The true value of ecosystems is high on the this month’s UN biodiversity summit in Montreal. This is also increasingly relevant to the financial sector, argues a new report by ASN Bank and the Foundation for Sustainable Development
As the UN biodiversity summit COP15 gets under way in Montreal, a new report published by ASN Bank and the Foundation for Sustainable Development aims to encourage greater understanding of the true value of nature and how to integrate it into decision-making by assessing the impact of investments on ecosystem services, and the value of these services to society and local stakeholders.
According to the authors of the ‘Make nature count’ report, this is first time that a bank has calculated the monetary value of nature by assessing four investment case studies.
One the case studies is a project in Madagascar, involving the transformation 150 hectares of degraded pastures and shrubland into dryland forest, with an estimated increased in value of $870/ha. However, taking into account the effect of the investment scenario on a broad range of ecosystem services, the increase in value was much more substantial, to over $50,000/ha.
A growing number of experts believe the ‘true value’ of ecosystems and their services should be structurally integrated in the economic and financial system if we want to stop the continuing loss and degradation of ecosystems and biodiversity.
As stated by Frans Timmermans, vice-president of the European Commission, in his speech introducing the new EU Nature Restoration Law in June 2022, investment into nature restoration “adds €8 to €38 in economic value for every €1 spent, thanks to the ecosystem services that support food security, ecosystem and climate resilience and mitigation, and human health”.
The true value of biodiversity and ecosystems is also high on the agenda of COP15 in Montreal (6-19 December). The conference is expected to lead to the adoption of a post-2020 global biodiversity framework. Also the government representatives will look at the implementation of the protocols of the Convention on Biological Diversity (CBD) that deal with the fair and equitable sharing of benefits from the use of nature.
Many more representatives of the financial sector are expected to attend the Montreal meeting than previous biodiversity summits. Through their investments, financial institutions can be heavily dependent on ecosystem services and deterioration of nature therefore causes massive risks: physical risks, transitional risks and reputational risks. Several central banks now also speak about ‘systemic risks’.
To properly take the full value of nature into account in decision-making, reliable data on the economic importance and monetary value of ecosystem services is essential.
The report used data provided by the Ecosystem Services Valuation Database (ESVD), the largest publicly available database with standardised monetary values of all ecosystems and their services, to analyse biodiversity-related risks of several so-called ‘positive impact’ projects worldwide. It concludes that “it shows how the ESVD can help provide the much-needed data to put all ecosystems services on the balance, how this influences time horizons, and the involvement of various stakeholders”.