The value of nature is astonishing, when you stop and think about it. Marshes protect coastlands. Urban trees clean the air. Forests provide timber. Oceans give us seafood. Snow-capped mountains store drinking water. Some might say nature is priceless.
Not Mark Tercek, the former investment banker at Goldman Sachs who became CEO of The Nature Conservancy in 2008. His new book, Nature’s Fortune: How Business and Society Thrive by Investing in Nature (Basic Books, 2013), argues that nature provides enormous economic benefits to society, business and consumers, and that, if we can figure out how to value and pay for those benefits, we can slow down and even reverse the degradation of nature that threatens our well-being.
It’s an important and potentially controversial argument, as Tercek acknowledges. While the 20th century conservation was all about protecting nature from people, Tercek and some of his allies in the environmental movement would like the future to be about protecting nature for people. If nothing else, he argues, recognizing the economic value of nature will expand the base of the environmentalist beyond the white, college-educated and relatively affluent folk, the backpackers and hikers and birdwatchers at its core.
In the introduction to Nature’s Fortune, Tercek writes:
Environmentalists generally believe in nature’s inherent value. That idea is the bedrock of the environmental movement. However, environmentalists cannot persuade everyone to think along the same lines. Focusing only on the innate wonders of nature risks alienating potential supporters and limits the environmental community’s ability to reach a broader audience and to mine sources of new ideas. The ‘Isn’t nature wonderful?’ argument can leave the impression that nature offers solely aesthetic benefits or, worse, that nature is a luxury good that only rich people or rich countries can afford. We need to get business, government and individuals to understand that nature is not only wonderful, it is also economically valuable. Indeed, nature is the fundamental underpinning to human well-being.
Allowing his “inner banker’ to run free, he says:
”concepts such as maximize returns, invest in your assets, manage your risks, diversify, and promote innovation are the common parlance of business and banking. These are rarely applied to nature, but they should be.
But how? That’s easier said that done. What makes Nature’s Fortune valuable– and I liked this book a lot — is that it acknowledges the complexity of such abstract notions as “natural capital” and “ecosystem services” and brings them down to earth, while recognizing that the argument for investing in nature is far from settled. (It’s also much better read than, say, the United Nations Millenium Ecosystem Assessment or the reports churned out by groups like The Economics of Ecosystems and Biodiversity (TEEB), which plow similar ground.) Tercek and his co-author, journalist Jonathan Adams, take readers to watersheds in the Andes, to floodplains in the Mississippi Delta, to a cooperative fishery in Morro Bay, California and to the city of Philadelphia to make a business case for conservation.
Some of their arguments are counterintuitive. Consider water. The UN in 2010 declared access to safe and cleaning water a “human right.” But does that mean water should be free? (We don’t pay for human rights like freedom of religion or speech.) No, says Tercek, who is nothing if not a pragmatist. To the contrary, he notes, free (or virtually free) water leads to waste, and exacerbates the risk that some rivers will run dry. “The price of water does not reflect its importance–a lapse that has hidden the risks of water shortages for decades,” he writes.
The good news is that once we agree that people should pay for water, opportunities to protect nature arise. Instead of “gray” infrastructure — dams and pipes — to deliver water, some governments and businesses are investing in “green” infrastructure, by protecting forests or paying farmers to use water more efficiently. In the Cauca Valley, near the Pacific coast of Colombia, Coca-Cola FEMSA, the largest independent Coke bottler in the world, is paying to protect forested hills far upstream from its bottling factory. “Not only does it cost less to protect the forests compared to the engineered alternative, the investment also produces a host of additional benefits,” Tercek writes.
The trouble is, “green” infrastructure is not necessarily cheaper than “gray.” The Nature Conservancy’s signature partnership, an alliance with Dow Chemical that is intended to help Dow incorporate the value of nature into its business strategy, point to some challenges. Scientists from TNC and Dow are working at a pilot site in Freeport, Texas, where Dow has extensive operations, to see whether the company can preserve its access to water in the Brazos River by investing in nature (marshes, payments to up-river farmers to conserve water), or whether it should reforest a nearby floodplains instead of curbing its own air pollution. Maybe a mix of “green” and “gray” infrastructure is needed. These are intriguing ideas, but TNC has to figure out how to value the green alternatives, which could turn out to be more expensive or less effective than building water treatment plants or installing conventional pollution controls.
As Tercek writes:
The testable hypothesis is that once businesses can quantify a broad range of services they depend on from nature, they will see a bottom-line payoff from investing in the natural assets that generate those services. If proven right, a straightforward business calculation will cause them to change their practices to favor nature. Those changes can ripple across entire industries.
We’ll see. The encouraging news is that Tercek and TNC are experimenting. That’s vital because, despite all the talk about “green business” and “corporate sustainability” that we’ve been hearing for close to a decade now, neither forward-thinking companies nor their environmentalist friends have been getting the job done.
As Tercek writes:
nearly every precious bit of nature–teeming coral reefs, sweeping grasslands, lush forests, the rich diversity of life itself–is in decline. Everything humanity should reduce–suburban sprawl, deforestation, overfishing, carbon emissions–has increased.
The idea is not just to prod businesses and governments do less harm, but to find ways for them to restore what we’ve already lost.