“Natural Capital”: Will Putting a Price on Nature Help Protect It?

Candice Gaukel Andrews by Candice Gaukel Andrews | March 19th, 2013 | 7 Comments
topic: Eco Travel, Green Living

Oak tree

The benefits of green spaces and natural settings are becoming more apparent all the time: reduced stress, depression and feelings of aggressiveness; an increase in overall happiness; faster post-operative recovery; a decline in ADHD symptoms in children — all of these outcomes have been verified when people spend time in nature. The outdoors make us happier, cause us to be kinder and can even give us bigger brains.

While you could say these kinds of benefits are priceless, there’s a new trend afoot. By assigning a monetary value to natural elements in a healthy environment, it is hoped that governments, businesses and others in positions of power will come to see that protecting nature makes good financial sense.

This concept of pricing ecosystem services and natural features — and allowing them to be bought and sold — is gaining wide acceptance among conservationists. But could this approach end up obscuring the unquantifiable, soul-restoring advantages of natural places and put them at even greater risk?

Getting nature on the balance sheets

Tanzania

More than 25 percent of Tanzania's land area is set aside as parks and reserves. ©Eric Rock

The phrase that ecologists use to describe the lands, waters and biodiversity that contribute to national and international economies is “natural capital.” The Natural Capital Project (also known as NatCap), a partnership of conservation groups, the University of Minnesota and Stanford University, is a central developer of this concept. Working off the premise that the things we pay for are usually what we believe have value, NatCap aims to enter nature’s contributions onto the balance sheets of businesses, corporations and governments.

The idea of natural capital gained significant attention in 2005, when the United Nations published the Millennium Ecosystem Assessment. Synthesizing information from the scientific literature and knowledge practiced by the private sector, local communities and indigenous peoples, the report concluded that human actions are depleting Earth’s natural capital, putting such strain on the environment that the ability of the planet’s ecosystems to sustain future generations can no longer be taken for granted.” We cannot continue to undercut ecosystem services by ill-advised development.

A case in point was New York City during the 1990s. At that time, the city’s drinking water was violating the U.S. Environmental Protection Agency’s water-quality standards due to sewage, pesticides and other pollutants in its upstate watershed. The city considered building a new, $7 billion, downstream water-filtration plant. In addition to the construction cost, the plant would have required $300 million a year to operate. Instead, however, the city opted to use rural land acquisitions and other measures to restore the natural watershed, which filtered out pollutants for less than a quarter of the cost of building a new plant.

Today, the conservation group American Forests points out that the 2.8 million trees growing in Baltimore, Maryland, streets and parks store 527 tons of carbon every year, remove 269 tons of ground-level ozone and help cut air-conditioning bills by $3.3 million a year. In Eastern and Southern Africa, it has been shown that lions generate billions of tourist dollars, spurring governments in those regions to invest in their protection. The hope is that West Africa will begin to see this economical value in their own lions and initiate conservation measures there.

Natural capital proponents say that the old-style messages of protecting nature for its own sake have failed to stop habitat destruction and the dwindling of species. Philosophical arguments, they state, rarely trump profits and the promise of jobs. Now, by pointing out the marketplace value of ecosystem services — such as flood control, water filtration, carbon sequestration and species habitat — we can save the natural world and turn a profit at the same time.

Taking stock of our souls

Critics of the nature capital idea say that it’s not possible to put a price tag on nature. Traditional conservationists sought to protect certain landscapes primarily for their intrinsic value — something likely to carry less weight when thought about in economic terms. Not all ecosystem goods and services are easy to quantify.

While assigning dollar amounts to natural resources, we shouldn't lose sight of their restorative value. ©Eric Rock

Opponents also argue that old-style conservation methods haven’t necessarily failed. Protected areas now cover 40 percent of the landmass in Belize, 27 percent in Guatemala and in the United States, 26 percent in Costa Rica, and 25 percent in Tanzania.

Allowing ecosystem services to be bought and sold risks creating more harm to the environment, as well. If governments pay landowners to bank carbon, for example, they may plant nonnative species or genetically modified trees that bank carbon faster. Or if a quarry company wants to destroy a rare meadow, it can buy absolution by paying someone to make a meadow somewhere else.

Still, those in the natural capital camp see their approach as not about reducing nature to a bottom-line amount but as a way for environmentalists to find common ground with economists. Arguing about how much scenic beauty we need or how important it is to save a particular animal before it’s gone isn’t as effective as calculating the costs by various methods of maintaining clean drinking water or bringing in tourism dollars.

Nature capitalists could be right. Let’s just hope, though, that in the midst of assigning dollar amounts to natural resources, we don’t lose sight of how restorative nature can be to our souls.

Do you think that describing nature in terms of capital assets is the right step for environmentalists to take, especially when funds for conservation are dwindling?

Happy trails,

Candy

Feature photo: Numerous studies have shown that natural settings reduce your stress, make you feel happier and help you recover faster after an operation. Is it possible to put a price on that? ©John T. Andrews



Comments

  1. Natural capital is best defined by its own oxymoron. Capital is not natural, and natural is not capital. This is an artifical construct derived from 19th century “economic” philosophy and a highly limited knowledge of natural systems (ecosystems) functions.

    As such it is limited to the antique framework and perceptions of centuries gone by. It is pre-climate science. It is pre-Internet. While it has been embellished and modified, this view of economics still produces events like planet-sized financial collapses.

    Would we knowingly want to entrust biodiversity to an economic system that has demonstrated, not once, but many times, it’s inability to manage without systemic failure? I see “natural capital” as the last breath of 19th century economics, before the entire financial system moves on – emergent and fueled by the bottom’s access to dense natural places, rather than driven by the abstractions at the top.

    Ms. Ejhinger | March 20th, 2013 | Comment Permalink
  2. Economic value is held by everyone. It is easy to measure and is the engine of modern livelihoods. In the west at least we also feel that it underpins our lifestyles. So whilst we know that other values exist, we don’t see them as the foundation of our hierarchy of needs. Troublesome a concept as natural capital may be, we may be stuck with it until our obsession with wealth passes and the sight of impala grazing at dawn is worth its weight in gold.

    alloporus | March 20th, 2013 | Comment Permalink
  3. I think you have analyzed and discussed it fully ,what those people forget is just like biological control , when you just introduce certain species to eliminate another species and you forget after that species is eliminated what will happen to the introduced species like the case of Cane Toad in Australia,Nile Perch in Lake Victoria,
    I think what is important here further studies should be done and come up with the option to reduce the gaps which you have observed like plant trees which will help to capture carbon dioxide faster,most of incentives should be given for conserving the indigenous species rather than introduced species

    George | March 20th, 2013 | Comment Permalink
  4. Economic value is held by everyone. It is easy to measure and is the engine of modern livelihoods. In the west at least we also feel that it underpins our lifestyles. So whilst we know that other values exist, we don’t see them as the foundation of our hierarchy of needs. Troublesome a concept as natural capital may be, we may be stuck with it until our obsession with wealth passes and the sight of impala grazing at dawn is worth its weight in gold.

    Dr J. Mark Dangerfield | March 20th, 2013 | Comment Permalink
  5. Such a tough question, following a well-written post that does a nice job of pointing out the difficult angles.

    There have been attempts in my area to do this, the “Return on Environment; The Economic Value of Protected Open Space in Southeastern Pennsylvania” being a good example. It looked at the value of nature capital as well as costs related to human health, job creation, recreation, real estate. The creators were very careful to point out that the numbers were specific to the area within the study and that they couldn’t be easily translated to other parts of the country where the cost of living is significantly different.

    Meanwhile, arborists have been doing this for cases such as when a homeowner wants to file a lawsuit for damage done to mature trees. I’m sure there are other examples in the real estate world.

    In both cases, however, the value is based on current human conditions. Real estate, water bills, inflation, average salary, gym memberships … all things that we put a price on, but the tag is slippery and fluent. If we beginning tagging things like rain, it has to be specific — very specific. A tree of a certain size and species on one person’s property will not be worth the same amount of money on anothers’. Such is true for every drop of rain.

    There’s also a movement afoot to stop talking about profit and money and stock values and capital. Old-style conservation has not failed. Today’s young people are pushing to find jobs at companies that recognize the value of sustainable action. Companies such as Gaiam are finding success. Etc. Etc.

    So my answer is: there is a certain time and a certain place where the translation should or can be made. But in the end, you we will never be able to convert the natural world to our currency. It would be very much like trying to put a price tag on our own selves.

    Ruth Heil | March 21st, 2013 | Comment Permalink
  6. This concept has been about for years. The challenge is allocating a value to NC ranging from lost economic opportunities, tourism dollars, bio discovery and even offsets. All have application and even a combination can aid resource allocation. However it still refuces intangible values to a dollar figure, the cost of lost amenity, spiritual connection and understanding of the complex environment we occupy is far greater.

    This later issue of valuing nature in a number of dimensions is emerging work.

    Joe Adair | March 21st, 2013 | Comment Permalink
  7. They may be going too far in placing a value on nature. If we bring it back to a more simple valuation it may we may gain more. For example: here in Florida every documented Manatee that passes by a home raises the value of the home by $10,000. Who are some of the most involved in Manatee protection? Real estate agents and property developers of course.

    These kind of one-to-one relationships exist in rural america, where the amount and type of wildlife that passes through or inhabits your property increases the properties value, thus encourages the property owner to protect what they have.

    This may seem very simple, but as a former president of an NGO, we found that educating the residents on the value that the wildlife brings to their property gained us many members/supporters of our efforts.

    Roy | March 28th, 2013 | Comment Permalink

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