Natural capital markets: Putting a price on nature

Carbon markets are just the start of a revolution putting a price on nature.

Whether its the deforestation of our rainforests, the leakage of waste plastics into the ocean, or the destruction of the coral reefs by pollution, the damage being done to our natural ecosystem is becoming clearer by the day.

The main pressures on terrestrial, marine and other aquatic biodiversity include habitat loss and fragmentation, over-exploitation of natural resources, pollution, invasive alien species and climate change. The root cause of this loss of biodiversity is our growing demand for food, fuel, water and land, combined with inefficient resource misallocation in global production and consumption systems.

In the same way that markets are providing a way to price the externalities related to carbon emissions and incentivise behaviour change, governments are also looking to markets to help put a value on our natural capital. Natural capital is defined as, “The stock of renewable and non-renewable natural resources (e.g. plants, animals, air, water, soils, minerals) that combine to yield a flow of benefits to people” according to the Natural Capital Coalition.

Biodiversity provides annual benefits worth $125–140 trillion according to the Organisation of Economic Cooperation & Development (OECD). This is equivalent to more than one and a half times the size of global GDP, directly benefiting a host of resource-intensive industries like food, agriculture and…