Markets for Natural Capital – Status Quo and Prospects

The new brochure of the Global Nature Fund (GNF) and the German Environmental Aid (DUH) reveals the possibilities and limits of two models for compensating environmental impacts: Biodiversity-Offsets and Payments for Ecosystem Services (PES).

Bonn, 26 June 2014

In their just published brochure, GNF and DUH show how the protection and sustainable use of nature can be optimized by considering nature also as an economic factor – as "natural capital”.

Man constantly intervenes in nature and landscapes and thereby destroys diverse habitats. Currently the international community contributes to the preservation of biodiversity in the amount of 52 Billion US-Dollar per year. But to enable adequate funding for the protection of biodiversity, at least four times of the amount is needed. Natural capital markets have high potential to cover this financial gap by involving the private sector.

Two models of natural capital markets were analyzed

1. Biodiversity-Offsets (compensation measures)
are measures required by law to compensate or substitute impacts on nature and landscapes. In Germany Biodiversity-Offsets are legally fixed via the Federal Act for the Protection of Nature.

2. Payments for Ecosystem Services (PES)
by contrast, are based on the principle of voluntariness. The basic idea is that the beneficiaries of PES pay a direct contractual sum to the "provider” of ecosystem services (e.g. landowners). Those, in turn, implement measures that guarantee the conservation or restoration of ecosystem services.

The aim of this brochure is to draw attention on how Biodiversity-Offsets and Payments for Ecosystem Services can be used in practice. In addition, the study points out the limits of the applicability of both models and provides recommendations for how the private sector, financial institutions and NGOs can participate.

First insights

With regards to Biodiversity-Offsets, both organizations underline that it is insufficient just to restore the lost habitats for plants and animals. Rather, the central goal should be to extend the habitats and to achieve a net gain.

Only additional investments and measures can result in a gain of biodiversity. However, additional funds will be required that can only be archived by voluntarily compensatory payments.

Considerable potential is offered by PES. Even though the private sector signals growing interest in getting engaged in natural capital markets, only a few actually did so yet.

The German Federal Agency for Nature Conservation supports the project "Natural Capital Markets” with funding from the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety.

Links

The three following toolkits give recommendations on how different stakeholders can take action in natural capital markets.

Similarly, recommendations for policy makers have been developed and can be downloaded here:

Natural Capital Markets (official website)

Hard copies of the study and the toolkits can be ordered for the cost of postage from the Global Nature Fund (info@globalnature.org).

Tags: Ecosystem valuation | Biodiversity Management | Biodiversity policy | Financing biodiversity conservation | Finance Industry | Case Studies


Other articles you might be interested in:

Vorschau
Sustainability management, reputational gains and competitive advantages – companies and the benefits of natural capital accounting
The new study “How business values natural capital” published by the Global Nature Fund (GNF) shows that companies increasingly consider including natural capital into their accounts. Driven by internal sustainability and risk management, more and more businesses review and value their environmental impacts.


Vorschau
Conference: To No Net Loss of Biodiversity and Beyond
On 3 and 4 June 2014, 280 individuals from 32 countries met in London for the first global conference on approaches to avoid, minimize, restore and offset biodiversity. It was discussed how to ensure that development is planned to achieve no net loss or preferably a net gain in biodiversity.


Vorschau
Verified Conservation Areas: A Real-Estate Market For Biodiversity?
A power company in Germany can use forest-carbon from Brazil to offset emissions because carbon offsets are standardized units, but an American city that damages the habitat of endangered species in Arizona has no such option – in part because habitat is as varied and localized as land itself. Frank Vorhies says VCAs are part of the solution.


Vorschau
Yorkshire Water develops environmental profit and loss account
Yorkshire Water has become the first-ever UK water company to develop an environmental profit and loss account (EP&L) to help integrate sustainability into its core business strategy.


Vorschau
Mainstreaming the Topic of Biodiversity in Corporate Sustainability Management – Experience and Recommendations from the ‘Biodiversity in Good Company’ Initiative
On the occasion of the Thirteenth meeting of the Conference of the Parties to the Convention on Biological Diversity (CBD-COP 13), to be held in Cancún, Mexico, in December, 'Biodiversity in Good Company' advocates better integration of biological diversity in corporate sustainability management.

Twitter Xing Facebook LInkedIN



A Simple Explanation of Business & Biodiversity!

Featured video

Newsletter



Media Partners