Placing a value on the essential services that nature provides helps us better understand the trade-offs we make in economic development decisions. Ecosystems represent our planet’s natural capital. With an estimated worth upwards of 80 trillion dollars annually, the services provided by natural ecosystems are as important to our livelihoods as the roads, bridges, factories, and dams that make up our built, or human-made, capital. Yet, much more needs to be learned about how to quantify these myriad benefits and assign them monetary values — so that we can make credible and persuasive arguments and establish policies for protecting the ecosystems that deliver them.
Why is it important?
When society factors the full range of benefits, cost reductions, and risk prevention provided by multiple ecosystem services into economic development decisions, the trade-offs involved become more visible — enabling better-informed decisions that balance long-term consequences and opportunities. These decisions will require that narrowly conceived projects be transformed to deliver natural and financial benefits and provide for new development opportunities that align with sustaining ecosystem services over the long term.
Examples in practice range from a beverage corporation’s investment in a watershed protection project in a region where it sources water for its product to the construction of river dams in ways that have the least impact on biodiversity and the well-being of local communities.
Payments-for-ecosystem-services (PES) programs or conservation agreements have also been established, where local communities stop practices that degrade the land and water in exchange for monetary or in-kind benefits, like teachers, farm equipment, or employment opportunities. National governments can also eliminate harmful subsidies for unsustainable water management by farmers and utilities, while encouraging more effective and efficient practices that are less harmful to the environment.
Fully incorporating the value of ecosystem services into decision making will help illuminate the trade-offs that are being made as countries try to reduce or adapt to the effects of growing populations and climate change
We also need to factor in the value of natural solutions to water resource and supply challenges. In the Catskill Mountains outside of New York City, for example, the government found that watershed protection and restoration sustained high-quality freshwater flows more efficiently and at lower cost than building a new multi-billion-dollar water treatment complex to purify water for human consumption. These kinds of "natural infrastructure" opportunities can be found in a variety of ecosystems, from riparian corridors, gallery or montane forests, mangroves and estuaries to seagrasses, wetlands, peatlands, swamps, and grasslands.
How is CI contributing?
We are working with corporate, government, development agency, and community partners to understand and mitigate threats to freshwater biodiversity and ecosystems. We are devising solutions to improve land and water stewardship by, for example, fostering ecologically sustainable fisheries, incorporating ecological principles and water- and energy-saving methods into agriculture, and developing ways to adapt to climate change using "natural infrastructure" opportunities.
We are valuing the role that freshwater ecosystems play in delivering services and understanding the unintended trade-offs that occur when we fail to value ecosystems for their services. We are also evaluating the range of conditions under which nature can either support or replace the need for man-made infrastructure and testing the feasibility and economic viability of combining natural options with traditional engineering approaches.
We engage with corporate partners to develop and implement leading water management strategies and practices, including efficiency measures, water footprint accounting, and sustainable water sourcing across all stages of operational and product development lifecycles. We are working with governments to eliminate harmful subsidies, to adopt market and regulatory innovations for utilities that create incentives for end-user efficiency, and to promote the implementation of more efficient irrigation systems.
What are CI's major areas of work?
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Developing natural infrastructure options to show how conservation can be directly incorporated into development, offering a cost-effective and efficient means of addressing freshwater resource management challenges while enhancing freshwater ecosystem protection.
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Demonstrating innovative and cost-effective water- and energy-efficient practices for utility services (electricity, natural gas, and water), agriculture, and other private sector interests and helping to shift subsidies that unintentionally degrade freshwater ecosystems into incentives that protect them.
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Increasing land and water stewardship, developing payment-for-ecosystem-services (PES) projects, and creating new markets for water to create a direct financial incentive for conserving watersheds and freshwater ecosystems.
Results expected
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Natural infrastructure projects address water resource and supply concerns efficiently and cost-effectively while also protecting freshwater ecosystems, and the creation of new policies and investment sources by private and public development banks to fund additional projects.
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Creation of climate change adaptation planning and policy processes, and funding streams that fund ecosystem-based adaptation approaches in critical landscapes.
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Adoption of better land and water stewardship practices and water pricing by corporate partners, as well as farmers and water utilities in Brazil, Indonesia, China, and CI priority freshwater regions.
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Influence up to 50 percent of global agricultural commodity production supply chains, and secure USD $10 million for enhanced watershed management and protection of freshwater ecosystems and services.
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Assist in the development of Payment-for-Ecosystem-Services (PES) policies and programs, including monitoring protocols and training programs, in South Africa, China, Brazil, Costa Rica, and other countries that want our help.
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We continue to secure corporate partnerships and long-term investment from development banks in PES and other water market projects.
Priorities
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Piloting (with partners) a dam-screening tool as part of a PES program that will identify dam development and operating conditions, which enhance the protection of freshwater ecosystems while avoiding ecosystem services trade-offs and other impacts that otherwise impede the efficiency of dam operation. This tool will offer long-term dam operation efficiency, electricity provision and ecosystem protection.
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Seeking new partnerships to develop a white paper and program of action to pilot-test combined natural and traditional infrastructure approaches in two or more locations.
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Assessing the potential for adopting point-of-service energy efficiency approaches more widely throughout China and in Brazil, regions where pressure from infrastructure expansion and development must be reduced. Providing advice to countries where CI works on how to include alternative energy into their climate mitigation and adaptation strategies.
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Increasing food, fuel and fiber production on lands that are already degraded to avoid additional land clearing for these activities, and engaging at least three companies in CI's Sustainable Biofuel Crops Initiative, which includes water conservation measures.
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Expanding application of purchasing guidelines that establish sustainability standards for soy and palm oil to areas of high freshwater importance.
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Compiling lessons learned from Costa Rica, Mexico, and Ecuador on PES programs and using them to make recommendations on how to implement and scale up PES mechanisms for water and other services.
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Creating an investment portfolio of ecosystem services projects for corporate, government, and other donors, as a means of both reducing their water footprints and protecting the sources of their freshwater supplies.
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Developing a PES training program including communities, government officials and policymakers, and implementing it in South Africa, China, and other interested countries.
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Developing a freshwater market strategy to determine the extent to which various options, such as nutrient trading (a system wherein governments cap and trade excess nutrients from fertilizer and pesticide run-off), offer the best opportunities to secure long-term financing for our freshwater project portfolio.