Natural capital

If corporations and people knew that the benefits of a local urban forest were worth, say, $12,000, would they be more inclined to take care of it?

Some economic and public policy pundits say yes, and I tend to agree with them. I recently read a story in The Conversation, “Putting a dollar value on nature will give governments and businesses more reasons to protect it” by Linda Bilmes. She’s the Daniel Patrick Moynihan Senior Lecturer in Public Policy and Public Finance at Harvard Kennedy School. (http://bit.ly/nature_dollar_value)

Some reports say that the loss of the natural environment could become the planet’s sixth mass extinction. How will price tags of sorts help? Bilmes says, “As an expert on budgeting and public finance, I know that governments and private businesses alike pay much more attention to resources when they have a well-defined price tag. I believe that overhauling society’s concept of wealth to include ‘natural capital’ – the value nature provides to humans – is a critical step for slowing and reversing the loss of precious ecosystems.”

Natural capital is the world’s stocks of natural assets – air, water, forests, soil, and all living things from elephants down to tiny microbes. And these resources contribute more than $125 trillion to the global economy annually, according to the World Wildlife Fund. She explains that forests absorb carbon and filter the water we drink, and bees pollinate crops that enable us to grow food. Those things have economic values.

However, Bilmes notes that while actions to combat climate change have measurable goals, “there is no globally accepted metric for saving biodiversity” and that “human societies don’t formally recognize the economic value of these services.” And that has a direct effect on the degradation of our natural assets.

She mentions the Capitals Coalition, an organization that seeks to persuade at least half of the world’s businesses, financial institutions and governments to incorporate natural capital into their decision-making by 2030. The coalition believes “By identifying and measuring the value that flows between nature, people, society and the economy, ... [it leads] to outcomes that deliver benefits across the system.”

Bilmes says that natural capital accounting “would require businesses and governments to calculate how human activity affects nature, much as they assess depreciation of buildings or machinery. Analyzed in this way, nature is a financial asset, and damage to it becomes a liability. This approach creates incentives to conserve natural resources and restore others that have been degraded or depleted.”

“Adopting metrics to measure and track the benefits people receive from wildlife and ecosystems would clarify how human activities affect nature and show how much investment is needed to reverse humanity’s current destructive trajectory,” she says.

Your trees are sold to municipalities where urban forests filter air and water, control storm water, conserve energy, and provide animal habitat and shade. Your plugs are used in grassland restorations. Your products are natural assets and valuable in many senses, including natural capital.