Could nature become the new gold?
As I sat in the opening circle of the Chatham House unconference 2023 event, I had a question in mind. A question that I wanted to hear the attendees’ diverse and extensive perspectives on:
Could nature become the new gold?
Some may consider this question childish or overly optimistic, but it is intentionally provocative and designed to elicit feedback. Here, I summarise the rationale for posing this question using the classic McKinsey SCQH framework.
Situation
The rapid and alarming deterioration of the biosphere poses significant and far-reaching economic consequences. It is already affecting regions where ecosystem productivity and resilience are more fragile and vulnerable, such as areas affected by desertification. With heightened risk due to limited resources and increased environmental pressures, the consequences are rapid and growing in severity, especially in light of the ongoing population growth and its associated challenges.
Low-income populations, who heavily rely on natural resources for their livelihoods, are the most vulnerable to these challenges, but broader systemic issues will gradually impact entire countries and economies. Pollution, habitat loss, and the presence of invasive species can have rampant negative impacts on multiple sectors, including agriculture at large, tourism, and public health. These adverse effects can result in economic losses, reduced productivity, and health issues for communities.
Soon enough, noticeable biosphere-related issues will spread across the globe, affecting not only delicate environments but also robust ones. In fact, systemic shifts are already at play worldwide to varying degrees, even if there are no overt consequences at present.
Complication
Despite the urgent nature of these challenges, it is evident that our current economic system is not adapting quickly enough to address them. At present, the preservation of biodiversity is implemented through various means such as National Determined Contributions (NDCs), leading to policies and law enforcement, supported by reporting (e.g. ESG), financial risk modelling, etc.
However, the perception of these efforts as burdensome and costly hinders their recognition as valuable assets. This prevailing perspective hampers our ability to fully grasp the immense wealth and benefits that nature provides. It hides the significance of investing in the preservation of biodiversity and the inestimable value it provides to our society and the planet as a whole.
Question
So, what if we could shift this perspective? What if we could fundamentally reframe the prevailing mindset that prevents the world from recognising the true value of biodiversity and nature? Rather than perceiving them as mere expandable resources or externalities to be managed, what if we could transform our viewpoint and regard them as the ultimate form of wealth? As the driving force of our economic system? By viewing nature as a valuable asset, we could unlock new opportunities for sustainable development and create incentives for the protection and conservation of biodiversity.
Hypothesis
One potential way to achieve this paradigm shift is by integrating cutting-edge technologies with biodiversity markets. Combining the Internet of Things (IoT), satellite imagery, drones, and the latest innovations in environmental DNA (e-DNA) sampling or eco-acoustics with Artificial Intelligence (AI) provides an effective and efficient way to collect and manage data for natural resources and biodiversity. Although there are philosophical questions regarding the quantification and valuation of nature (should we?), it would enable the creation of new markets, such as dedicated biodiversity markets, where “biodiversity” can be traded. This approach, despite its flaws, would achieve the end goal of allowing stakeholders and key players to monetise assets, frequently evaluate them at a low cost, and provide better financial incentives to protect biodiversity. It would also ensure sustainable land use, agricultural practices, and conservation.
In exploring the potential for trading these new types of securities and liabilities, we can uncover new ways to direct financial resources towards biodiversity, regenerative practices, and nature conservation. By examining the implications attached to such products, including insurance, we can further quantify the benefits and risks associated with prioritising nature as the focal point of our economic system.
Implications
By reimagining the position of nature and biodiversity within our economy, we have the opportunity to not only safeguard our planet’s precious ecosystems but also create a sustainable and prosperous future.
Nature has the potential to become the new gold, but it requires a collective shift in mindset and a commitment to valuing and protecting our natural heritage.
This is a work in progress. I would very much value feedback, please reach out if you have any criticism to provide.
