Accounting for natural capital
Dan Kraus (here with son Logan at Ragged Falls, Ontario) believes natural capital valuation can help Canadians better understand the benefits of conservation. NCC
Imagine if every year – along with all the other bills you received – you were sent an invoice from nature for the “goods and services” you enjoyed: clean water, breathable air, the pollination services of bees, to name a few. These ecosystem processes can be assigned a “natural capital value,” says Dan Kraus, Weston conservation scientist with the Nature Conservancy of Canada (NCC), adding that economists are able to put “a dollar value on the services nature provides to help us all understand how the loss of these resources would affect us economically. “
Forests around a city, for example, provide a home for many species and also serve as natural flood prevention services, soaking up heavy rainfalls and runoffs like a sponge. “Some people may not recognize the virtue of conserving these places as habitat for birds, but they do get it if you explain how losing forests could lead to flooding that costs millions of dollars.”
Natural capital valuation is a rapidly maturing science used by progressive corporations and governments interested in both economic growth and sustainability.
“This is a way of providing new economic models, new leadership and new ways of thinking about sustainability,” says Brian DePratto, an environmental economist with TD Bank Group. “By putting a dollar value on the contributions made to our economy by air, water, land and trees, we can make smarter decisions that incorporate the value of environmental benefits. It’s a way of bridging the gap between the environmental and the economic.”
In addition to funding projects through the TD Green Bond, which produce economic and environmental benefits for communities across Canada, TD has also applied the valuation methodology to many different natural assets.
A TD Economics report found, for example, that the value of urban forests in Halifax, Montreal, Toronto and Vancouver totalled $58-billion, and provided an additional $275-million in benefits to city residents through improved air quality, reduced wet-weather flow and other benefits. Similarly, economists have calculated that the rivers and wetlands in the Lower Fraser Valley in British Columbia kick in more than half a billion dollars in benefits each year, both to the local residents, as well as visitors and those downriver who enjoy the cleaner water.
With these kinds of benefits now measureable, it’s safe to say natural capital valuation will become an increasingly familiar expression in the Canadian political lexicon. By accounting for the full value of nature we can better understand the consequences of habitat loss and the benefits of investing in conservation.
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