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Natural capital: a fairytale with an unhappy ending

Stunt at the entrance of the World Forum on Natural Capital. Photo by Colin Hattersley

The idea of putting a price on nature to protect it is gaining ground. End of November big companies, banks, governments and even the United Nations gathered in Edinburgh, Scotland for the first World Forum on Natural Capital (WFNC). We were present as well. Not to join their party but to resist the idea that everything is for sale.

Natural capital are trees, rivers, mountains but with a price tag attached to it. Once we value nature economically we can protect it better, the organisers of the forum say. The idea behind it is that growth and biodiversity can go side by side in harmony. Harmony in this case means that a project developer who trashes a forest for building a road for example will be able to compensate or offset the damage done by investing in the protection of a similar forest elsewhere.

It’s a kind of magic: a forest (or a river, or a mountain or any other kind of ecosystem) disappears in one place and pops up in another. Result: no ‘net loss’ in biodiversity + an extra road. For the magic to happen, everybody needs to make a small effort. Governments are asked to account their ‘natural capital’, companies need to include their impact on that natural capital in their balance sheet and the financial sector is getting ready to trade in ecosystem services and estimate related risks etc.

image by ecologiae

While “the green economy” (the banner under which these ideas are being pushed) was introduced as a way to protect nature, it soon became a way to sustain economic growth. The green economy is designed to allow for business as usual. At the WFNC the main aim was to convince businesses to join in. The opening quote of the forum “Let’s get down to business” wasn’t a slip of the tongue.

Business should be at the forefront of the green economy. After all the 1000 biggest companies are responsible for 60% of environmental degradation in the world, participants of the Forum learned. There is the CSR (Corporate Social Responsibility) element but to convince businesses, speakers mostly played on the argument of cost efficiency

Offsetting is a magical tool for that. Jochen Zeits, former CEO of Puma and big proponent of the idea of valuing natural capital, illustrated it as follows: “Yesterday I was in the Philippines and over the weekend I will be in the US. I fly around the world but when I die I will be proud to say that my impact on the environment will be positive.”

Blinded by so many incredible stories many of the attendants seemed to have forgotten that magic is a kind of delusion and that it can be dangerous, especially financial magic. Or as one financial expert put it: “Once you put a price on nature in order to protect it, you may find someone willing to pay slightly more in order to destroy it.”

Here are some more downsides of the financial magic:

  • Once you price the priceless you have subjected it to an economic logic for once and for all. Prices may go up and down, you cannot control them anymore.
  • To obtain higher prices for ecosystems and a large scale offsetting market you actually need more pollution – they become mutually dependent. This is also the reason why discussions on reducing environmental impact were no longer on the table in Edinburgh, after all you can offset it.
  • It is hard to see how offsetting works in practice: ecosystems are place-dependent and you cannot just move them around, and how to account for them is extremely arbitrary.
  • In brief, it doesn’t work. If you want to protect nature you need political will, courage and according policies. Flexible market-based mechanisms won’t do the work for you, to the contrary they undermine political action.

Beyond discussing the flaws in the system and the technical impossibilities, our aim was to bring people together to challenge the idea of valuing nature and turning it into an economic good. To do so we organised our own Forum on Natural Commons in Edinburgh

From left to right: Nick Dearden, Maggie Chapman, Morga Watson, Mike Hannis, John O'Neill. Photo by Colin Hattersley

Morag Watson, John O’Neill, Mike Hannis and Nick Dearden who spoke at the Forum offered a different view on the value of nature, what it means for us and how we should manage it. “Nature is not for sale it is a common good”, was the central idea.

Morag Watson emphasized the importance of the human value system and claimed that “we should not reinforce frames that are detrimental to us, to our values”. As Mike Hannis put it, one of the limits of this natural capital system is that “markets cannot replace ethics”.

One of the main dangerous of putting a price on nature is that it puts pressure on protected areas. As Tamra Gilbertson highlighted, “people have fought for years to build strong laws for protecting forests and other ecosystems”.  By subjecting these to market logic laws can be undermined. The highest bidder gains control at the cost of society.

The commons have always been under threat of privatisation, and Nick Dearden pointed out that we are witnessing a new attack on the commons. “We need to take back environmental assets into public and collective control, not commoditise nature”, he argued.

According to John O’Neill, “offsets and environmental markets are ways of pushing corporate regulation off the political agenda”. Most stunningly they are proposed as the only way forward, as if there was no alternative. “People tend to forget that valuing natural capital is actually an alternative in itself, a bad one we should reject.”

“Instead we need to take back environmental assets into public and collective control, not commoditise nature”, Nick Dearden said. The different speakers highlighted a number of ways to do so. Community power projects were put forward as an example but also the re-commonisation of ecosystems is needed. It has been proposed for the North Pole but it also works for the forest near you.

What seemed an absolute absurd idea when we first heard about it, is now being mainstreamed. Some may want you to believe otherwise but financialisation of nature is far from the only game in town. Edinburgh was a first step in building resistance against the idea of selling out nature. To be continued…

 

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