Putting a price tag on the ocean might just save it.
....MUCH MOREA few years ago, Ralph Chami, a financial economist with the International Monetary Fund (IMF), was on a boat in Mexico’s Sea of Cortez with researchers studying blue whales. He knew nothing about the whales—only that seeing them in the wild was on his “bucket list”—but the moment Chami saw his first blue whale surface next to their boat, he felt everything change. The whale was a female, and she was massive, 110 or 120 feet long, with a mouth large enough to fit an elephant. One flick of her fin would have thrown Chami and the researchers into the sea. But she was feeding next to their small boat peacefully. For Chami, the experience epitomized all that he had missed about the wider world from the years spent in conference rooms and behind computer screens and he struggled to contain his emotions.
At night, Chami listened to the researchers talk about the astonishing amount of carbon the world’s great whale populations capture. Why, Chami wondered, was this information not more widely known? The problem, he thought, was that scientists were speaking a language that the people with the money and power to help protect our shrinking whale populations did not understand. That realization set Chami on a new path, helping translate the value of living whales and entire ecosystems into dollars and cents as a way to incentivize their protection. In 2019, he and several colleagues published their findings on the economic value of the world’s great whales in IMF’s flagship magazine, Finance & Development. After accounting for all the services a great whale provides, such as the 33 tons of carbon dioxide its body captures over its lifespan of—on average—60 years, the tourism dollars generated by whale-watching, and the nutrients it disperses that make fish more abundant, the number Chami arrived at was $2 million per whale.
Why consider a whale—and the ocean environment it inhabits—as a service provider? It occurred to Chami that most of the benefits of biodiversity are “silent and invisible” to those making the decisions around the use of natural assets. But, if a living whale offered far greater value than a dead whale, bought and sold for its meat and blubber, Chami saw that it would be possible to value other living things—and even entire ecosystems. In 2019, he co-founded Blue Green Future to advocate for market values to nature’s regenerative services, from whales to seagrass meadows.
Of course, not all aspects of nature’s value can be captured by economic terms. Like life-insurance policies, markets can only account for aspects of nature that can be quantified monetarily. And just as the value of a person’s life amounts to much more than assets owned and income earned, simply pricing the benefits that nature provides fails to capture its less-tangible values—all that is transcendental and spiritual about our living planet.
Recently, I spoke to Chami and Dinah Nieburg, a psychologist, executive coach, and a co-founder of Blue Green Future, about how a “nature-based economy,” can save the world’s oceans, the limits of science-based conservation, and the risks and rewards of using markets to fight climate change and biodiversity loss.
To start, why do you feel it’s important to put a price on living things, be it an ecosystem or an individual animal?
Dinah Nieburg: If we are to survive as a species, we need to change our behavior from an extractive mindset to valuing and creating markets around the services of nature. We’re advocating that you can actually create a market for living ecosystems. It brings together the preservation of nature with income for local and indigenous people who can contribute to both the protection and regeneration of these living systems. Otherwise, we just continue to damage, extract, and kill our living systems.
Ralph Chami: The other way of looking at what we’re doing is we’re valuing a living and thriving nature. There are values for the ocean, but they’re all extractive. Meaning, if you catch and kill a whale for consumption it’s $40,000 to $80,000. So when people say, “oh you’re putting a price on nature,” I say no, you’re putting a price on nature. You’re putting a zero price on nature. I’m trying to tell you it’s not zero.
If you catch and kill a whale for consumption it’s $40,000 to $80,000.
Which brings us to the question, how much are the oceans worth? How would you go about valuing the ocean, especially since much of the ocean’s biodiversity, functioning, and deep-sea structures are yet to be discovered?
Nieburg: As with any of the ecosystem services, we start with the known science and create financial valuations from there. In the case of the open ocean, scientists know overall how much carbon is sequestered by the ocean, and since we have a carbon market for carbon sequestration, we can derive a ballpark figure on the services already provided by the open ocean. Additional “living systems” values of the open ocean will eventually be measured.
So, what is that ballpark figure?
Chami: The value of the ecosystem services of the open ocean is at least in the tens of trillions, if not more. For example, in carbon sequestration alone, starting from 1870 until now, the value of carbon captured at the bottom of the deep ocean is close to $30 trillion. Another example is seagrass. In a report submitted to UNEP/GRID-Arendal, we valued the carbon sequestration of global seagrass to be over $2.3 trillion....
As noted in another post: "What The Heck Is 'Spatial Finance'":
So skipping over there we see:
Nature and Spatial FinanceWe have taken nature as the basis of all human economic activity for granted. The economy and the finance sector depend as well as impact nature. Financial decisions need to take these risks and opportunities into account. To date such assessments have been difficult. However, with the advance in geo-spatial and earth observation data combined with artificial intelligence and machine learning, new opportunities are rapidly developing to manage risk, opportunity and impact. This new and emerging field is called Spatial Finance.
Through the application of the WWF-SIGHT data and tool, WWF-UK has been developing case studies and engagement with the finance sector for a number of years. We now actively advocate for spatial finance approaches and tools to be rapidly provided by third party data providers and adopted by finance institutions....
Ah, very innovative. And it is in the interstices between the average person's mental maps and the innovation where the real money will be made.
Probably related:
