On 27-28 March in New York, bankers, economists, forestry experts and others discussed the linkages between biodiversity and the market economy (1). This focused not only on global trends and theories that support the pricing of goods and services but, instead, was very much focused on concrete, tangible, business examples where biodiversity, ecosystem services and financial markets go hand to hand. This was really the key added value of the conference: exposing concrete cases in where ecosystem services have been valued economically and understood as long term investments. The conference highlighted that there is an increasing number of investors willing to invest in such portfolios.

Valuing nature
From these two days, it was clear that, gradually, economic agents are changing the way they value the services that come from nature. Quoting one of the speakers, Ricardo Bayon, “Labour used to be a scarce resource, and that’s why we attributed value. Today natural resources are scarce and therefore we have to pay for it”. As Claudia Sobrevila, another speaker, from the World Bank stressed, “we face three major problems: Ecological, due to landscape fragmentation, climate change and invasion of alien species; Social, coming from inequality and exclusion, extinction of indigenous groups that live closer to biodiversity, population growth, conflicts, weak local, national and global governance; and Financial, due to growing competition for scarce resources, short planning horizons and market failures”.

Attributing a value and a price to goods is the only way to not over consume. In order to develop a global market for ecosystem services, there is a need for creative and innovative economic and financial approaches. These approaches also need a legal framework — this can be at the national level, or can be between investors, or between them and governmental bodies. The need for some governmental intervention notwithstanding, it is the business community that has the power to develop innovative financial approaches.

New investment approaches
Business is already showing interest in looking for different investments. According with Radha Kuppalli, from New Forests, a forestry and eco products investment management company that manages USD 150m of sustainable forest assets in the Asia and Pacific region, “Investors seeking exposure to high-growth emerging markets and trends in sustainability should consider a new style of investment in forests, considering both timber and the new ecosystem-based assets”. She also indicated that, increasingly, investors are looking for different investment approaches, with strong sustainability criteria.

This conference, which gathered around 100 participants, was an extremely valuable experience, with a rich selection of examples from US, Europe, Asia and Brazil. It was an excellent way to learn how different cultures, different legal and voluntary frameworks have been working in these regions, and how to strengthen the rationale for expanding ecosystem service markets.

Sofia Santos is a Partner at Sustentare.

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(1) The conference was organized by Green Power Conferences. Presentations can be download here