Despite the economic and social values of HoB’s natural capital, and the high costs of poor management, its critical role in the economy and in broader human welfare largely continue to be ignored.
GDP measures fail to account for the important role of natural capital in determining productivity. Few industries take into consideration the costs of reduced or lost ecosystem services. Policy continues to incentivize extraction. External costs remain external to those responsible.
The value of HoB ecosystems and biodiversity is poorly recognized because they are ‘public’ goods and services without markets or prices. The lack of incentives to conserve results in poor ecosystem management, impacts on ecological functions and, eventually, losses due to foregone revenue streams. Considerable investments may be required to offset the losses incurred.
‘Business-as-usual’ practices, based on unsustainable use of natural resources, are having negative impacts on ecosystems, biodiversity and on the quality of individuals’ health and livelihoods, not least among forest-dependent communities. These impacts rarely respect sectoral boundaries and are imposing widespread external costs— or ‘externalities’—on other economic sectors and on society as a whole.
The profitability of HoB’s extractive industries often depends to a significant degree on the fact that many of the environmental costs associated with productive processes are externalized.
Some industries are now paying for services, such as water treatment or dredging, that a well-managed and functioning ecosystem would provide for free or at lower cost.
The current economy not only undervalues natural capital but is neither inclusive nor sufficiently equitable. The rapid economic growth that has taken place in Borneo in recent years has clearly benefited some.
However, growth in its current form appears to be unsustainable both for the island’s ecosystems and species—which are facing severe pressures— as well as for its people—many of whom, despite rapid increases in GDP, continue to suffer from high levels of unemployment and poverty.