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The Triple Bottom Line and the Wealth of Nations

Andrew Burger headshotWords by Andrew Burger

Skeo Solutions Sponsored Series

Introduction To Environmental Justice

While there are thousands of organizations working to solve the world's problems, the ways these groups operate and measure success differ markedly.

Perhaps these differences could be overcome if local public interest and community development groups were to use similar metrics, tools and methodologies to support their efforts and realize their aims?

Could the most pressing challenges facing society – including those of socioeconomic and environmental justice – really be resolved with better data? Imagine if community organizations made use of holistic triple bottom line metrics to do the same sorts of empirical, data-driven research and strategic planning conducted by IBM, Apple, ExxonMobil, Walmart and World Bank.

Beyond GDP: Measuring sustainable development

Despite its predominance and universal use, the limitations of GDP as an overall indicator of health and well-being have long been recognized by those working in a range of fields. As Hunter Lovins is fond of saying, cancer is great for GDP, but it ain't great for the patient! Economists, such as Nobel Prize winner Amartya Sen, work hard to develop more holistic, inclusive standards and indicators of overall national health and well-being that consider social, natural resource and ecosystems health in addition to economic growth.

Leading international organizations, NGOs, and business groups, including the United Nations, World Bank Group, World Wildlife Fund (WWF), The Nature Conservancy (TNC) and the World Business Council for Sustainable Development (WBCSD),  are also leading the charge.

One example of a new framework is UN University's first Inclusive Wealth Indictor (IWI) report,  introduced during the June 2012 Rio+20 UN Conference on Sustainable Development.

The Inclusive Wealth Report measures the wealth of nations by analyzing a country's capital assets, including manufactured, human and natural capital, and their corresponding values.

Measuring natural capital and social well-being

The Natural Capital Project is a great example of a public-private initiative to take on the formidable challenge of tracking and putting data behind social and environmental impacts at the local level. A joint partnership of Stanford University's Woods Institute for the Environment, the University of Minnesota's Institute on the Environment, the World Wildlife Fund (WWF), and The Nature Conservancy (TNC), the Natural Capital Project, “aims to integrate the values of nature into all major decisions affecting the environment and human well-being. Our ultimate objective is to improve the state of biodiversity and human well-being by motivating greater and more cost-effective investments in both.”

Encapsulating groundbreaking metrics and methods that integrate economics, ecology and social development, the Natural Capital Project has developed innovative, free-to-the-public, open source software applications, such as InVest, which is used to measure natural capital, and RIOS, which focuses on watersheds, that can be used by just about anyone looking to assess the socioeconomic and ecological costs, benefits and impacts of a broad range of investments, from power generation facilities, dams, highways and property development to wastewater processing, reforestation and other ecological restoration projects, in an integrated manner.

We focus on using relatively simple models that can be applied widely with fairly commonly available data. They can't address all the complexities, so we've focused on a few key elements and the relationships between the decisions people make, their effects on the environment and communities, and then the likely costs and benefits,” Natural Capital's Lisa Mandle explained during a 3p interview.

“The work we do doesn't say what the right answer is, but it does help clarify the effects, the costs and benefits...and minimizes the tradeoffs between stakeholders,” she elaborated. “It reconciles the likely winners and losers and makes the end results more sustainable and equitable.”

The connection between ecosystems services and human health

Initially thinking that they should put monetary values on every parameter in their models, Natural Capital Project team members quickly found out that it was not required. They discovered that there are a variety of ways to "represent the value of ecosystems services" that are useful to decision makers and the broad range of stakeholders in a project, Mandle said.

The Natural Capital Project team found that they could map ecosystem “servicesheds” based on the economic and social value they provide in the local community to demonstrate the distribution of the costs and benefits of a proposed investment project. The model could show how community members might be impacted by a dammed river or a new highway.

Real-world use of the Natural Capital Project's tools and methodology has been growing. Project team members have been working closely with TNC and the Latin American Conservation Council, a consortium of business leaders led by former GW Bush administration Treasury Secretary Hank Paulson, to apply triple bottom line metrics and methods to assess the costs and benefits of a growing range of development and infrastructure projects.

They [the Latin American Conservation Council] have three focal areas right now: water security, sustainable food security, and smart infrastructure – development with minimal environmental impact and maximization of a diverse range of benefits, and not just in terms of dollars and cents,” Mandle elaborated.

The Natural Capital Project was asked to provide an assessment of ecosystem services and natural capital to complement the environmental impact assessment (EIA) of the controversial Pucallpa-Cruzeiro do Sul highway that will stretch from Brazil's Amazon Basin over the Andes mountains to Peru's Pacific Coast.

The effort incorporated measures and valuations of biodiversity, water quality, forest and habitat loss, carbon sequestration, health impacts, job creation and the loss of livelihoods. The Natural Capital project team concluded that while ecosystem services losses might be small if strong mitigation measures were taken, the losses in some communities could be quite high. “When we look at the distribution of losses, indigenous communities would likely wind up bearing a disproportionate share [of them],” Mandle related.

Beyond indigenous communities

The Natural Capital approach can also be applied in urban and developed world settings too. Project team ecologist Kate Arkema led “the first comprehensive analysis of natural defenses ecosystems provide against coastal storms and climate-induced sea level rise along the entire U.S. coastline.” The study included valuations of the protection coastal marine ecosystems afford "poor, vulnerable populations that don't have the ability to compensate" or recover from natural or man-made hazards and disasters.
One of the most important things we can take away from this body of evidence is that we can map and value the goods and services people get from nature,” according to Natural Capital project lead scientist Dr. Anne Guerry. Furthermore, “ecosystem service information can make – and has made – a difference in diverse decision contexts around the world.”

Moving forward, the Natural Capital Project is working to better understand and develop means of measuring, illustrating and communicating the connections between ecosystems, the services they provide and human health and well-being, said Mandle. “We're thinking a lot about health benefits and nutrition, disease prevention and the like.”

NCP isn't the only group working to find better ways to measure social and environmental impact. A host of community development organizations, including Boston IndicatorsData Driven DetroitGreen Living DCRoanoke Neighborhood Indicators and the West Oakland Environmental Indicators Project are working on these same issues at the local level. They provide tools, skills, metrics, methods and training for measuring triple bottom line impacts. These groups share a common process: community members identify and prioritize the most pressing economic, social and environmental problems in their area. Once empowered with hard data, community groups find it easier to unravel practical solutions to difficult problems.

The more that tools like those developed by NCP and other groups are utilized, the more effective they will become and the easier complex social and environmental problems will be to unravel and address.

Andrew Burger headshotAndrew Burger

An experienced, independent journalist, editor and researcher, Andrew has crisscrossed the globe while reporting on sustainability, corporate social responsibility, social and environmental entrepreneurship, renewable energy, energy efficiency and clean technology. He studied geology at CU, Boulder, has an MBA in finance from Pace University, and completed a certificate program in international governance for biodiversity at UN University in Japan.

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