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  • Life on earth.

  • Anyone who has ever stepped outside

  • can appreciate the value and the richness

  • that the natural world brings to our lives.

  • But right now, we are destroying nature much faster

  • than it can be restored.

  • So if nature is so valuable, why are we so bad at preserving it?

  • One reason is that that value is very hard to measure

  • in conventional economic terms.

  • There is a disconnect between appreciating

  • the damages we are causing and embedding it

  • to our own way of economic thinking.

  • It's been a free resource, which it can't be.

  • 75 per cent of our land is now damaged,

  • 66 per cent of our marine life.

  • And many businesses are starting to see these pressures.

  • This disconnect between nature and the economy

  • is evident in the level of financing available to projects

  • that protect plants and animals and their habitats, which

  • is somewhere between $80 to $90 billion a year.

  • That's just a fraction of the total

  • that's needed to reverse the loss of species

  • that we see today.

  • But if the economics were different,

  • could businesses be incentivized to protect the natural world?

  • And would investors follow suit?

  • The challenge is that many of the benefits of nature

  • are intangible.

  • And the costs of destroying it often go uncounted.

  • But it turns out there are a number of ways that you can

  • measure the value of nature.

  • And some of them might surprise you.

  • Too often, nature has been seen as a source

  • of unlimited materials and a free dumping ground

  • for industrial output.

  • But that could change if we start

  • to count the cost of destroying natural habitats.

  • Professor Partha Dasgupta is leading a review

  • into the economics of biodiversity

  • for the UK Treasury.

  • Part of his work is to look beyond the market

  • price of natural resources.

  • Many resources have a market price.

  • But they're wrong ones.

  • So for example, a fishery has a market price.

  • You can buy and sell fisheries as we do, farms,

  • for example, fish farms.

  • But that's not quite the issue because these shrimp farms,

  • for example, are extremely polluting.

  • They discharge salt and other chemicals

  • that adversely affect neighbouring

  • paddy fields, for example, if you happen to be in Sri Lanka.

  • That damage needs to be costed and deducted

  • from the value of the fishery.

  • Costing out the damage from one fishery is one thing.

  • But applying that thinking on a global scale is another.

  • While economists are trying to change

  • the framework of our economic thinking,

  • businesses are not waiting around.

  • For many companies, the cost of climate change

  • and the impact of damaging nature

  • are already too apparent.

  • We see businesses being worried about stranded assets.

  • We see disruptions in the business process.

  • So investing in nature on the one hand means mitigating risk.

  • Paul Polman is a former chief executive of Unilever.

  • He now leads an organisation calling on other CEOs to change

  • the way they do business to safeguard natural resources.

  • Broadly, business people know what needs to be done.

  • Where the challenges come in is the complexity of the issues

  • and a feeling for, yeah, we know that we want to restore it,

  • but how can I, as a business, integrate that

  • into my business models.

  • And one of the things that are absolutely needed

  • to make that evolution at the speed and scale

  • is to put a price on these scarce resources,

  • put a price on water, put a price on carbon,

  • and put a price on forests.

  • I've said many times, as long as a dead tree is

  • valued more than a tree that is alive, we are in trouble.

  • Underlying all of this is the idea of natural capital.

  • That means valuing forests and other habitats

  • not only for the goods they could be turned into if they're

  • chopped down but for the services

  • they can provide if they're left standing.

  • Ecologists already understand how

  • nature acts as a climate buffer by pulling

  • huge amounts of carbon dioxide out of the atmosphere.

  • Through photosynthesis, plants convert CO2 in the atmosphere

  • into reduced forms, which they use to grow.

  • And that carbon enters plants and soil pathways.

  • And as soon as it's there, it's essentially

  • scrubbed out of the atmosphere.

  • And so these natural processes offset about 1/3

  • of our global carbon dioxide emissions every year.

  • This has made planting forests a very popular option

  • for companies that want to offset their carbon emissions.

  • But Colin thinks restoration projects could do even more.

  • You know, we can't go there, and plant pine trees,

  • and they grow great.

  • They sequester carbon.

  • But they're not restoring any of that native biodiversity.

  • And so when we do restoration, we're

  • looking to hit both of these goals,

  • both the nature-based climate solution of sequestering

  • carbon, but also addressing this habitat loss

  • and this biodiversity loss.

  • You know, this is one of few climate solutions

  • that also has the opportunity to actually address

  • the biodiversity crisis.

  • That awareness is starting to work its way

  • into how businesses and governments think

  • about conservation.

  • At the same time, something just as significant

  • is happening in the financial sector.

  • Investors are finding new ways to fund nature-based projects.

  • HSBC is launching a new natural capital

  • fund, which will invest in projects

  • that restore nature and deliver financial returns.

  • It will invest in real assets, so in land,

  • in forests, in mangroves.

  • And the returns will come from long-term preservation as well

  • as the goods and services or goods

  • that we'll be generating with those assets, so food

  • and timber.

  • So we're trying to establish nature-based investing

  • as an asset class in its own right

  • that pension funds, insurance companies, asset allocators

  • would make a discreet allocation to

  • in the same ways they would real estate or infrastructure.

  • This fund is a first of its kind.

  • And it doesn't have regulatory approval yet.

  • But if other asset managers follow suit,

  • it could start to unlock some of the financing that's

  • needed to repair nature at a large scale.

  • By some estimates, it would take more than $2 trillion

  • to truly restore nature and transition

  • to a low-carbon economy.

  • That's a tall order for governments still grappling

  • with the impacts of Covid-19.

  • But as economists, companies, and investors

  • start to measure the value of nature in new ways,

  • maybe the way we think about this challenge will change.

  • The trillions of dollars that are

  • required to be invested in nature

  • need to come from somewhere.

  • Private sector is its best position.

  • And if business speaks up and says,

  • when we do this collectively, it creates more jobs,

  • it makes your economies more resilient,

  • it gives these politicians that are often short-term focused,

  • it gives them more ammunition to move things forward.

  • That value, which is so important for enriching

  • our lives, why shouldn't it be included

  • in economic reasoning in a natural way,

  • as opposed to constantly have to do special pleading, protest

  • marches and so forth?

  • We're in a biodiversity crisis.

  • The trees can't wait.

  • The forest can't wait.

  • We need action now.

Life on earth.

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B1 US FinancialTimes nature carbon biodiversity natural price

How to put a price on nature | FT

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    joey joey posted on 2021/05/16
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