Posts Economy, Environment

Environmental Economics researchers Heini Ahtiainen and Antti Iho discuss environmental protection tinder, plan crowdfunding methods, define marine benefits with economic terms and end up pondering about the moomins. This is a serious matter. It concerns the entire Baltic Sea.

Wellbeing obtained from the environment, our various ways of experiencing it and the question on the price of things have a common denominator in economics. The EU Water Framework Directive and the Marine Strategy Framework Directive require that the costs and benefits for new policy measures be examined to improve water quality.

A cost-benefit analysis is an instrument with which researchers Heini Ahtiainen and Antti Iho can help decision-makers to make the most environmental benefit of any planned action. To prevent spending money on something that doesn’t work, they simplify.

“The need for cost-benefit analysis has been understood well, but not what it entails. Decision-makers may think that the benefits can be measured as accurately as in natural science,” says Mr Iho.

Ms Ahtiainen agrees.
“There are a number of ways of finding out the benefits of environmental protection. The people who use the information do not yet know enough about the analyses. We want to give out information also to other than decision-makers, so that people would think about the benefits from a broader perspective.

Soon it will be possible to buy the benefits gained from protecting the Baltic Sea.

Kuva: Erkki Oksanen
Photo: Erkki Oksanen

No price, no value?

Mr Iho draws an equation of the problem of joint use. It is easy to ignore something in politics that has no price or market. The cost-benefit analysis puts a price tag on things. It brings matters on the same scale.

“If there is no price, there is no value. A common but peculiar view is that if there is no price, there is no value. Example: if half of the forests in Helsinki are cut down, this does not cost anything to the residents but reduces wellbeing.”

“The wellbeing effect is real even if it does not show in income flows,” says Ms Ahtiainen.
“It will be shown later in land prices, for example. This hidden value will be revealed by cost-benefit analysis at an early stage,” continues Mr Iho.

The benefits of protecting the Baltic Sea have been studied. We know that Finland, Sweden and Denmark would benefit the most. People are also prepared to pay for the protection. This means that we can calculate the expense and develop mechanisms for collecting payments for improving the sea’s condition.
“So we would be paying for marine ecosystem services. There are hardly any functioning examples of these kinds of activities in Finland as yet,” says Ms Ahtiainen.

Emission changes owners

An emissions trade system is being developed for the Baltic Sea suffering from eutrophication. Researchers are planning an online application in the recently launched Nutritrade project for those willing to pay. But who would be the buyers and what would the commodity be?

“When chemical phosphorus removal from wastewater was started St. Petersburg, Finland and St. Petersburg were engaged in emissions trade, although few people saw it that way,” says Mr. Iho.
“Emission rights were bought off the market,” says Ms Ahtiainen.

The results are visible. According to Mr Iho, water in the Gulf of Finland is factually clearer than for years, and part of the reason is probably thanks to better water treatment in St. Petersburg and restriction of emissions on the Luga River.

In a more extensive emissions trade system, the payer could be anyone – concerned citizen or an aware city or municipality – aiming at nutrient neutrality.

An emissions trading system is being developed for the Baltic Sea suffering from eutrophication. Researchers are planning an online application in the recently launched Nutritrade project for those willing to pay. But who would be the buyers and what would the commodity be?

“When chemical phosphorus removal from wastewater was started St. Petersburg, Finland and St. Petersburg were engaged in emissions trade, although few people saw it that way,” says Mr. Iho.

“Emission rights were bought off the market,” says Ms Ahtiainen.

The results are visible. According to Mr Iho, water in the Gulf of Finland is factually clearer than for years, and part of the reason is probably thanks to better water treatment in St. Petersburg and restriction of emissions on the Luga River.

In a more extensive emissions trading system, the payer could be anyone – concerned citizen or an aware city or municipality – aiming at nutrient neutrality.

Who’s polluting?

Hang on, hang on. Whatever happened to the polluter pays principle? “Does it work anywhere?” the researchers counter.

“And who is the polluter in the end anyway?” We all eat food that is the result of agriculture. In a way everyone pays, and the government decides whether taxes are used for reducing emissions. To what extent the polluter pays is extremely difficult to determine,” Ms Ahtiainen explains.

Mr Iho goes back to St. Petersburg.

“The polluter pays” principle can be strangling.  The phosphorus clean-up would probably never have started if the principle had been adhered to strictly. The John Nurminen Foundation paid part of the expenses in a project which resulted in the phosphorus removal of St. Petersburg reaching the Finnish coast. Finns will reap the benefits as the Gulf of Finland gets better.

Therefore more coordination is required to make the willingness to pay and the need for protection meet. Semi-automated crowdfunding. Local projects, Mr Iho is thinking.

We also need large-scale action to affect the entire sea. The central part of the Baltic is doing badly, and one of the worst polluters is Belarus, which does not border on the Baltic but whose nutrients end up in the sea along the Daugava River.

“This causes a lively debate. Should each state do their part to correct the situation? What if a million Swedes wanted to pay and said that nothing else matters than getting Belarus wastewater treatment to function and the shores of Gotland cleaned up? Would we then have saved the sea using the wrong method?” Mr Iho asks.

Standards out, payments in?

Is society moving towards an era where everything is for sale? Could the Baltic Sea be improved by whoever can afford it, with the market deciding on the outcome? No, the researchers say. Emissions trading and coordinated crowdfunding, taxation and standards complement each other. The debate is also about what fundamentally are society’s duties.

“Overall control must be retained. Even if standards are relaxed, point source pollution limits must still be enforced. The Talvivaara mine in Finland is a good example of how important it is to have environmental protection measures based on rules and regulations. Relaxing permit conditions would be an unwelcome development”, says Mr Iho.

“Not all that appears like saving is actually that. You can lose a huge amount of benefits if certain things are left undone. This is one of the key findings of our research,” says Ms Ahtiainen.

She says that people are prepared to pay for the sea to remain as healthy as possible, and to prevent any further setbacks. However, not all share the same view of what constitutes the sea’s good state.
“Exactly. Russians like to fish for roach and bream, while Finns prefer salmonoids. If just a thousand people want the local water area to improve and others agree that it is a good idea, perhaps this is not a matter for the whole country to deal with. Coordinated protection could step in when a certain basic level has been reached,” says Mr Iho.

Enjoying the sea comes first

If there are enough payers for environmental protection that exceeds certain standards, the future may hold better opportunities to deal with it. Whether it is called emissions trade or something else is not yet known.

“Long Island Sound in the US is being improved so that everyone involved has to pay. We too can create a system that is not regulation in its strictest sense. But is it emissions trade? We shall see what some scientist will call it afterwards,” says Mr Iho.

The door is not yet open for emissions trade. What can concerned people do already today to help the Baltic Sea? Antti Iho closes the textbook on economics and ponders:
“When Moomintroll saw a boat, he wanted to go for a row before he died. My advice is to go rowing. Fishing, walking on the beach. The worst this would be to think that you can no longer enjoy the sea. Because marine conservation will continue only if people think it is important,” says Mr Iho.

Heini Ahtiainen agrees.

Text: Marjatta Sihvonen