Measuring What Matters: Acknowledging Nature’s Role in the Global Economy

“Accounting” may not be a word that gets many pulses racing. But what if I told you that a new kind of accounting — called natural capital accounting — could revolutionize the way the world’s nations assess and value their economies?
 
Currently, gross domestic product (GDP) is the most widely used indicator of a country’s economic status. But while this number places a value on all the goods and services produced by that economy, it doesn’t account for its “natural capital” — the ecosystems and the services they provide, from carbon sequestration to freshwater regulation to pollination.

In my travels from Colombia and Brazil to Indonesia and China to the DRC and Madagascar, I've seen the value of nature up close. For example, in 2012 Madagascar’s GDP per capita was US$ 447, ranking 6^th from the bottom among the world’s countries. Yet it holds some of world’s greatest biodiversity, including a high percentage of endemic species found nowhere else, and unique ecosystems which provide benefits for residents and attract visitors from afar.
 
Natural capital accounting (NCA) is a new lens for viewing national (and natural) wealth, where it comes from, and how it’s sustained. It directly links biodiversity and the ecosystem services deriving from it with economic outputs and outcomes.
 
The World Bank works to help countries reduce poverty, share prosperity, and achieve sustainable development. For most of its existence, it has relied on increased GDP per capita as a primary indicator of success. But with its Wealth Accounting and Valuation of Ecosystem Services (WAVES), the Bank is now playing a fundamental role in re-orienting development and establishing proper incentives to achieve green, sustainable development. 
 
WAVES is an international partnership that aims to mainstream natural resources in development planning. This is the Holy Grail for translating sustainable use of natural resources and conservation into terms that national policymakers can understand.
 
Conservation International and WAVES share a common goal: to provide decision-makers with information on the most effective use of ecosystems in support of development planning. Accounting for the value of biodiversity — and the ecosystems and services it underpins — is a key part of that.
 
CI is deeply engaged with WAVES on a number of levels. These include jointly supporting the Gaborone Initiative, as a participant on WAVES’ Policy and Technical Experts Committee and through partnering on field projects in Madagascar and Peru.
 
Late last week, I spoke on two panels at WAVES’ 4th annual partnership meeting. One was the opening panel session on “Natural Capital Accounting (NCA) and Development Planning” which was webcast and live tweeted to the World Bank community and beyond. The other was on the role of NCA in achieving the Convention for Biological Diversity’s 2020 Aichi Biodiversity Targets.
 
CI’s partnership with WAVES and engagement with the UN Statistics Division — which in 2012 published a guide of international standards for valuing nature — illustrates the kind of applied research collaboration that is needed to really get a better understanding of changes in ecosystem capital and implications for people. We see generating new NCA approaches as a critical avenue for further research, development and investment, but its experimental nature requires testing of robust, scientific approaches that go beyond the guidelines currently available.
 
This is what we are currently doing with EVA (Ecosystem Values Assessment and Accounting), a pilot project for ecosystem accounting we are implementing in Peru, in partnership with the national government, the department of San Martín, and with support from the Betty and Gordon Moore Foundation. For example, this information could demonstrate trade-offs involved in converting a plot of land from forest to agriculture or identify which geographies should be prioritized for conservation.
 
The ultimate goal of NCA is to show the world’s leaders that protecting natural capital is critical for truly sustainable development. This gets to the heart of the Bank’s twin goals of reducing poverty and boosting prosperity. 
 
Together, the World Bank, CI and our partners hope to get economies moving away from only measuring traditional GDP and toward a system that incorporates the role of nature to development and planning. If we succeed, this will truly be a game changer.