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Valuing Nature – Making the business case for the environment?

Mark Walton

There is growing momentum around the idea of payment for ecosystem services, assigning financial value to natural resources.

Being able to discuss the impact of what an enterprise does, beyond financial efficiency and savings, can be empowering and promote an appreciation of environmental assets. But it is not an easy fix.

The UK government’s approach to this issue is outlined in Defra’s publication of the Ecosystem Markets Task Force report. This outlines the business opportunities that the Task Force believe emerge when nature is valued effectively. Amongst its recommendations, the report trailed a catchment based approach to water management. This would encourage more integrated management and usage throughout the water cycle by expanding the understanding of the value within a catchment area of services such as flood management and waste water drainage. Defra state that such approaches will seek to ensure that quality and sustainability is maintained throughout and that environmental as well as business benefits are realised. They wish to encourage social enterprise and community involvement in catchment-based approaches and, yesterday, launched a £1.6m framework to support the development and coordination of up to 80 local catchment management partnerships.

The catchment based approach operates at various scales. The more strategic, regional level, overseen by a system of basic national coordination led by the Environment Agency, is complemented by small scale, local level mechanisms. These are intended to enable communities and social enterprises to engage in a way which is both manageable and meaningful.

Some, such as Tony Juniper, argue that environmental assets can only be effectively protected if their value is recognisable in corporate calculations. Others are deeply critical, however, and argue that valuing nature will lead to greater commodification and reduction of access to environmental services, or will allow companies to “buy absolution” for the damage they cause. It is also argued that ecosystems are so interconnected and complex that it is impossible assign a financial value to the impact we have on it.

From a commons-based perspective it is useful to turn the business case on its head. The Task Force argues that new models for business seek to create value while reducing pressure on the ecosystem. The commons approach would seek to reduce pressure on the ecosystem (or address social goals) while creating enough value to be sustainable. The important difference is that the relationship with nature is of primary importance and is not substituted for business growth.

A potent example of the inadequacy of traditional business based approaches to fully get to grips with environmental problems is found in carbon markets, which are at risk of total collapse across Europe. One of the key problems with a cap and trade approach to carbon reduction is that a great deal of energy goes in to maintaining the market and almost none in to making sure it actually contributes to the overall reduction in greenhouse gas production.

Valuing nature, in the sense in which Defra intends, is unlikely to account for the “externalities” that do not directly affect the business itself. The Task Force report makes this plain:

These companies are not just taking notice of the market price of natural resources: they also assign value to the services provided by nature and are finding ways to make what was once the invisible value of nature’s resources and services apparent in their business models

It will be interesting to see how this plan develops and, in particular, whether there is enough support, financially and otherwise, to sustain these mechanisms which allow people to participate. £1.6 million spread across an entire national network of catchment areas might not actually go that far and it is unclear how Catchment Management Partnerships will be financially sustainable in the long term. Community and social enterprises may find that their concerns with regard to payment for ecosystem services are not the same as the Government’s and bigger corporations’.

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