We have spent centuries learning to price things we cannot predict. It is time to apply that knowledge to nature.

(image: NASA Earth Observatory images by Wanmei Liang, using PACE data from NASA EOSDIS LANCE and GIBS/Worldview)

In most places, the organisations profiting from degradation are not the same groups bearing the biggest losses. That misalignment is why “nature is valuable” arguments often fail: the value is real, but it accrues to one set of actors while the costs land on another.

(Mamoudzou, 27 April 2021, Bebetot)

There is a number quietly embedded in almost every financial model for a nature-based project. Most people never question it. Yet more than almost any other variable, it determines whether restoring a mangrove forest, protecting a fish stock, or regenerating degraded land looks value-adding or uneconomic.

The implications of not valuing nature and how it is leading to nature-related stranded assets, but in a different way to the fossil fuel assets: for nature it is not inevitable.

This article walks through an illustrative model that applies familiar financial and actuarial techniques to translate ecosystem health into financial risk metrics.