Paying for Nature

Dow Chemical wants to put hard numbers on exactly how much the environment is worth to business

  • Siebe Swart / Hollandse Hoogte / Redux

    A Dow plant in the Netherlands recycles city water

    How much are the birds of heaven worth? How about the lilies of the field? Or clean air and water, verdant forests and untouched grassland, healthy coral reefs and lush mangroves? By the environmentalist's accounting, they're invaluable because nature has a worth all its own. But to business, untouched nature typically hasn't had a value — at least not one that could be put in a ledger.

    Until now. Many greens — and a growing chorus of corporate suits — are arguing that nature in its own right provides economically valuable services that underpin business. A virgin forest is pleasant to look at, of course, but it also prevents soil erosion and improves water quality at no cost — valuable if you happen to own a beverage plant downstream that depends on clean water. That same forest might provide a habitat for bees, which can pollinate plants in surrounding cropland — a vital function if you run a coffee plantation nearby. By this reckoning, nature provides "ecosystem services" — from clean water to carbon sequestration — whose benefits for business are increasingly measurable in hard, cold dollar figures. "All the things that nature does for us fuel our prosperity," says Peter Kareiva, chief scientist for the Nature Conservancy (TNC), a Washington-based environmental group.

    Until recently, the concept of ecosystem services was mentioned only in obscure scientific journals, the province of a few ecologists trying to figure out the dollar value of the atmosphere. But the threat of government action on carbon emissions (which now have a price of about $20 a ton on the European market), insistent shareholder pressure on green issues and growing concern over limited natural resources have prompted an increasing number of companies, including giants like Coca-Cola, to examine their ecological numbers just as closely as they would any other part of their balance sheets. Last month, Dow Chemical took the trend to a new level, announcing a five-year, $10 million collaboration with TNC to eventually tally up the ecosystem costs and benefits of every business decision. The Michigan-headquartered company will look to make environmental factors part of its profit-and-loss statements — a move that could signal to other companies that nature can no longer be ignored. "Our planet's natural resources are more and more under threat," says Dow CEO Andrew Liveris. "But protecting nature can be a profitable corporate priority and a smart global business strategy."

    Historically, conservationists and corporations were usually on opposite sides of the environmental debate, and few greens wanted to see the nature they loved tainted by consideration of dollar figures. Yet as climate change emerged as a concern in the 1990s — and, with it, the accounting of carbon dioxide emissions — even the deepest green began to understand that nature's value would really be understood only once it was quantified. A 1997 study in the journal Nature attempted to estimate the value of the planet's ecosystem services: forests and oceans, air and climate regulation, even cultural and recreational benefits. The researchers came up with a very rough figure of $33 trillion — nearly twice the global gross national product at the time. (The authors came to that calculation in part by estimating the public's willingness to pay for certain ecosystem services like waste treatment and pollution cleanup.)

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