Economics is a force of nature. But just as importantly, nature is a force of economics. At least it should be.
Determining the economic value of nature, in hard numbers, is the mission of Natural Capital Project. Founded in 2006, the Project is a partnership between Stanford-based Woods Institute for the Environment, the Nature Conservancy, and the World Wildlife Fund.
The concept that a rainforest may be worth more in the long run than a bunch of harvested logs isn’t hard to grasp conceptually, but it becomes a little harder in the day-to-day realities of human endeavor, especially for poor nations struggling to maintain a sagging economy.
“…it’s hard to turn down the cash deal” as Mark Tercek former official at Goldman Sachs and current head of the Nature Conservancy puts it, “It’s hard to put a value on these services”
It may be hard, but that is what the Natural Capital Project sets out to do.
Putting a price tag on nature is the key to saving it (and in the process, us).
Unplugging life support: Houston we have a problem
Back in the days of Apollo, the whole world looked on in rapt fascination as the astronauts of the ill-fated Apollo 13 mission struggled with their rapidly deteriorating life support systems. A scenario that began with those now iconic words, “Houston, we’ve got a problem”.
Of course, there is no need to go up into space and back four decades to witness a deteriorating life support system. It’s all around us. Earth, we have a problem.
The problem lay, in large measure, in economics. How we calculate GDP and leave on the table the “trillions of dollars of benefits that nature provides, and on which our lives depend”.
The Natural Capital Project envisions a world of “greater economic realism” where management of ecosystems reflects their value as precious natural assets. Not ‘there’s gold in them thar hills’, but ‘those hills are gold’.
That all sounds good. But how?
Tools and fieldwork
The Natural Capital Project brings together some of the brightest minds in both ecology and finance, working together to create a financial model capable of putting a price on natural systems.
Gretchen Daily, a co-founder of the Project and its current chair, is the first biologist to brainstorm with business leaders at Goldman Sachs, picking the brains and bridging the divide between economists, businesspeople, and lawyers in an effort to shape a new standard for the conservation movement.
With a new way of looking at nature conservation based on economics and cost/benefit analysis, the Project’s initial “toolbox” consists of the Natural Capital Database and InVest (Integrated Valuation of Ecosystem Services and Tradeoffs).
InVest is a software modeling tool that allows government officials, conservationists, farmers, and other landowners a means of making informed decisions on land and ecosystem use by demonstrating a future cost/benefit analysis those decisions will make for people and the environment.
InVest, created in collaboration with the National Center for Ecological Assessment and Synthesis (NCEAS), maps and models the natural capital for any given scenario to determine the delivery, distribution, and economic value of ecosystem services and biodiversity.
An example might be to determine which parts of a watershed provide the greatest carbon sequestration, biodiversity, and tourism values. Another might be to determine the economic value for a government to pay residents to maintain a forest in order to regulate water supply instead of harvesting the trees and damaging the watershed. Or perhaps estimating the value of a forest full of pollinating insects crucial to nearby crop production. Working with a tool like InVest provides a systematic approach for making informed and enlightened decisions like these. The Natural Capital Project plans to distribute InVest free of charge starting in November. Columbia already has plans to use it for relicensing water and land access.
Currently the Project is focusing its initial efforts on four main sites: The Eastern Arc Mountains of Tanzania; Upper Yangtze River Basin in China; the Sierra Nevada Mountains in California; and the Hawaiian Islands. Based on a detailed set of criteria these sites represent the best opportunities to develop the concept and tools of valuing nature and natural systems. In doing so, the Natural Capital Project hopes not only to conserve nature, but also to preserve the natural life support systems on which we all depend, and for which we all too often take for granted.
“We’re in the biggest mass extinction since the dinosaurs” says Project director Gretchen Daily, “People estimate we’ll lose half of the Earth’s life forms in our lifetimes”.
There isn’t a GDP estimate in the world that could come close to placing a value on what we stand to lose if we don’t start taking notice.