Property developers should take advantage of the economic value of nature and integrate biodiversity into their projects, rather than just offsetting their impact, according to software and consultancy company Endangered Wildlife OU.
The Estonia-headquartered company would like developers to leave natural spaces “instead of trying to offset and move your problem elsewhere”, said Shana Gavron, CEO at the company.
“We are looking to work with property development companies that are trying to be green,” Gavron told Carbon Pulse.
Endangered Wildlife published a hypothetical case study that aims to show how integrating biodiversity can increase profits while supporting nature, without the need for offsets.
Biodiversity-positive action in a development of 32 luxury detached houses over an 11-hectare plot in Norway could increase net profit by €600,000 up to €8.7 mln, the case study suggested.
Setting aside five hectares alongside the houses for “natural gardens” – rather than landscaped ones – would save development and maintenance costs, it said, as the natural area would save money and reduce biodiversity impacts through removing the need for lawnmowers, leaf blowers, fertilisers, and lawn clippings.
The consultancy would like to work with companies in charge of larger property developments, because it is easier to calculate conservation value over bigger areas, Gavron said.
“We see the property development market and agricultural sectors as being two very key land use sectors, that ultimately are going to interact quite significantly with biodiversity.”
Countries around the globe have proposed a variety of methods for attempting to develop land without damaging biodiversity overall through offsetting. The UK is introducing mandatory ‘biodiversity net gain’ rules next year.
However, the approach is controversial as it allows actual damage be done to nature and then compensated for.
BIODIVERSITY VALUE
Endangered Wildlife used its Biodiversity Valuator, first released in 2021, to estimate the total biodiversity value of the development, with a hypothetical figure in addition to the financial profit.
Animals supported by the natural gardens in the case study have a value equivalent to over €4 million over 30 years through their contributions to society, the economy, and the environment, Endangered Wildlife claimed. These creatures could include foxes, lemmings, beavers, and deer.
This conservation value of over €4 mln is usually “intangible” to developers, but the figure offers a way to add biodiversity into financial decision-making, quantifying the wider benefits of supporting biodiversity, Gavron said.
The methodology considers five factors in its calculation:
- Aesthetic: The visual beauty created by species, gauged by the maximum virtual price a person is willing to pay to see the species
- Carbon: The value of the carbon dioxide removed from the atmosphere by the species
- Economic: The total value boost to the economy the species by across 28 factors such as employment, recreation, and hotels
- Hedge: The amount a stakeholder would be willing to pay in theory to prevent the population falling below a minimum viable level
- Impact: The hypothetical value created by increasing the population sustainably on other ecosystems
Over 50% of the conservation value of the animals supported by the natural gardens would be economic, according to Endangered Wildlife. This model values animals’ overall contributions to factors such as employment, recreation, hotels, and restaurants.
This value is estimated via a “discounted cash flow valuation” model, “a widely accepted method to calculate the financial value of an equity-based asset”, the consultancy said in its biodiversity valuation whitepaper.
For example, Endangered Wildlife estimated the economic value of lions in a reserve in South Africa over 30 years, in a paper published last year. It suggested the lions boosted tourism in the area with the values of:
- Hotels – €25.3 mln
- Restaurants – €15.3 mln
- Employment – €10.4 mln
- Recreation – €4.1 mln
The organisation’s methodology has been reviewed by “professors, government advisors, and various industry experts”, Gavron said. She previously worked as an analyst for Scandinavian banks DNB and SEB.
Endangered Wildlife offers conservation valuations as an independent third party. Clients of the consultancy that have used the methodology include NGOs, small and medium-sized enterprises, and private individuals in UK, US, South America, Australia, and South Africa, Gavron said.
“We’ve tried the concept of altruistic or emotive conservation for decades, and we’re still facing a problem. We’ve never actually tried it from the perspective of saying: ‘For every life you save, you’re creating value’,” she said.
The case study follows Intergovernmental Science-Policy Forum on Biodiversity and Ecosystem Services sounding a planet-wide alarm over the economic and environmental cost of invasive species.
By Thomas Cox – t.cox@carbon-pulse.com
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