Blue nature’s value is more than a price
Interview with David Obura, Director of CORDIO East Africa and Chair of the Intergovernmental Platform on Biodiversity and Ecosystem Services, also known as IPBES
How do you think about the value of blue nature assets?
Blue nature harbors immense value that is difficult to capture in a single price. Consider coral reefs; they provide physical benefits such as coastal protection which provides tangible monetary benefits when protecting coastal buildings from storm surges and sea level rise. But prices find it hard to reflect more intangible benefits, such as cultural significance, getting to the heart of holistic value versus monetary value. Understanding the full spectrum of an asset’s value is crucial. This isn’t to say monetizing nature isn’t useful. Good examples exist. Parametric insurance has led the field in getting a price metric for reef protection, and blue carbon is up-and-coming. The key thing is markets optimize for a particular value, not the broader basket of values, particularly those that are non-monetary, that reflect nature’s contributions to people. Fishing is the oldest example – we know how to monetarily value a fish, so we maximize catches for the money, but we don’t think holistically about the broader benefits of sustainable fish stocks and ecosystem health, leading to overfishing.
How viable are biodiversity and carbon credits for encouraging a blue nature transition?
These credit mechanisms are growing. Biodiversity credits are particularly promising in their aim because they try to value multiple aspects of an asset’s natural value, whereas carbon credits are about addressing a negative, pollution. I’m optimistic about their prospects but with a few conditions attached. Credits must be high integrity, i.e., verifiable, durable, and robust, and priced high enough to support proper incentive structures. Credits can only support the right outcomes if markets optimize for a broader set of values than price alone. Historically this hasn’t been the case.
How do physical tipping points influence the value of blue natural assets?
There is some nuance here. Ecosystem decline can be abrupt, such as sudden coral bleaching or fishery collapses, but it can also occur in a gradual linear fashion. The decline also varies by scale, occurring locally or regionally. Market dynamics can hide these physical dynamics. As natural assets become rarer, their value falls, but as we well know, their price increases. This creates a downward spiral where higher prices incentivize an asset bubble that bursts when the asset degrades past a point or, eventually, fully disappears. We are beginning to compare natural tipping points to economic or financial inflection points – nature’s ‘Minsky moments’. With climate, the trigger points are relatively clear – it’s possible to measure emissions, and we know more about the dynamics. But with biodiversity, the trigger points are complex, many are unclear, and many are interrelated. This creates uncertainty when thinking about value over time.
Looking ahead, how does a successful blue nature transition look in 10 years?
The costs of doing business are integrated into economic activities. Philanthropy and grants play a key role in seeding projects, but integrating nature-related costs into businesses from the start targets harm at the source. This will help make significant progress towards the 2050 Global Biodiversity Framework targets. While the conservation community emphasizes Target 3, protecting 30% of land and water, the business and finance community must deliver on Targets 14, 15, and 16 – integrating biodiversity into decision-making, and minimizing negative impacts of production and consumption. IPBES plays a crucial role in bringing together the evidence to guide businesses and other actors. Others focus on building actionable frameworks, such as the TNFD. We need connected, global frameworks and regulation, given nature is connected globally.
