What is the global biodiversity financing gap arising from challenges in economically valuing natural resources?
The global biodiversity financing gap arises from difficulties in economically valuing natural resources. Current valuations use shadow prices or willingness to pay, lacking market price connections. This dissuades investors reliant on market prices, creating a gap in nature protection funding. Estimates suggest a global need for biodiversity financial support between $265 to $440 billion annually, while actual investments are around $120 billion. This deficiency underscores the challenge of bridging the gap between necessary and available funding for biodiversity conservation.
How can we value nature’s role in climate mitigation?
Our prevailing economic model, overly focused on growth, often neglects the environment, resulting in potentially irreversible damage. We need an integrated approach to balance economics with environmental conservation. Wild animals and marine vegetation play crucial roles in climate mitigation, such as whales that sequester around 33 tons of CO2 or mangroves in the Florida Everglades that capture carbon valued at millions per square kilometre. Seagrass, often overlooked, provides a long-term economic benefit estimated over $1 trillion and supports marine life and shoreline protection. Yet, our current frameworks rarely assign these entities an explicit economic value. Recognising and quantifying their services will realign our strategies for biodiversity conservation and climate action.
What is the limitation of current nature-based solutions and what are the benefits of using wild animals and marine vegetation as NBS?
The current focus of NBS primarily on habitats like forests and wetlands may overlook the role of wild animals and marine vegetation, potentially missing opportunities for private investment. Wild animals and marine vegetation play critical roles in carbon sequestration and ecosystem health. By incorporating these entities into NBS, there's potential for attracting significant investments from financial markets, which can aid in climate mitigation and biodiversity conservation. These animals and vegetation, through their carbon services, offer a holistic approach to preserving ecosystems and addressing climate change.
How can we financially value nature’s contribution to climate mitigation?
Whales are ecological giants, indirectly sequestering roughly 33 tonnes of CO2 through their krill consumption, which themselves feed on phytoplankton that sequester an equivalent of four Amazon Rainforests. Despite their immense climate mitigation role, whales face threats from ship collisions to pollution, largely because our economy doesn't assign them monetary value. Ironically, when quantifying the carbon they sequester, a living whale is worth an estimated $3 million.
The path forward? Building an economy rooted in natural preservation and prosperity. This involves introducing financial assets based on natural services, letting private entities, NGOs, and governments trade claims on these services. Governments would initially hold these claims, with investors aiming to profit from them. While profits could be monetary, they could also be in the form of carbon credits, incentivising carbon emission offsets. Ensuring resources' health is pivotal; investors should allocate funds for protection and restoration. Using blockchain, we can ensure transparency in conservation funding, making local communities the main beneficiaries. This system would pressure governments to enhance legal protections, likely imposing penalties for natural degradation. By establishing natural asset-backed securities, we'll align financial incentives with nature conservation.