20 November 2013
Last updated at 23:58
Mangroves have a value that goes far beyond the price of wood
Business leaders and environmentalists say putting an economic value on nature could be the best way to save it.
Scottish First Minister Alex Salmond will be among those speaking at the first World Forum on Natural Capital in Edinburgh later.
The event has been organized by the Scottish Wildlife Trust in partnership with the UN and other organisations.
The concept of “natural capital” involves businesses calculating the economic value of nature.
This allows an assessment of companies’ financial impact on the environment. This data is used to make strategic decisions that conserve the natural raw materials they rely on, to ensure the future growth of the business.
The forum, being attended by senior business leaders and conservationists, is considering a new kind of economics, according to Alan McGill from accountancy firm Price Waterhouse Coopers.
“Chief executives used to roll their eyes at the subject matter, but when you get Paul Polman who’s running Unilever standing up and saying that climate change is costing his business £250m a year, that’s time to wake up, that’s time to do something, that’s time to innovate,” he told BBC News.
“We will see changes from top to toe in organisations. I believe the chief financial officer will disappear, and you will have the chief information officer.
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What are ‘ecozystem services’?
- The UN recognizes four basic categories of ecozystem service that nature provides to humanity:
- Provisioning – providing timber, wheat, fish, etc
- Regulating – disposing of pollutants, regulating rainfall, storing carbon
- Cultural – sacred sites, tourism, enjoyment of countryside
- Supporting – maintaining soils and plant growth
“It’s taken around 150 years for accountants and governments to agree how financially to measure performance. We’re now in the process of doing the same for non-financial information, looking at the environment and understanding how to value it.
“It won’t take us 150 years to do that, because we haven’t got 150 years to do it.”
Jonathan Hughes, director of conservation at the Scottish Wildlife Trust, said that species were continuing to go extinct at an unprecedented rate. “The true value of nature has been invisible and has not been factored in,” he added.
He gave the example of the recent storm in the Philippines, where mangrove forests that would have helped to protect many of the islands have been cut down.
“If sold for wood the value of mangrove is £1,000 per hectare. But if you factor in storm protection, the fact fish use them to breed in, the carbon they absorb – the mangroves are worth around £21,000 per hectare to the local communities,” Mr Hughes explained. Such unrecognized benefits are sometimes referred to as “ecozystem services”.
An increasing number of multinationals from BQ to Harley Davidson are now starting to see the environment in terms of natural capital.
Kering, the company that owns brands such as Gucci, Saint Laurent and Balenciaga, is examining how the environment impacts the whole group, for example where the leather and precious metals used in these products are sourced.
“The planet is changing – it’s climate change, it’s social change. So you can’t do business as usual any more,” said Michael Beutler, Kering’s sustainability operations director
“We need to reflect that change. It’s the new business paradigm. You need to think about natural resources.”
However, there are environmental groups that believe that monetising nature will only damage it.
The World Development Movement views it as “The Great Nature Sale”.
Nick Dearden told BBC News: “I don’t know many people who believe that the financial markets will be able to solve the environmental crisis.
“I would argue the very reverse, actually. What we need to do is remove finance from nature and indeed remove finance from many of the places it is in the world today, and think about nature as something that cannot have a price put on it, and that’s why it needs to be held in common by all of us.”