How Can We Accurately Value Nature Conservation?

Earlier this year a new report from the World Economic Forum revealed that half of the world’s GDP is dependent on nature in some way.  That represents around $44 trillion of economic value.

“This research provides compelling evidence of the tremendous extent to which our economy depends on nature and its services,” said Marco Lambertini, Director-General of WWF International. So it is not surprising that the investment community is starting to take note.

Yet the challenges involved in governing common resource systems have been vexing policymakers at least since Garrett Hardin famously chronicled the tragedy of the commons in 1968 .  Elinor Ostrom famously charted a path towards overcoming this problem in her Nobel Prize-winning workthat illustrated how local communities were able to cooperate and manage common resources effectively.

Central to the challenges posed when trying to govern common resources is the difficulty in accurately assigning value to natural resources.  Yet, with COVID perhaps reminding governments of the importance of tackling problems before they get too severe, there is a renewed emphasis on grappling with climate change, and therefore on protecting precious natural resources that do so much to buffer the impact from it.

It’s a topic examined in depth by McKinsey in a recent paper whereby they describe a new method for valuing nature conservation that they hope will underpin efforts made by the global community to better protect the commons.

“Much of the global economy depends on natural capital—the world’s stock of natural assets,” the researchers write.  “Yet the complexity of natural capital makes its benefits hard to quantify, leading many to overlook nature as an investment opportunity.”

You can watch a discussion of the report’s authors, Robert Wilson and Duko Hopman, hosted by the Conservation Finance Alliance, below.

Mapping the world

The researchers began by dividing all land areas into 5km by 5km “pixels”, with marine areas divided into 30km by 30km pixels.  In all, this divided the globe into around 6 million pixels covering the earth’s surface.

This allowed them to map areas where they believe nature has an extremely high value, which in turn means that the co-beneficiaries can be identified and the costs associated with conserving these areas better understood.

“We then overlaid this global map with thousands of spatial data layers covering a range of variables (such as biodiversity, carbon stock, and human footprint) to establish a baseline for nature conservation and define six alternative scenarios to maximize the value from expanded conservation,” the researchers explain.  “In each scenario, we assessed the impact of expanded conservation on climate change, jobs, GDP, zoonotic disease risk, and biodiversity and calculated the additional operating costs of conservation that may be required.”

The video below is building on the seminal book, Natural Capitalism: Creating the Next Industrial Revolution by Paul Hawken, Amory Lovins & L. Hunter Lovins, first published in 1999.

Fertile areas

They hope that by identifying the areas where the most value can be derived from conserving the natural environment, priority can be given and resources focused in ways that deliver the best outcomes for all concerned.

They argue that if this targeted approach is adopted, not only can atmospheric CO2 be reduced by up to 2.6 gigatons per year, but up to 650,000 jobs could be created in conservation management fields, such as wildlife management and area infrastructure.  This in turn would either generate or safeguard around $500 billion in global GDP.  What’s more, it would also lower the risk of new zoonotic diseases emerging by slowing ecosystem fragmentation.

Of course, achieving such grand ambitions would require a huge, concerted effort by the numerous stakeholders involved, and it is perhaps the concrete recommendations the report makes for those stakeholders that is of most interest on a practical level.

Next steps

For instance, they advocate those in the private sector to better understand the risks associated with the loss of natural capital and henceforth to make stronger investments in conservation in an attempt to mitigate those risks.

This investment in natural capital could also be amplified through more effective collaboration between sectors, and the authors advocate approaches such as Project Finance for Permanance as a mechanism to support this.

Among governments, the report emphasizes the importance of truly understanding the investment case for the expansion of nature conservation.  This would include understanding how and where the erosion of natural capital is and might be putting populations and their livelihoods at risk, while also understanding how the benefits from such investments flow to Indigenous and underserved communities who often live in these conservation areas.

For those of us on a more individual level, the report advocates pooling resources, both financial and human, to try and accelerate projects that have the biggest potential impact.  Numerous sustainability investment funds exist to help channel resources in the right direction, and the report urges the donor and practitioner communities to better work together to get the best outcomes.

An organisation that is already walking in this direction is True Price, based in the Netherlands. Their mission is to “… realize sustainable products that are affordable to all by enabling consumers to see  and voluntarily pay the true price of products they buy” whereby a ‘true price’ implies that no damage is done to people or to nature: it is fully sustainable. If all products are sold for a true price, then the global economy is sustainable.

Moving towards a accurately valuing nature

Below some tips on how we, as individuals and organisations, can help move towards accurately valuing nature.

What each and everyone of us can do

• Recognise that nature is priceless. ‘Values’ are human constructs but nature exists with or without our perception of its value. As an individual, make a stand and reiterate that nature has and always will have intrinsic value that is not dependent on what we think of it. And remind your peers that however we choose to try and ‘measure’ nature’s worth, without nature we simply do not exist.
• Recognise that you are nature! Nature is not outside of who you are. We are all an integral part of the earth, oceans and skies. We are inseparable so being aware of what you do is simply self care and self supporting as well as supporting all others. Be aware of what, how and where you eat and buy across all aspects of your life.
• Go for a walk, photograph an amazing scene and keep looking at it to remind yourself how amazing it is in nature.
• Create reminders for yourself and others of the limitless beauty and contribution of nature to every aspect of our lives; if we do not value nature, we might end up in a ‘Matrix’ (the movie) scenario where humans become entirely subservient to technology – if we survive at all.
• Aim to buy and use products with the lowest possible environmental footprint; this includes buying local and buying organic.
• Consider renting instead of buying.

What organisations can do

• Include full environmental costs in your spreadsheets and then imagine that what is bad for the planet is also bad for your children’s children.
• Recognise that nature is priceless. It precedes any human existence and cultures that try to reduce the living world to measurable product. Do all business on the basis of that understanding.
• Create a conscious attitude to all decisions: is it good for the business, our clients, and our environment?
• Get everyone to go for a walk and publish the photographs in memorable places like canteen, reception and website, suitably captioned.

RESOURCES:

• This 2014 paper by the Institute of Chartered Accountants in England and Wales (ICAEW) – which despite its name has 158,000 members across 149 countries – addresses the question whether we need to value nature, how it is done, and who should do it.

• The UN has two particularly relevant initiatives : (a) The System of Environmental-Economic Accounting (SEEA) is a framework that integrates economic and environmental data to provide a more comprehensive and multipurpose view of the interrelationships between the economy and the environment and the stocks and changes in stocks of environmental assets, as they bring benefits to humanity;  and (b) The Enhance Natural Capital Accounting Policy Uptake and Relevance (EnhaNCA) project aims to provide materials to increase policymakers’ understanding of applications of natural capital accounting (NCA) according to the System of Environmental-Economic Accounting (SEEA).

• You can find a collection of interesting articles on by the German-based Heinrich Boell Foundation.

• Mass Audubon is a great example for what is being done locally, in this instance new England where Mass Audubon is  protecting more than 38,000 acres of land throughout Massachusetts. They have developed value fact sheets on,
  – Forests
  – Coastal Areas
  – Wetlands & Waterways
  – Grasslands & Farmlands
  – Urban Green Space