The Value of Nature

Can we put a price on nature and what would be the benefits?

Fresh water, clean air, lush vegetation, or endless empty beaches, nature is not only essential for us to survive; spending time in nature is also good for our (mental) health. Unfortunately almost everything in our current society runs on economic value. So for natural conservation and climate change to gain more attention, it will have to become part of our economy. But how do you put a commercial value on nature?

Carbon offset programs

The idea of putting a price on carbon is familiar by now. For example, when you buy a plane ticket and you have the option to pay extra to offset your emissions. This also happens at a global scale, where companies and even countries pay others for the ‘offset’ of their own carbon emissions. Talks at the United Nations’ 26th Climate Change Conference of the Parties in Glasgow this November, known as COP26, will address how to implement a global carbon market, enabling countries to trade carbon credits in order to meet their emissions targets. At the same time, private sector investors and companies are looking to carbon markets as a solution to regulatory measures that will enforce de-carbonization. “There’s a tremendous political push for this,” says Alain Frechette, director of strategic analysis and global engagement at Rights and Resources Initiative (RRI), a community land rights coalition.

In theory, a global carbon market should mean we reduce emissions across the whole planet. Lower income countries could benefit financially from restoring their climate-friendly landscapes. However, rich countries can also meet targets while continuing to emit by paying for reductions elsewhere. When it comes to action on climate change, focusing too heavily on just carbon storage comes with pitfalls. Natural ecosystems are not simple carbon storage devices but rather complex systems that require complex management to thrive. The trick between success and failure will be in the details. If we don’t get the true value of nature right, a global carbon market could lead to a land grab that devastates communities living in the world’s richest landscapes, and wreaks havoc on wildlife, too.

“Carbon offset is either a massive opportunity that’s going to be a kind of biodiversity renaissance, or a huge global risk to biodiversity conservation “, Sarah Bekessy
Bekessy works with conservation organization Bush Heritage Australia, and says the cost of land has already noticeably increased in the face of a global carbon market. “The land grab that’s happening in Australia right now is extraordinary and the risk is that organizations that buy land for conservation are going to be pushed out,” she says. “The carbon market is going to have some sort of responsibility, therefore, to fill that space and actually be part of the biodiversity solution as well.” Whether or not that happens is down to the details ironed out in Glasgow this November. That’s why COP26 is so important.

Aside from what happens at COP26, action on climate change is already affecting the way we value land and ecosystems. Gabon is a net sequester of carbon thanks to the rainforest that covers most of the country. This year the UN-backed Central African Forest Initiative paid the country $17m for reducing emissions from deforestation in recent years. Similarly, the Seychelles had almost $22m of national debt paid off by US conservation group The Nature Conservancy in return for protecting its coastal wetlands, another habitat that is a significant carbon sink and home to endangered species, including the hawksbill sea turtle and scalloped hammerhead shark.

Ecosystem services

It is clear that nature does a lot more than absorbing (our) carbon. Around the world our flora and fauna provide clean air, food, and resources for humans and animals alike. Trees, cut air pollution, but also reduce the risk of flooding and help maintain soil quality. Landscapes like (rain)forest, savanna, grasslands, coastal wetlands and even oceans and deserts provide for humans, and countless other species, in many ways. Animals within the ecosystems also provide services, such as insect pollination or the carbon storage of elephants or whales.

Felling a woodland for timber has a market value, but protecting it to reduce the risk of devastating floods in a local town, for example, usually does not. But what happens when we try to put a price on those things too? The way we humans can benefit from nature is known as “ecosystem services”. If we can put a price tag on these services, it might be easier to let them count within our global economy. The concept of ecosystem services was developed in the 1970s. It was originally intended to highlight our dependence on nature and get people interested in conservation, but later evolved into a way of putting a price tag on those benefits.

Over the past years scientists have attempted to put an economic value onto ecosystems by calculating the “services” they provide to human beings, from the food or resources they provide to more indirect benefits, such as carbon sequestration, pollination, or recreation and tourism. A study published in Science Direct in 2014 even estimated the total value of the biosphere’s ecosystem services to be up to $145 trillion a year! At a local scale, the calculations are generally done for a whole ecosystem – coastal wetlands, tropical forests and so on. So, the median value of coral reefs, for example, has been calculated at around $200,000 per hectare per year. Or its value is calculated by the service provided. For example, the global value of insect pollination services for crops has been estimated at around $180-500bn a year. But our ecosystem is very complicated and the whole range of techniques that were used in these types of studies, were used differently and inconsistently. This was the conclusion of researchers Annelies Boerema, Alanna Rebelo and colleagues, who reviewed more than 400 papers on the topic in 2016.

In the Scottish Highlands, scientists are now trying to put a more exact dollar figure on how much nature is worth expressed in money. It happens at a rewilding project in an old commercial forest known as Birchfield near Loch Ness. It is only a small area of 40-hectare, but the site is a hive of technological activity. Drones fly overhead to track the extent and condition of the various habitats below, from recently felled woodland to a newly discovered peat bog. Meanwhile, camera traps and audio recording equipment capture evidence of the huge variety of species that live on the land. While all physical changes are being monitored, researches from the Natural Capital Laboratory are busy calculating how much society benefits from the restoration of this forest. Their challenge is to put an economical value on the forest and the natural activity within.

For some, putting a price on ecosystem services is how we can make sure nature, or rather natural capital, is given due weight at the decision-making table. “It’s about ‘what is the value that we’ve not been recognizing in the past?’, and making sure that we do recognize it today,” says Adam Eagle, chief executive of conservation charity The Lifescape Project that set up the Natural Capital Laboratory (NCL) in 2019, alongside infrastructure firm AECOM and the landowners of Birchfield. “It’s a really powerful tool when you’re talking to decision-makers and policy-makers, explaining to them that actually there is a direct negative economic impact of what they’re doing, even if it’s hard to see.” Take the peat bog the team discovered on the land. They are now monitoring its water level. “We’re not fixing it yet, so to speak, we’re just leaving it as it was for some time so we can get a baseline,” says Eagle. “Once we’ve taken restoration actions in a couple of years’ time, we’ll run the same tests again, and we’ll be able to show the difference in the water levels.” From that they’ll be able to work out the net financial gain from restoring the peat bog in terms of its impacts on flood mitigation, water quality and carbon storage. Fixing the damage after a flood is more expensive that reducing the risk of floods, thus putting an economical value on flood prevention.

The true value of nature is intangible

The NCL project has involved designing a natural capital accounting tool to keep track of the habitats and species present, and the monetary values of the services they provide, which sits alongside a virtual version of the NCL accessible online. At the end of the first year, climate regulation benefits had the largest estimated annual value at $20,710, followed by air quality regulation $8,100 and flood regulation $6,100. While this approach might work for economists, focusing on ecosystem services doesn’t necessarily resonate with other people. “It’s certainly skyrocketing in prominence in terms of the language and the thinking that we use to try and promote biodiversity,” says Sarah Bekessy at RMIT University in Melbourne, Australia. “But has it really filtered down to being something that is therefore more valued in society?” The fact that numbers don’t tell the whole story is clear when we consider our reaction to changes in our local environment, too. There may be no net difference in carbon if some trees on your street are cut down and replanted elsewhere, for example, but you’ll still feel their loss when you step outside. “That’s not those trees that those people have walked past every day,” says Bekessy. “That place-based value is a really under-appreciated aspect of nature.”

Eagle agrees, while ecosystem services is a useful concept, it doesn’t capture all of the value in the natural world. “It’s not all just in pounds and pence and dollar signs,” he says. “There is something else that is somewhat intangible that we’re missing.” Before the Covid-19 pandemic Eco-tourism and Sustainable-tourism were strongly increasing in popularity. More and more people wanted to explore earth’s mysteries and natural beauty and not just from their Natural Geographic channel. The Covid lockdowns around the world might have even increased our appreciation for nature. I was very relieved just being able to walk through the neighborhood again after being ‘locked up’ for almost three months. And when parks and nature reserves opened up to the public again, more people than ever found these entrances. To many of us the inherent value in nature, and the incalculable ways in which we benefit from connecting with it have become more obvious.

Local community rights

For the people who live in natural landscapes that are most valuable to our planet, and whose livelihoods depend on them, the stakes are even higher. A report published earlier this year by Rights and Resources Initiative investigated the legal rights of indigenous peoples, local communities, and Afro-descendant peoples to the carbon storage opportunities on their lands. Their research included 31 countries across Africa, Asia and Latin America, which together are home to two-thirds of the world’s tropical rainforests. They found that few countries explicitly recognize those rights, and the countries that do often don’t have clear legal frameworks to regulate carbon-linked transactions.

Part of the current problem is that governments do not always have people in mind when assessing land for its potential to combat climate change. “When countries draw maps and identify areas where they can do emission reduction studies and so forth, those maps do not show people living there, they never show communities that have been there for decades, or centuries. Countries have not made the headway in terms of developing the legal frameworks that would support engagement in these arenas,” says Frechette, lead author of the report. “And yet we’re plunging straight into this, with the hope that all of these questions will be resolved in the next couple of months.” Without clear community rights, those who depend on that land are unlikely to benefit when countries trade in its emissions-reducing capabilities, and could face additional challenges. “It’s unclear how carbon markets will affect people’s rights to pursue their own livelihoods and ensure that they can access the forest for food, timber or resources to meet their basic needs,” says Frechette.

If local community rights were secured, however, the planet would benefit too. A growing body of research shows that indigenous people and local communities are the best guardians of their land, and when they have clear land rights they can play a vital role in climate change mitigation and biodiversity conservation. A UN report on forest governance in Latin America and the Caribbean, for example, showed that when governments formally recognize collective land rights, rates of deforestation are lower. “Communities have been doing this largely by themselves without support,” says Frechette. “Just imagine if they had access to that, if carbon markets did provide benefits for them.” The community project in Gazi is a good example of mutual cooperation resulting in mutual benefits for the investors, community, nature and our climate.

A holistic relationship with our planet

There are international signs that those who favor a more holistic, rather than transaction-based, relationship with the planet are beginning to have their voices heard. After much debate between delegates from different parts of the world, members of the Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES) – an IPCC-like initiative for biodiversity – agreed to use the term Mother Earth, alongside the language of ecosystem services, in their conceptual framework. This is a rather unique decision for a scientific organization. Now it is time for many more people, and especially world leaders to value earth’s natural ecosystems in a more holistic way.

Sustainable community tourism can help with putting a holistic value on nature. It can make us more aware of the real beauty of our planet and it can provide communities with an alternative income from tourism, instead cutting trees for lumber and farming. Tourism can help to combine the ecological value, sentimental value and economic value of our planet. Hopefully Eagle and his team from Natural Capital Laboratory are able to find clear ways to put an economical value on ecological systems, so more industries are able to gain profits from conserving nature, instead of abusing nature.