Imagine if every year you were sent an invoice from nature for the “goods and services” you enjoyed – such as clean water, breathable air, the pollination of bees – along with all the other bills you received. 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 now 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 sponges, soaking up heavy rainfalls and runoff.“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 field used by some 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 (TD). “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 natural and the economic.”
In addition to funding projects through the TD Green Bond that 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 that they provide an additional $275-million in benefits annually 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 to local residents, as well as visitors and those downriver who enjoy the cleaner water.
With these kinds of benefits now measurable, natural capital valuation may become an increasingly familiar expression in the Canadian 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.