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How Can We Put a Price on the Value of the Natural World?

Do you value the natural world? The ability to walk outside and breathe fresh air, drink fresh water, or enjoy the climate conditions that make modern life possible? It's high time we start recognizing the financial value of these environmental benefits. Conservation efforts are resource-intensive, and effective valuation of nature and natural resources is crucial. In this post, I will delve into various nature-based valuation methods.

Natural Capital encompasses the world's stock of natural resources, including the soils, air, water, and all living organisms. These assets provide free goods and services, known as ecosystem services, which are fundamental to our economy and society, and ultimately sustain human life [1].

Recently, the concept of “Natural Asset Companies” (NACs) generated significant interest within the SEC. A proposal in late September of 2023 defined NACs as entities that "will be corporations that hold the rights to the ecological performance (i.e., the value of natural assets and production of ecosystem services)" [2]. This model could enable investors and shareholders to support companies dedicated to environmental preservation. With the financing gap for biodiversity estimated between US$598 and US$824 billion per year, and over US$5 trillion per year for climate change, the potential for NACs seemed substantial [2]. However, this proposal was retracted in January, halting the formal establishment of NACs [3].

Despite the absence of NACs in the current corporate landscape, many organizations still recognize the value of nature and natural resources. For instance, Benefit Corporations, or B Corps, are for-profit entities certified by B Lab for their positive impact on society and the environment. A myriad of impressive, impact-focused companies hold B Corp certification. We are aspiring to add Forevergreen to this list once we complete our first year of operations.

Parallel to B Corps, the Voluntary Carbon Market (VCM) is another avenue where nature-based carbon offsets are traded, empowering retail investors and businesses to fund initiatives that rebuild and protect our planet. Furthermore, Green Accounting practices are evolving to enhance corporate accountability in environmental stewardship.

As we move forward, valuing natural resources and taking concrete steps to safeguard them cannot be overlooked. The investment capabilities of individuals who are eager to support these initiatives may currently be limited, but we anticipate a swell in the demand for natural capital investment. This is expected as more people witness the degradation of the natural world due to prevailing practices.

Our collective future hinges on how we value and protect our natural resources today. Let's commit to this cause and ensure a sustainable world for generations to come.


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