Wednesday, September 17

The Safest Investment: Natures Utilities


We see what happens when financial markets make poor investments. "What investors thought was safe as houses has turned out to be nothing more than the property of the poor disguised in a silver wrapper, enabling bankers to pocket billions."

The BBC's Green Room this morning has a better idea: Why don't we invest in "Natures Capital"?

Forests are a giant planetary utility, performing a service essential for billions of dollars worth of industrial energy and food production: "The Amazon releases 20 billion tonnes of water into the atmosphere each day. This air-conditions the atmosphere, waters agri-business and underpins energy security from hydro to biofuels."

To replicate what the Amazon does would be a $50 billion a year investment.

"Were it possible to build a machine to do this, every day it would consume the energy equivalent to the world's largest hydro dam running on full power for 135 years"

But since nobody is reinvesting in this giant utility, "depreciation" is setting in. By doing nothing, allowing the deforestation to continue, we are literally eroding our capital. None of us is investing in the natural utility to keep it going. And what is more, nobody is even required to pay that utility bill.

Utilities get turned off if we cannot pay the utility bill. Even natures utility, the Amazon, needs our capital investment to prevent depreciation. It is getting to the point where this capital is no longer generating any "income".

So could preventing "depreciation" in our forests one day be a safer investment than houses? What if we invested in this giant utility, just like an investment in any other utility? Letting it burn is endangering the foundation of our existence, far more than the global financial meltdown.

"Just one day of emissions from deforestation equates to 36 million people flying from London to New York. Seven billion tonnes of carbon dioxide (CO2) annually places rainforests just second to energy as a source of global emissions and is more than the entire world's transport sector put together."

Natural capital investments may turn out to be as safe as any other public utilities. We need the equivalent of an ecosystem services market with an environmental regulatory body that forces us to value the common goods that we continue to plunder at our peril.

This is why we need a carbon "market". Funds are needed to protect our assets.

Crossposted at Treehugger Forum
Photo from flikr user wildimagephoto