For example, the services that forests provide-such as habitat, water filtration and climate regulation-are regarded as free. But when forests burn, the financial costs can be huge. The massive fires that raged in Indonesia and Brazil in 1997 took heavy tolls in terms of the medical costs of smoke-caused respiratory illnesses, airplane and boat accidents, lost productivity and tourism, diminished crop yields due to reduced sunlight, and transportation disruptions (over 1,000 flights were canceled in one month alone). Yet, the forests were burned deliberately, by loggers and commercial plantation operators. And the Indonesian government did little to prevent the burning because it grossly underestimates the value of intact forests to society-and because many of those who set the fires have ties to the government.

"The lack of formal pricing for nature's services leaves them with little protection," says Abramovitz. "When an asset is regarded as free, it is taken for granted and can be badly depleted or contaminated before the damage is noticed, or before protective action is taken. When nature's services are lost, no one is charged-but we all pay the price."

The report, which appears in the January/February issue of the magazine, notes that the erosion of natural services pulls out key underpinnings of the industries and societies that have depended on them-but that have failed to properly value these services by spending the money necessary to protect them from unrestrained exploitation or inadvertent destruction. Abramovitz cites other examples of undervalued natural processes:

* Wild bees, bats, birds, and other creatures pollinate some 80 percent of the world's agricultural crops. Farmers do not pay directly for this service. It is not really "free," however, because when wild pollinators disappear, the reduced productivity exacts a heavy cost to the farmer-and consumers. Wild pollinators are disappearing, as human developments destroy or contaminate their habitats. In the United States, she reports, populations of wild and domesticated bees have crashed. As a result, the cotton industry alone has incurred losses estimated at estimated $400 million per year.

* The purification of fresh water through natural filtration is regarded as free. Yet when watersheds are cleared of their natural cover, or "developed," and the filtration is lost, water users face high costs to replace the natural filtration service with an artificial one. New York City, for example, relies on rural watersheds to clean the water that serves 10 million people each day. In 1996, experts estimated that it would cost $7 billion to build water-treatment facilities adequate to meet the city's projected needs. Instead, the city chose a strategy that will cost it only one-tenth that amount: helping upstream counties to protect the watersheds around its drinking water reservoirs.

"The total value of such uncounted services is far larger than economists have traditionally believed," says Abramovitz. "The global total actually exceeds the value of the "human" economy as measured by global Gross Domestic Product." According to a recent comprehensive study conducted by Robert Costanza of the University of Maryland's Institute for Ecological Economics, the global value of these ostensibly "free" services is about $33 trillion, compared with a global GDP of $25 trillion.

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