A Handbook for Understanding Natural Capital - Earth Economics

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Who uses Ecosystem Service Valuations Increasingly, private businesses and public agencies are formally recognizing the importance of incorporating ecosystem service concepts and valuation approaches in management and decision making frameworks. This includes accounting for natural capital on the books, monetizing the role of natural systems in disaster mitigation and relief, and including ecosystem service valuation in environmental impact assessments. In March 2013, the Obama Administration released an updated Principles and Guidelines for Water and Land Related Resources Implementation Studies (P&G) , which are the rules that govern how Federal agencies evaluate proposed water resource development projects. The new P&G, developed by Federal agencies with great public input, lays out broad principles and tools to promote and support cost effective water infrastructure projects. Included in this improved P&G toolkit are ecosystem service valuations. The inclusion of ecosystem service valuations in the P&G will help guide investments with greater speed and at reduced costs. It allows for the selection of water infrastructure investments that provide the most significant long-term benefits to a community and its economy. It sets the stage for more informed decision making about risk mitigation, encourages investment in regional recreation that boosts local business, and supports priorities of the local community. While all federal agencies are updating their procedures to apply the new P&G guidelines, the United States Federal Emergency Management Agency (FEMA) became the first agency to adopt ecosystem service valuation in formal policy. Faced with rising natural disaster costs and climate uncertainty, FEMA approved Mitigation Policy FP-108-024-01 in June of 2013. The policy enables the use of FEMA mitigation funds to remove, rather than rebuild, structures in areas that experience frequent flood or hurricane damage. This policy shifts billions of US taxpayer dollars away from rebuilding damaged structures in the same location where there is a high likelihood that they will be damaged again. Instead, FEMA funds will be used to secure permanent no-build zones on flood prone land and structures will be rebuilt on safer ground. When an ecosystem is considered valuable it is more likely to be preserved. Ecosystem service valuations quantify 23
By shifting investment out of hurricane and flood prone areas, the new policy will improve private investment and incentives. FEMA’s adoption of ecosystem service valuation will save lives and secure healthier ecosystems, stronger economies, and community resiliency. Increasingly, private companies in the US and abroad are adopting an ecosystem services-focused approach. They recognize the importance of these services to their own operations and their communities. As of early 2013, over 35 companies publicly named ecosystem services as an issue of concern. Businesses that have begun analyzing their practices through this lens are discovering risks and issues they would otherwise have overlooked, allowing them to take action before those potential risks are realized. As an added incentive for businesses, ecosystem risk management approaches are increasingly the focus of investors, financial institutions, and corporate ranking systems, such as the World Bank’s International Finance Corporation, the Dow Jones Sustainability Index, and banks that have adopted the Equator Principles . Dow Chemical is just one of the high profile corporations undertaking this approach; they are working with the Nature Conservancy to develop their strategy. In their own words: “The collaboration between Dow and The Nature Conservancy demonstrates that protecting nature can be both a global business strategy and a company priority. By combining our resources and expertise, we are integrating the value of nature into Dow’s business decision-making. Scientists, engineers, and economists from both organizations are working together to analyze the various services that nature provides to our operations and the community. Those ecosystem services include water, land, air, oceans and a variety of plant and animal life. The work involves validating tools and models that can assign a value to these services in order to support Dow’s decision-making when it comes to designing, constructing and operating its manufacturing sites.” the value of the natural services provided by a given ecosystem, justifying investment in natural systems. 24
Page 1 and 2: WHAT IS YOUR PLANET WORTH A Handboo
Page 3 and 4: suggested citation Schrier, A. V.,
Page 5 and 6: Things are changing! Exciting metho
Page 7 and 8: BENEFITS OF A HEALTHY ECOSYSTEM Wha
Page 9 and 10: WHAT DO WE PAY FOR THESE SERVICES T
Page 11 and 12: SO WHAT’S THE PROBLEM As ecosyste
Page 13 and 14: Built Capital Natural Capital Defin
Page 15 and 16: s in action WATERSHEDS The federal
Page 17: s in action MANGROVE FORESTS Mangro
Page 21 and 22: MAKING A CASE FOR INVESTING IN ECOS
Page 23: Are Values of Ecosystem Services th
Page 28 and 29: The Ecosystem Valuation Toolkit: St
Page 31 and 32: IS CALCULATING AN ECOSYSTEM’S VAL
Page 33: Creative Funding Concepts Engage th
Page 37 and 38: ABOUT EARTH ECONOMICS Since 1998, t
Page 39 and 40: Resource Primary Developer Descript
Page 41 and 42: CITATIONS 1 Vitousek, P., Ehrlich,
Page 43 and 44: IMAGE CITATIONS PAGE CITATION PAGE

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