Valuing ecosystem services with monetary figures can help to show the true profitability of investments in conservation activities, Hague-headquartered ASN Bank has said.
ASN Bank calculated the value of ecosystem services, in a project invested in by its Biodiversity Fund, to estimate the scale of its impacts on nature and society, it said in a report.
“By applying the concept of monetary valuation of ecosystem services to investments, this report unveils the transformative potential of ecosystem services in bridging the divide between profit and principles,” the bank said.
“Ecosystem services valuation provides a clear language for due diligence, offering a path to enhanced stakeholder engagement and new investment opportunities.”
ASN Bank used the Ecosystem Services Valuation Database (ESVD) to determine the economic benefits of nature in its projects after conservation. Initially developed in 2010, the database draws from 9,400 indicators and 1,300 studies to estimate the values of ecosystem services around the world.
The concept of ecosystem valuations has existed for decades but there is not yet a universally agreed way of using it. However, the idea has gained increasing traction in the financial sector in recent years.
ASN delved into the case study of the impact of investment in a project to recover degraded pastures in the state of Rondonia, Brazil, in the Southern Amazon region.
The ReforesTerra initiative aims to reforest 2,000 hectares of land where grazing had led to soil degradation.
The investment demonstrated substantial benefits, ASN said. “The total economic value after restoration is approximately $8 million, while this was only $600,000 before.”
Its value was estimated per hectare across the categories of provisioning, regulating, habitat, and cultural services, ASN said.
For example, the value per hectare per year of water went from $44 for degraded pastureland, to $99 for restored rainforest.
“More importantly, a much broader range of services is provided that benefit a diverse group of stakeholders,” ASN said.
These included carbon sequestration, pollination, and maintenance of genetic diversity, which had no discernible provision for the degraded land.
“An important factor in this project is that its success hinges on innovative approaches like compensating farmers for potential losses in food production through carbon credits, highlighting the vital role of Payment for Ecosystem Services mechanisms.”
The case study is a “compelling demonstration of the need to maintain a healthy balance among the ecosystem services in play”, ASN said.
By Thomas Cox – t.cox@carbon-pulse.com
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