshaw 1989). However, even in this last case, which relies on a strong assumption, there is a higher priority to use resources now than in the future.

This priority is reasonable. The future comes with risks and uncertainty, therefore, if the benefits of a project can be enjoyed in the present, why wait? In contrast, if the benefits are only realized in the future, the present individual will expect compensation for the time lag (Brush 2003). Therefore, the current generation has significant bias when judging the needs of the future cohorts.

As in Chapter 1, this is where the precautionary principle must be favoured. These cohorts must, at a minimum, have the same possibilities we have currently. At this stage, the claim of Dasgupta (2021) can be fully understood.

It is not enough to leave the future generations the same physical capital; if the ecosystem services are deteriorated, the capacities of the future supply chains to continue production will be limited, and some might even disappear.

IT IS IMPOSSIBLE FOR CURRENT GENERATIONS TO KNOW WHAT THE FUTURE GENERATIONS NEED OR WANT. OUR DUTY IS TO ENSURE THAT THEY HAVE AT LEAST AS MANY OPTIONS AS WE HAD, SO THAT THEY CAN FLOURISH ACCORDING TO THEIR FUTURE ENVIRONMENT. 51 | WWF-Myanmar Investing in Nature

Thus, having more capital will be ephemeral as it will not be able to be recovered once it depreciates. Then, once supply chains are affected, individuals will face challenges to support their needs and the ways we used to cover them will not be available for them. Hence, if environmental services are not protected in the present, the needs of future generations will be severely affected. For this reason, their current conservation should be a priority.

4.5 CONCLUSIONS In most of the theoretical designs regarding production and nature, there is an explicit assumption of the rights and obligations of the stakeholders involved in the process. However, this assumption is far from valid. Allocation of rights is a political process that depends on the historical events and the context in which the institutions take place.

Consequently, these historical processes have resulted in resources that are not equally allocated, leaving groups in society to develop actions and policies to legitimize their access to resources and

shape society in a way that improves its collection of resources. However, if the modification of instructions severely vulnerates the needs of the other groups, this may spark conflicts and social unrest creating a worse situation for society. It is in the long-term interest of the power groups to create open spaces where different groups can express their needs and wants, and the decisions consider their concerns and welfare needs.

For the special case of future generations, the recommendation according to the principles of sustainability is to make sure that resources are used in a way in which future generations have at least the same ecosystem services that we can access.

Finally, the chapter highlights several debates on the allocation of rights, and while the final decision needs to be taken by the relevant stakeholders, the strong recommendation is to avoid assigning rights to those individuals who can affect ecosystem services as their actions can affect the pyramid of needs of some population groups. Having them on the side that needs to bargain can help designing, monitoring and accountability processes.

IF THERE IS A POLICY THAT DEGRADES LAND TO A POINT THAT IT IS IMPOSSIBLE TO LIVE IN A REGION, WHAT ARE THE RIGHTS OF THOSE FUTURE GENERATIONS WHO WOULD HAVE BEEN BORN THERE? 52 | WWF-Myanmar Investing in Nature

image © Shutterstock/WWF-Myanmar

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