Taskforce values nature-based markets at $7 trillion
Nature-based markets, including agriculture, voluntary carbon credits, conservation projects, and nature-based solutions for carbon sequestration, could be worth more than $7 trillion a year, making them equivalent to 8.6 percent of global GDP.
That is according to a new research paper from the Taskforce on Nature Markets, which sets out a detailed taxonomy for nature-based markets and estimates the size of the increasingly influential sector.
The report details how more than half the calculated value comes from agricultural production alone, which is entirely reliant on nature to deliver its products. The study also found that an estimated 3 billion acres of privately owned assets is worth up to $8.6 trillion, 85 percent of which is agricultural land.
According to the researchers, its estimates are a “modest tip of the iceberg” as increased awareness of nature’s vulnerability and the economic value of ecosystem services highlights how the wider global economy is reliant on nature.
“Nature markets are a bridge to a total shift in our economic system,” said Sandrine Dixon-Declève, Taskforce member, co-president of the Club of Rome and chair of the European Commission’s Economic and Societal Impacts from Research and Innovation Expert Group.
“We need to start by placing a value on nature within our current financial and economic architecture but can’t stop at that. A real transition requires not only financing change through low carbon and nature-based solutions but changing our financial and economic systems to truly service people, planet and prosperity at the same time.”
The paper, “Nature in an era of crises,” completes the first phase of the Taskforce on Nature Markets’ work to promote a more equitable and nature-positive approach to the net zero transition.
According to the study, the $95 trillion global economy depends 100 percent on nature and faces multiple climate and nature crises over the coming decades — including heatwaves, droughts, supply chain disruptions and floods.
The paper states that if nature is explicitly valued and traded in nature markets, it creates an opportunity to deploy policy and market mechanisms that shape its value and the distribution of its economic benefits.
“We are witnessing the beginnings of a paradigm shift in trade principles that have burdened Africa for many decades,” said Carlos Lopes, professor, Mandela School of Public Governance & African Climate Foundation Advisory council chair. “An emerging political environment is advancing the notion that productivity is going to be replaced by other concepts like near-shoring, reshoring, onshoring and the like. This, coupled with critical elements relating to the climate transition and geopolitical security issues are catalyzing the shift . We are witnessing a tectonic shift of trade rules.”
The world’s dependence on nature is moving from something that is invisible and under-valued to one that is explicitly recognized, valued and traded.
Nature markets are already booming in sectors such as carbon credits and commodities, and increased awareness of nature’s vulnerability and value is helping to boost understanding of nature’s essential role in the economy, the study said.
“The world’s dependence on nature is moving from something that is invisible and under-valued to one that is explicitly recognized, valued, and traded,” researchers added.
Rhian-Mari Thomas, Taskforce member and chief executive of the Green Finance Institute, said: “Working on the legal and illegal dimensions of nature markets is a powerful way to embed due diligence across business and finance and expose not just illegal deforestation, but also illegal mining, fishing, as well as illegal dumping and wildlife trafficking.”
Attempts to place a value on nature remain hugely contentious, with some campaigners arguing that assigning a dollar value to nature can make it easier for such resources to be exploited.
But the Taskforce argues that well-governed nature markets can channel investments towards economic assets that deliver equitable, nature positive outcomes, and away from those that do not. “If markets can be shaped to treat nature as a regenerative asset they could be a critical part of addressing the inextricable crises emerging at the finance-nature nexus,” researchers said.
“Our goal is to make people more aware of the value of nature, its presence in everything we consume, and how fragile the precious balance it affords is, thus mobilizing global efforts to have nature adequately priced and protected.” said Joaquim Levy, Taskforce member and director for economic strategy and market relations at Banco Safra SA