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Carbon is a co-benefit

Carbon sequestration is only fraction of Nature's Value. It is time for holistic ecosystem valuation.

A version of this was originally published on ImpactAlpha as a guest post. Much of what is covered is core to our thesis at Basin Natural Capital and the nature-based real asset class we are building. In conjunction with this post we are releasing the overview of the Basin Protocol (v2) including our RealValue methodology for the Higher and Better Use of Real Assets.

It’s time to center nature in the carbon removal conversation: Carbon is a co-benefit

Carbon is a hot commodity. 

The market for carbon removal – which spans soil carbon sequestration, reforestation and the enhancement of natural processes like ocean-based carbon absorption to technological solutions that capture carbon from the air and store it – is projected to be worth $1 trillion to $4 trillion between 2037 and 2050

In addition to eliminating carbon from the atmosphere, carbon dioxide removal (known broadly as CDR) also provides co-benefits – that is benefits, expected or unexpected, that a project provides other than a net reduction in greenhouse gas emissions. Such co-benefits, from clean water to improved livelihoods, are beginning to be priced into carbon credits and offsets. 

But the speculative boom of the carbon market is only a fraction of the value of nature. According to the World Economic Forum, about half of global GDP – some $44 trillion – depends on nature.  But in reality humanity is a part of nature and is 100%, not 50%, dependent on it.

It’s time to flip the script and put nature at the center: carbon removal is actually a co-benefit of nature and humanity. The conversation needs to shift from the price of carbon unto itself to the value that carbon removal brings to nature, society and the economy.

no caption needed!

no caption needed!

A growing body of research (see Ostrom, Costanza, de Groot, Paulson, Dasgupta, IPBES-IPCC, et al.) make similar points: 

  1. The climate/carbon crisis is not separate, it is a symptom of a much greater problem, nature loss. 

  2. Nature is a public good. 

  3. Value nature. Or else.

BloombergNEF’s recent Biodiversity Finance Factbook articulates what’s at stake: About $1 trillion annually is needed in biodiversity funding, a gap of about $830 billion a year. But $1 trillion to protect biodiversity is cheaper than the cost of inaction, as the researchers point out.

A part of nature, not apart from nature

Humans are a part of nature and cannot exist without the numerous benefits it provides.  

The Biosphere underpins Society and the Economy

Stockholm Resilience Centre

Stockholm Resilience Centre

Besides the direct material benefits (food, shelter, nature-derived consumer goods) nature provides a multitude of indirect and protective benefits. They include erosion control, clean air, storm surge protection, wastewater filtration, pollination, nutrient cycling, habitat, soil, medicines and much, much more. Recreation, scenic views, and inspiration for art and culture are also part of what the Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES) calls “nature's contributions to people,” or NCP.

The problem is that we don't currently account for most of these benefits. We treat them as free, but they could soon be at a cost that we cannot afford: biodiversity is shrinking faster than at any point in human history. There is a strong possibility that 30% to 50% of all species could be lost by 2050.  

A deeper reason this epoch is called the Anthropocene is that the climate crisis is not about saving the planet – the planet will be just fine. It is about saving ourselves, or at least modern civilization as we know it.

Nothing is external

Who made up this word?

Who made up this word?

A commonly used and generally accepted accounting term is "deferred maintenance". It refers to the practice of delaying necessary repairs or upgrades. If the repairs or maintenance are necessary, they shouldn't be deferred. This is passing the buck.

In the same way, externalities are a fallacy. They are internal to someone, something, somewhere. Somebody has to or will pay the price. 

CO2 emissions and nature loss are often considered externalities. What if we think of their solutions as public goods? Too much carbon in the atmosphere, an impaired biosphere, or the loss of biodiversity affect us all. Some are making the case that CDR facilities should be publicly owned, the way that water treatment and municipal solid waste plants are. Just as nature is a public good, so is CDR.

The question becomes: who pays for public goods and why?

Accounting for nature

Accounting for what is truly valuable may be the solution we need.

What is the worth of nature? What is the worth of carbon removal? Both are invaluable. But oftentimes invaluable means free, and people don’t value what they get for free.

The field of ecological economics helps with this by establishing values for ecosystem services, or the benefits nature provides to people. For example, the air purification from trees represents $6.8 billion in avoided deaths each year in the U.S. alone. 



If the most recent global value of ecosystem services, from 2014, were put into 2022 dollars, the value would be ~ $190 trillion annually. To put this in perspective, the projected $4 trillion carbon dioxide removal market that Exxon cites is 2% of that.

Every ecosystem type can now be valued with new datasets taking into account spatial and temporal aspects and even eDNA (Environmental DNA). Recognizing that the natural environment is an important component of a community’s resilience strategy, the Federal Emergency Management Agency (FEMA) has adopted monetary values for ecosystem services. Its most recent Ecosystem Services Values (ESV) update uses value per acre, per year. The Ecosystem Services Valuation Database, or ESVD, incorporates over 4,000 global studies across sixteen biomes and twenty-three Ecosystem Service Values using per hectare per year.

Compiled by Author

Compiled by Author

The per ecosystem data further shows why carbon is a co-benefit of nature. Both FEMA and ESVD calculate nature-based CDR’s (climate regulation) economic value at around 1% of the total ecosystem services value. (The data also shows that rivers, wetlands, and open space could easily dethrone forests/trees as the climate poster child. But I will save that for another day.)

An alternative framing of Ecosystem Services is Core Benefits. Instead of looking at the follow-on effects of an activity, as co-benefits do, Core Benefits take a holistic systems based approach. At Basin, our regenerative finance venture, we are not after just CDR, or just clean water, or just clean air, etc; we are seeking the sustainable well-being that is provided by a resilient biosphere and society. 

Not either/or. Climate is both/and.

AirMiners Meme Contest Winner

AirMiners Meme Contest Winner

Just as society needs to avoid and reduce emissions, we are definitely going to need all the technological carbon removal we can get. The development of direct air capture (DAC) and other carbon removal technologies, along with the broader decarbonization of the economy, are going to take time. Meanwhile, we need to fund the restoration and conservation of ecosystems and carbon sinks as fast as possible. 

A way to fund both Nature-based Solutions (NbS) and CDR is through the valuation of the benefits each provides. We need to value things for what they are worth, not by price or cost.

Ecological and environmental economics does this and is getting better and better every day and my optimism could not be higher. In March, the Taskforce on Nature-related Financial Disclosures, or TNFD, released its fourth and final draft of the much anticipated nature disclosure framework for business and financial institutions of all sizes, across all sectors and jurisdictions. TNFD builds on the Taskforce for Climate-related Financial Disclosures (TCFD) and incorporates several commonly accepted environmental, social and governance (ESG) reporting frameworks, including (at the risk of acronym overload) GRI, SASB, and SBTN.

Imagine how the economic value of climate regulation referenced above will change if CDR is appropriately valued. The Social Cost of Carbon, a federal estimate of carbon’s costs to society, kind of does this, but is framed as a cost rather than the value of the benefits. As an example, what is the per acre per year value of DAC? Pretty high, I suspect. It could even be argued that in a world that continues to emit, CDR’s economic value is actually the sum value of all of society, the economy, and Nature. Because without large scale CDR we are really screwed. 

So, I urge you to, please, keep bringing the science, research, and math to establish and support the Value of the Core Benefits that nature and CDR provide us all.

Real Wealth

Regenerative Finance Meme Contest Winner

Regenerative Finance Meme Contest Winner

Regardless of nomenclature, pigeonholing, and maximalism, at the end of the day, I think we all want to feel safe and secure, and to be happy. Historically the word "wealth" meant "well-being, health, happiness, prosperity and preservation." Money and financial wealth was a byproduct (co-benefit!), not the focus. Besides family, friends, and pets I don't know of anything that provides incalculable benefits besides nature.

If you want to remove carbon, invest in nature. If you want clean water, invest in nature. Clean air, invest in nature. Risk reduction, invest in nature. Climate resilience, invest in nature. A healthy society, invest in nature.

Thomas Morgan (aka TMO) is the founder of Basin Natural Capital. Basin is creating a new nature-based real estate investment asset class which combines trusted real estate valuation and investment fundamentals with data-backed natural capital accounting to scale the restoration and conservation of nature and biodiversity. Connect with TMO on LinkedIn or Twitter.

Fun fact: Since 2014, ImpactAlpha's reporting on natural capital and conservation finance has been instrumental in the building of Basin.

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