Natural capital: putting a price on the priceless | Guardian Sustainable Business |   Leave a comment

“With all eyes fixed on the latest global share prices and bond yields, there was relatively little interest in the most recent figures published in the annual red list.

This is the world’s most comprehensive inventory of the global conservation status of biological species. It shows that 25% of all mammals and one in three of the world’s amphibians are at risk of extinction.

While these trends are not as turbulent as the global financial markets, the steady decline of the world’s biodiversity could be just as critical to long-term economic success and prosperity.

This is because the loss of biodiversity causes ecosystems to stress, degrade or even collapse altogether. This reduces the environment’s ability to deliver the goods and services that nature provides for free, such as clean air, water, soils and waste disposal, as well as the raw materials that industry depends upon.

As a result, it is evident that the protection of biodiversity, while complex to value and quantify accurately, is essential for future well-being and economic development.

Policy will inevitably have to rise to this challenge and businesses must look ahead to what this might mean for them and how they should act responsibly.

That is why the Aldersgate Group, an alliance of leaders from business, politics and society, has recently convened a series of discussions on how to make this agenda more tangible for key decision makers. The findings were published today at the Business of Biodiversity Symposium with government ministers and leading chief executives.

It became immediately evident from our dialogue that the value of biodiversity must be reflected in prices and policy appraisal. We cannot take for granted the services that ecosystems provide for free – such as regulating the climate, absorbing pollution and reducing flooding.

The UN estimates that these services deliver to humankind over $72tn a year – comparable to World Gross National Income – but nearly two-thirds of the globe’s ecosystems are considered degraded. The global importance of understanding, measuring and capturing the value of nature is undertaken by the UN through TEEB, a major international initiative to draw attention to the global economic benefits of biodiversity.

The endeavour to reflect environmental values in prices is an essential one, but for complex challenges such as biodiversity loss, some tipping points exist beyond which damage to human welfare is irreversible. Already in certain coastal areas there are “dead zones”, where coral reefs and lakes are no longer able to sustain aquatic species.

Inevitably, there are limits to pricing the priceless. For example, how can you put a value on a species of Himalayan yew tree, on the brink of extinction, that is used to produce Taxol, a chemotherapy drug used to treat cancer?

That is why good resource management requires a combination of price, regulation and information to achieve the desired behavioural change, and caution is required when there is uncertainty about nature’s thresholds.

As policy develops, what should businesses be doing to address these risks and take advantage of the potential opportunities?

It is evident that many businesses are assessing their dependency on biodiversity and integrating measures for the sustainable use of natural resources into their corporate strategies. This is vital as all businesses, directly or indirectly, depend upon biodiversity and ecosystem services for their ongoing commercial success and should therefore address the significant risks and opportunities relating to their impact on nature.

In the first instance, an organisation needs an efficient method for determining the materiality of biodiversity to its operations and stakeholders. While a number of reports claim that there is an increased awareness from communities, NGOs, customers, consumers and shareholders on biodiversity issues, the evidence is mixed.

And businesses also struggle to communicate the more technical language of biodiversity and ecosystems to their customers, who are much more familiar with concepts of nature, place and landscape.

Despite improvements, the measurement of biodiversity remains challenging and identifying the implications for decision making can be complex. This is why it is often treated superficially in company reports.

However, that has not stopped forward-looking businesses leading the way. The Aldersgate Group’s upcoming report illustrates case studies from a range of companies in a variety of sectors such as M&S, PepsiCo, Puma, Willmott Dixon, InterfaceFlor and The Co-operative Group.

One example is Wessex Water which has undertaken an initiative to protect water quality upstream rather than pay for removing pesticides downstream – achieving bottom-line savings of more than 80%.

The failure to address risks can lead to significant costs. The Gulf of Mexico oil spill, for example, demonstrates how a major oil company was suddenly faced with society’s valuations of marine and coastal ecosystems, and forced to internalise the costs of environmental damage.

As more businesses begin to address such impacts, it is essential that biodiversity rises up the political and boardroom agenda. While we might be some way off the chancellor presenting a natural capital budget alongside the fiscal budget, more attention on the long-term implications of the red list would be a good start.

Andrew Raingold is executive director at the Aldersgate Group, an alliance of leaders from business, politics and society that drives action for a sustainable economy.”

via Natural capital: putting a price on the priceless | Guardian Sustainable Business |

Posted November 30, 2011 by arnoneumann in biodiversity, Sustainability, TEEB

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