“Isn’t it wrong to add a monetary value to nature? It’s more important than that.” So I was told by a good friend, last week.
It’s not the first time I’ve had this said to me (not that it’s my fault, by the way). There remains real tension around the topic of valuing nature, criticism relating to the morality and efficacy of doing so, and fear that it could facilitate the treatment of nature as a commodity to be traded.
Natural Capital has been described as the things we get for free from the natural world.
Therein lies the problem. If we don’t recognise the true value of nature, we’re unlikely to take care of it.
We may not like this uncomfortable truth, but the evidence is out there for all to see.
The Office of National Statistics has calculated the economic value of the UK’s natural assets to be £1.5 trillion – an unimaginable figure, but one that’s recognised to be a substantial under-estimate of the true value.
From an environmental perspective, a strong case can be made for a pure nature conservation approach involving policy interventions such as incentive payments and protected areas. These can be effective in maintaining environmental components and restore natural systems.
But, such an approach is limited by the practical and political difficulties of restricting commercial activities and the mounting costs in a time of such social and environmental change.
If we can attach realistic value to the goods and services we obtain from nature, then we might just be able to start addressing our natural capital debt. Here in the UK, our ecological footprint is running at 3.5 planets.
Government needs to speed up and amplify the uptake of the natural capital approach by business, helping to ensure that the value of natural capital is properly reflected in markets. That way, we can apply the ‘polluter pays’ principle:
Industry pays for wetland restoration that helps to purify water. This in turn offers recreational opportunities.
Food-chain businesses pay for habitat creation, which helps to conserve wildlife. This brings reputational benefits.
Insurance firms pay to slow water runoff and increase infiltration, helping to reduce flood risk. This results in lower insurance pay-outs and premiums.
Water companies pay to reduce pollutant input or loss, improving soil and water quality. This helps reduce treatment costs.
You get the point.
This natural capital approach can deliver environmentally beneficial outcomes in situations where there is short- or medium-term economic advantage to protecting the environment. It’s less successful when there’s no realisable, short-term economic advantage, such as conserving the most valuable wildlife habitats. This still requires a more traditional nature conservation approach.
The role of business in relation to nature conservation regulation is to keep environmental impacts within legal limits and stakeholder expectations; in relation to natural capital, it is to measure and manage natural assets for future returns. In either case, the condition of the natural environment has important implications for business in terms of:
Risk, e.g. disruption to supply chains
Cost, e.g. increased cost of materials
Brand & reputation, e.g. increasingly discerning customers
Revenue, e.g. price and market willingness to pay
We’re seeing a growing interest in Natural Capital Accounting, and this is highlighting that there is currently a considerable gap between the costs to business from any depletion of natural capital and the value lost by society as a whole.
Fortunately, the costs of action to preserve natural capital may be considerably lower than the value of the natural capital. This creates opportunities for business to invest in actions that can improve conservation outcomes and reverse natural capital depletion, establishing themselves in an increasingly green, ethical marketplace.
However, the costs of restoring natural systems at any meaningful scale are so great that the benefits to a business are likely to be insufficient to support a case for action, at least in the absence of shared responsibility or a strong sense of philanthropy.
Because it captures the true value of goods and services, the natural capital approach drives business action to reduce negative impacts, maintain beneficial practices and put right any damage. A role still remains for nature conservation, most notably where the benefit is to society at large, rather than an individual entity. By adopting an aligned approach, it becomes possible to increase the overall resources available to improve protection and restoration of our natural systems.
Wouldn’t it be great to do more than simply aim to maintain our biodiversity (although, in truth, we’re still losing that battle)? Taking a new approach offers us the opportunity to have a net positive impact on our environment.
Positive effects not only balance but are expected to outweigh negative effects by:
(1) Avoiding unacceptable impacts to ecosystems
(2) Reducing the impacts that may occur
(3) Restoring impacted ecosystems
(4) Compensating for residual impacts with offsets
(5) Seeking additional opportunities to contribute to local conservation