Most companies take for granted the fact that they are utterly dependent on a healthy planet. Nature provides not just the air we breathe and the water we drink, but an array of products and services to business—from the paper on which memos are printed to the sequestration of carbon in forests to the wild fish people eat for lunch.
The jargon-y name for these benefits is ecosystem services. Now a group of forward-thinking companies and nonprofits are asking:
What are ecosystem services worth?
How can companies protect them?
Should business pay for the services?
“Ecosystems and eco-system services do matter to the bottom line,”says Craig Hanson, director of the people & ecosystems program at the World Resources Institute, a Washington-based environmental think tank. “Nearly every business, to some degree, depend on ecosystems for its own profitability.”
These questions took on some urgency back in 2005 when the Millennial Ecosystem Assessment—a global audit of the world’s forests, wetlands and oceans—found that about 60% of the world’s ecosystems are degraded. Since then, WRI and the World Business Council on Sustainable Development, a group of about 200 international companies, have been developing a methodology to help businesses bettter understand the value of nature’s services. They call it an Ecosystem Services Review (ESR), and today the groups held a workshop at WRI to teach corporate executives how to use the ESR.
Now, this topic can get pretty wonky pretty quickly, but rest assured that it has practical implications. Jonathan Lash, the president of WRI, said that power plants (coal and nuclear) in seven countries have been forced to shut down in recent years because of a shortage of water needed to cool their operations. Imagine if they’d found a way to value, and protect that water years earlier. Hotels and tour companies in Australia, recognizing the importance, of the Great Barrier Reef to their business, have banded together to lobby for more environmental protection, according to Hanson. And a paper and packaging company called Mondi, which is based in South Africa, road-tested the ESR and decided after to invest money to remove invasive species from some of its lands because those plants were sucking up too much water. Earlier, Unilever joined with other companies and nonprofits to form the Marine Stewardship Council to protect fisheries after cod stocks declined precipitously in the western North Atlantic.
Put simply, degradation or pollution can threaten an otherwise healthy business.
“There are a lot of companies with ecosystem-related risks that they don’t know about,”says James Griffiths, manager director of the World Business Council for Sustainable Development.
The value of ecosystems is even being recognized by courts. In 2008, the Union Pacific Railroad Co. agreed to pay $102 million fine to the U.S. Forest Service after its workers helped spark The Los Angeles Times reported [PDF]:a huge California wildfire. As
U.S. District Judge Frank C. Damrell Jr. said Union Pacific was not only responsible for the cost of firefighting and lost timber, but also damage to young growth, soil, wildlife, habitat, recreational uses and views.
Ecosystem services also come into play in the discussions around REDD (Reducing Emissions from Deforestation and Forest Degradation in Development Countries), a UN-initiated program in which richers countries pay poorer ones to protect forests because trees are an effective way to sequester carbon dioxide.
The list of ecosystem services is long. It includes food such as wild fish, fiber such as timber, biomass fuel, frest water, genetic resources, natural medicines, air quality regulation (when lakes serve as a sink for pollutants), climate regulation, water purification (when wetlands remove harmful pollutants), pest regulation (when predators consumer pests), pollination, recreation, and ethical and spiritual sustenance.
The ESR methodology doesn’t attempt to place a value on these business benefits. Instead, it highlights the risks and opportunities that they present to companies. Companies that worked with WRI and the world business council to test out the methodology include Akzo Nobel, a Dutch-based chemical and coatings company; BC Hydro, a Canadian power company; Mondi, the paper company based in South Africa; Rio Tinto, the London-based mining giant; and Syngenta, an a global agribusiness headquartered in Switzerland.
You can read a lot more about this topic in a report called The Corporate Ecosystem Services Review.
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