Nature-based markets are worth $10 trillion per year, study finds

Published 12:57 on December 7, 2022  /  Last updated at 12:57 on December 7, 2022  /  Biodiversity  /  No Comments

The Taskforce on Nature Markets, supported by consultancy McKinsey's Vivid Economics, released Wednesday a report that outlines how the world could utilise nature markets to curb biodiversity loss and ecosystem degradation, valuing multiple established and nascent markets at almost $10 trillion per year in total.

The Taskforce on Nature Markets, supported by consultancy McKinsey’s Vivid Economics, released Wednesday a report that outlines how the world could utilise nature markets to curb biodiversity loss and ecosystem degradation, valuing multiple established and nascent markets at almost $10 trillion per year in total.

The ‘Global Nature Markets Landscaping Study’ outlined a taxonomy and scale to try and demonstrate the current economic value of 24 types of established and emerging nature markets, defined as those that explicitly value and/or trade nature.

These include emerging carbon and biodiversity credit markets and nature liability insurance, as well as established markets including conservation, nature-related tourism, and soft commodities.

The study builds on assertions made in the Taskforce’s recent white paper coined ‘Nature in an Era of Crises’, and saw an upward revaluation of nature markets from the $7-9.8 trillion estimated in the latest paper because of the inclusion of oil and gas, worth $2.5 trillion.

The Taskforce on Nature Markets was established hosted by Switzerland-based non-profit NatureFinance, is supported by the MAVA Foundation, and was set up with the aim of driving the expansion of nature markets.

Of the markets involved in the paper, the agriculture and livestock markets represent $4.3 trillion alone,  making them the largest nature market after extractive commodities – mining, minerals, oil, and gas – valued at $4.6 trillion.

Meanwhile, privately owned and market-accessible ecosystem assets are worth over $8 trillion, while nature credit markets are valued at over $5 billion per year.

Meanwhile, wildlife tourism generates over $260 billion annually.

According to the study, better governance of these nature markets can support increasingly fragile ecosystems, with time fast running out before irreparable damage is done to biodiversity and a wide shortfall in investment.

The study comes as the UN’s COP15 biodiversity summit begins in Montreal on Wednesday, where new market initiatives are expected to be launched on the sidelines.

As for the central negotiations, countries are expected to thrash out potential agreement on becoming nature positive by 2030 – meaning more nature than there was in 2020, as well as a Paris-style 2050 nature goal.

“By redesigning nature markets to include nature positive instruments and policies in their governance, we can include a broader array of financial tools and move beyond Official Development Assistance (ODA) as the principal source of biodiversity funding,” said Simon Zadek, co-lead of the Taskforce Secretariat and executive director of NatureFinance.

“We have a unique opportunity to reshape the core logic of these markets so that nature positive, net zero, and equitable outcomes are built into the way they operate. This is the objective being advanced by Taskforce on Nature Markets.”

The study argued that tightened operating and assessment mechanisms would be needed to help reduce the cost and negative impact of biodiversity damage.

This might include stronger legal frameworks, due diligence requirements associated with deforestation, and links between finance supply chains and nature crimes.

“The complexity and importance of nature in markets, governance, infrastructure and pricing mechanisms requires closer scrutiny and thoughtful implementation,” said Jason Eis, executive director at Vivid Economics.

“The key is market governance and market infrastructure including features like rules of trade, product and certification standards, taxes, and subsidies which could potentially help drive incentives for companies to support nature in responsible ways.”

By Roy Manuell – roy@carbon-pulse.com

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