The Economics of Ecosystems

Are businesses that take steps to conserve nature driven by philanthropy or economics?

At a recent panel hosted at the Harvard Kennedy School, Neil Hawkins, Vice-President of Health, Sustainability and Environment and Safety at Dow Chemical Co., answered, “It’s the economics. Absolutely.”

Now, before we write off his answer as just another attempt to commercialize nature, let’s consider that this is actually a revolutionary idea, albeit one that has been around for at least a decade — that there exist economic reasons for businesses to protect nature. Perhaps we no longer have to depend on philanthropy or threaten businesses with boycotts in order to incentivize them to take action to save nature. Maybe the economics will begin to speak for itself.

The Harvard Kennedy School recently awarded the Roy Family Award for Environmental Partnership to a collaboration between the Nature Conservancy (TNC) and Dow Chemical Co. for its work in this precise field: promoting the value of ecosystems in business decision-making. Panelists Leslie Carothers, Neil Hawkins, and Glenn Prickett spoke of how the Dow-TNC project has aimed not only to help companies make money and improve their performance by protecting nature, but also to find transferrable opportunities so that nature conservation doesn’t enter the business conversation project by project.

The collaboration has led to some interesting applications. For example, in a bid to cheaply and effectively remove pollutants from the air, a Texas plant discovered that it may be more cost effective to restore the native forests than to install expensive pollution control devices. “We uncovered material benefit from reforestation as an air quality control,” said Prickett, citing green engineering as the future for ecosystem conservation.

This idea was expanded upon in another experiment, in which engineers opted to create a wetland and restore the native ecosystem instead of building a concrete water treatment plant. According to Hawkins, the wetlands met all of their water treatment needs in terms of settling and filtration, while saving the company more than $100 million in capital.

These experiments highlight the point that is starting to gain traction in the business and conservation communities — that there does not have to be a conflict between conservation efforts and business goals. We can create economic incentives for ecosystem conservation. The partnership between the Nature Conservancy and Dow hopes not only to capitalize on this idea, but also to create a “leverageable concept . . . that can move forward to other companies and projects,” according to Hawkins.

Pavan Sukhdev once said, “We use nature because it is valuable, but we lose nature because it is free.” This Dow-TNC partnership may be showing us that there are economic incentives, even in the short run, to save nature. The collaboration isn’t perfect, but it is amazingly rich in learning opportunities and may provide a path for how to reverse our destruction of the environment.

Image Credit: By U.S. Fish and Wildlife Service [Public domain], via Wikimedia Commons


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