The practice of putting a value on ecosystem services – resources and processes that come from or occur in natural ecosystems – is finding a place in the business world.
In a bold move, Dow Chemical has partnered with The Nature Conservancy (TNC) in an effort to add up the ecosystem costs and benefits of every one of its business decisions. Dow hopes to make environmental factors part of its profit-and-loss statements.
"Protecting nature can be a profitable corporate priority and a smart global business strategy," Dow CEO Andrew Liveris said in a TIME article. As further incentive for companies to start considering the ecosystem costs of their business decisions, Goldman Sachs released a report in 2007 showing that companies considered leaders in environmental policies tended to outperform their peers and the general stock market.
A direct example of how preserving natural ecosystems can directly benefit a business’ bottom line is found in a study that was done by scientists from the World Wildlife Fund (WWF).
They looked at a coffee plantation in Costa Rica and found that coffee flowers grown near forests received twice as many bee visits and twice as much pollen as flowers far from the forest, resulting in increased production from those plants. The extra bee pollination was worth $62,000 a year to the farm – a total of 7% of their income. Plowing down the trees to allow for cattle grazing (a common practice in developing countries) would only earn $24,000 a year.
While leaving the forest intact in the above example results in a direct monetary benefit to the business, it also has the benefit of preserving the ecosystem in its natural state. An example of ecosystem preservation for the direct benefit of an entity occurred when New York City bought and protected 70,000 acres of its watershed in the 1990s to avoid the need for a $6 billion treatment plant. An ounce of prevention is worth a pound of cure.
It is true that the valuation of ecosystem services is still being defined. The value of water to a company can be easier to put a price on than something like biodiversity. But Dow’s initial investment in its collaboration with TNC is one that Liveris sees paying off for the company in the future, with the prospect of stronger environmental regulations and limited natural resources. "The economy and the environment are interdependent," says Liveris. And as WWF’s director of conservation science, Taylor Ricketts, succinctly points out, "We only value something when we measure it."
Do you think that ecosystem services are something worth valuing? Do you agree that they can be worth preserving, if not just for their intrinsic value but for their monetary benefits to businesses and society as a whole? Is it a realistic expectation for businesses to do so?