This post comments on a report on Natural Capital Valuation: An Incentive to Protect Nature? [1], published by the Sustainable Finance Group of S&P Global Ratings, Nov 8th 2021.
The report discusses placing a price on natural resources such as rainforests in order to reduce their exploitation. The idea is that the companies who exploit the resources should pay market values for them.
Given that market forces are destroying the rain forests, can we expect market forces to save them?
This is not an area I am familiar with, but as someone who has adopted a plant based diet, this was an interesting report to read.
The report recognises that continuing Amazon deforestation has the potential to trigger a cascade of climate tipping points that could push the world onto an irreversible warming trajectory.
The risk that this could occur is now increasing. There are positive feedbacks, non-linearities and margins of error in the climate models. So I would expect a cautious valuation of a hectare of forest to be far higher than the hypothetical $4741 calculated in the report.
At some point, surely the risk becomes so high that deforestation should be halted, irrespective of any financial value. The report mentions that parts of the rainforest are now a Carbon source. Perhaps that point has been reached?
A 12% increase in beef production cost would most likely be passed on to the consumer, as the report itself suggests, and, I suspect, with negligible impact on deforestation. What value would make a real difference?
To me, this report reinforces the argument for taking up a vegetarian or vegan diet in order to address the environmental impact of beef farming: safer than a high risk strategy of pricing the irreplaceable natural world.
