Business/Finance

At the World Forum on Natural Capital 2017 – part 2

China is about to become the global standard for this sort of effort, and other countries, particularly developing countries, will be looking to China, not Europe yet, and certainly not the US…

World-Forum-on-Natural-Capital

Part 2 of a series

Another excellent day, with a number of good presentations, some fine speeches, a somewhat dopey closing plenary, and a better lunch than yesterday (when the gnocchi was horribly overcooked – but who’s complaining?). Again, the sessions ranged in quality and interest, but on balance provided a range of sensible and interesting discussions on the fundamental issue of making natural capital central to economic and public policy decision-making – more specifically, what needs to happen for this to take place. It’s a tall order – look how long it took climate change to become commonly accepted in political discourse (and even here that’s iffy in some countries, as we all know). So it’s not at all impossible, and given that these discussions only have been going on for less than a decade, the amount of progress made to date is pretty impressive.

The panel discussions were fine, with two of them being very good indeed. One of them featured Gretchen Daily discussing the huge natural capital push in China, where natural capital is being incorporated in economic and ecological decision-making down to the level of pretty much every region in China. The scale of this effort is unprecedented, as you can imagine, and it’s still early days – the pushdown from on high came about two years ago, but in China things happen rapidly, so there are already serious on the ground efforts nationwide. China currently has about 200 million people whose sole task these days is restoring nature in some respect – reforestation, reversing topsoil depletion, restoring wetlands, that sort of thing. That’s more than three times the entire population of the UK. This is serious stuff, on an almost unimaginable scale.

It’s worth pondering this for a moment, be cause it involves a very good instantiation of what natural capital efforts are, and should be, about. This effort involves a complete stock-taking of the country’s natural resources, from forest to deserts, on a number of levels (including basic ecosystem assessments of stocks and flows), and then expending serious effort to reverse areas where there have been significant declines. But it’s more than that. It also involves significant considerations be given to avoiding natural capital depletion in economic and political policy-making. This is a complete reversal of the development trends of the past several centuries, certainly since the advent of the industrial revolution in Europe and its global expansion.

This has some implications you might not think about at first. For one thing, this is something that every country is being encouraged to do, and some actually are beginning this process. More interesting is the point that China is about to become the global standard for this sort of effort, and other countries, particularly developing countries, will be looking to China, not Europe yet, and certainly not the US, as a model for this work. I suspect that this thought has already occurred to some bright visionary in the Chinese political establishment.

More generally, this is what the conference, and the people behind it, want to encourage on a global scale. A big task, as noted earlier, and easier for some countries than others. I imagine Norway, to pick a not so random example, is well on its way here, and that Somalia will likely be lagging behind. There is significant NGO and government involvement here, not to mention a strong commitment from the UN, and the countries that need it most are those that can afford it least – hence much of the pressure to accelerate the funding of these projects.

The other good panel concerned ways that financiers and NGOs are approaching the issue of how to finance all this. Rather conservative estimates put the price of, well, saving nature as we know it, to be about $250 billion – annually. At present, what gets spent is about one-fifth that, and that mostly financed by governments. So there is a lot of thought being given to how to drag private finance – investors and insurance companies, mainly – into stumping up the financing. Some of this can be done in the guise of climate spending, but much can’t, and it’s hard to generate cash flows from biodiversity when you want to leave the biodiversity alone. This is a critical issue, and while it’s good to see a lot of thought, and real innovation, this all takes time and a broad range of commitments. The folks involved here are generally out of the finance sector – a whole lot of bankers, in fact – so they know what they’re doing. It just takes time.

So there is reason for optimism. On the other hand, as was pointed out throughout the conference, every single measure of natural capital that is tracked – except for ozone depletion – has gone negative for a number of years now, and many of these measures show no sign of slowing down. Species loss in particular is accelerating rapidly. Topsoil loss is accelerating, and outright desertification is spreading. Water depletion concerns continue to rise. And in spite of the general improvement in standard of living for most of the world over the past two decades, the bottom 20 poor countries remain severely poor, with their resource bases under increasing pressure, and they’re getting poorer. No wonder the general mood of the conference, in spite of some notable achievements the past several years, was, if not panic, a significant sense that we need to step it up, a lot. Many of these people are out in the world on a regular basis, and they’re pretty concerned.

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