Looking for the Next Economic Boom?: Put Your Greenbacks into Companies that Enhance Ecosystem Services

Ecosystem services sustain all life on planet earth. They are the critical gears, valves, filters, pumps, batteries and buffers that accomplish essential earth functions such as moderating weather, storing carbon, mitigating droughts and floods, cycling nutrients, cleaning the air and water, protecting against erosion, regulating the diffusion of disease, maintaining biodiversity, pollinating plants, decomposing wastes, rejuvenating soil and regulating climate. Ecosystem services have really only begun to be understood by humans including how essential they are to life and to the long-term sustainment and quality of life we’ve established.

Ecosystem services represent the processes the produce and sustain life, many of which we have taken for granted for decades. The “commons” as some ecologic services have been come to know, are becoming less common. The availability of clean water, old growth forests and timber, habitat for fisheries and the pollination of flowers and agriculture commodities are each examples of ecosystem services, each of which is undergoing stress from overproduction, overconsumption and degradation placed upon them from a burgeoning global population of 6.5 billion people.

The Ecological Society of America, US Forest Service, Millennium Ecosystem Assessment, The World Conservation Union, and The Katoomba Group's Ecosystem Marketplace are each useful references for defining ecosystem services as well as organizations that have committed resources to understanding the science, economics and social aspects of how ecosystem services impact the future of capitalism.

For example, The Katoomba Group's Ecosystem Marketplace seeks “to become the world's leading source of information on markets and payment schemes for ecosystem services; services such as water quality, carbon sequestration and biodiversity.” The Ecosystem Marketplace provides “solid and trust-worthy information on prices, regulation, science, and other market-relevant issues, markets for ecosystem services” in hopes that they “will one day become a fundamental part of our economic and environmental system, helping give value to environmental services that have, for too long, been taken for granted.”

The future of capitalism is intimately linked with ecosystem services. It always has been. The key difference between the first 100 years of industrialization and the next Century is the realization that there is just as much value in preserving, protecting and enhancing ecosystem services as there is in extracting the value through consumption and degradation, marked by our behavior with ecosystem services in the last 100 years.

Gary Luck, Associate Professor in Ecology and Environmental Management and Principal Researcher in the Institute for Land, Water and Society at Charles Sturt University has written:

“…I am unaware of any scientist who argues that the ecosystem-service approach should replace traditional strategies for protecting nature. However, it offers great promise as a value-adding tactic to secure conservation gains in regions dominated by humans. It is especially powerful in arguing for the importance of nature conservation in the spheres of society where moral and ethical responsibilities are sidelined – and money talks…The concept of ecosystem services offers a fantastic opportunity to link research and land management agendas across disciplines, as it can incorporate ecological assessment of service-providing organisms, economic and social valuation, and cost – benefit trade-offs of different land management strategies for both the landholder and society.”

US policy makers are now taking a serious look at ecosystem services for future policy and market based mechanisms for conserving natural resources, cleaning and protecting the environment. For example, The Food, Conservation, and Energy Act of 2008 seeks to establish a procedure, protocol and register for measuring, reporting and collecting/maintaining information on environmental (ecosystem) services within the US.

With 100 years of industrialization and environmental damages under our belt its refreshing to see that we’re now taking a more proactive, interdisciplinary and bipartisan approach to environmental economics and valuating the building blocks of life, environmental services. In the next 50 years there will be greater market, shareholder and public attention/emphasis on companies that conserve, protect and enhance ecosystem services – perhaps more than was ever placed on those that purely exploited resources. As we further our understanding about the full extent of “human services” embedded in ecosystems perhaps we will finally give the environment its true market valuation.

Watch firms like ARCADIS, Dow, DuPont, IBM, Geosyntec, Akzo Nobel, Syngenta, BC Hydro and others in years to come as they identify new business opportunities to enhance, conserve and protect ecosystem services. The World Resources Institute March 2008 publication The Corporate Ecosystem Services Review is a useful on-line guide outlining and summarizing the emerging business opportunities to address human induced changes in our ecosystems.

Mark C. Coleman
Senior Associate & World Inc. Case Leader, AHC Group, Inc.
Mark@ahcgroup.com

Additional Note: In an unfortunate example of how humans impact the environment, this past week the National Oceanic Atmospheric Administration’s (NOAA) Fisheries Service officially reported that the Caribbean Monk Seal has become extinct, largely due to overhunting by humans; however other influences like climate change, coastal development and entanglement in marine debris played a role in this mammal’s ultimate demise.