Natural Investment

Investing in nature is an idea that is often talked about as a tool for ensuring sustainable development but rarely acted upon. While the idea of placing a dollar value on nature is still opposed by some it is generally an idea which has been accepted as a good one.

The argument is fairly straightforward: our current economic system only values those things which have a dollar value attached to them. By not valuing nature, we have implicitly placed a dollar value of zero on it. Few people think that is an accurate reflection of nature’s true value. Rather, the natural world provides many services that have value, from the mundane — nutrient cycling — to the transcendent — pristine wilderness.

Programs like The Economics of Ecosystems and Biodiversity (TEEB) and Wealth Accounting and Valuation of Ecosystem Services (WAVES) have worked to put this theory into practice by actually assigning value to nature, but they have had varying degrees of success. The notion of ecosystem services has certainly entered the vocabulary of policy makers around the world but think tanks and working groups do not change the world on their own. Despite their success in generating discussion around the need for economic valuation of nature, they have had less success generating change at a grassroots level.

By way of illustration: even though nature is recognized as having value, individuals concerned about the environment have nowhere to go to invest in preserving that value. If you support a public company you buy stock. If you support a private company you might lend them money. You support something you believe in and might earn a return. But despite the fact that nature is increasingly seen as generating value, there has been no means to invest in that value.

The best that individual has been able to do in the past has been to contribute to a non-profit geared toward conserving nature. But doing so earns no return (except perhaps an altruistic one). For better or worse, that places a cap on how much money would ever be invested in the natural world.

All of that changed two weeks ago when The Nature Conservancy announced a partnership with JP Morgan Chase to create a multi-million dollar project aimed at closing the $250 billion dollar gap in conservation funding. Naturevest will be a social impact investment platform aimed at mobilizing funds for projects with clear environmental benefits that also deliver a financial benefit for the investor. In doing so they hope to build a fully-fledged marketplace for environmental investing. If they succeed it will be a major step towards making the language of TEEB and WAVES an actionable reality and putting real money behind the notion of natural capital.

Now, not every environmental problem is conducive to this type of approach. There are some places worth preserving that are unlikely to ever generate significant financial returns. Framing conservation only in terms of the language of natural capital does not do the history of Aldo Leopold and John Muir justice. There will always be a place for conservation that preserves the majesty of nature for its own sake.

But the fact that not all conservation problems can be solved with this approach does not mean that it won’t be useful. If, in fifteen years, Naturevest has managed to close even a third of the $250 billion funding gap that will be a major success.

For decades conservation was led by private philanthropy and government action and ignored the potential economic value of conservation The recognition that nature has economic value has opened the doors to new sources of funding. Naturevest is an example of a conservation organization getting real money to fund projects and engage with a new type of individual interested in making the world a better place.

 

Photo Credit: © Marjo Aho for The Nature Conservancy.

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