Who should value nature? Interview with Giles Atkinson

Is valuing nature as natural capital the way to reduce environmental degradation or a dangerous distraction that will commodify the environment? Alongside debates on if we should value natural capital is another question that is very rarely asked: who should value nature?

This exclusive interview with Giles Atkinson is from the report Who should value nature? by Dario Kenner (Why Green Economy?) published by the Institute of Chartered Accountants in England and Wales (ICAEW) in December 2014. The report explores how different stakeholders value the environment (ranging from consultancies firms, academics, conservation NGOs to indigenous peoples) and the challenge of identifying who should be involved in valuation in developing countries. Read the report © ICAEW 2014

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Interview with Professor Giles Atkinson, member of the Natural Capital Committee (United Kingdom)

1) Explain why you think nature should/should not be valued?

Valuing nature is unavoidable; it is one crucial element of good decision making. Most important decisions involve trade-offs and hard choices. Not valuing nature explicitly comes with risks. It makes these trade-offs implicit and non-transparent. It is far better to be clear about the valuations inherent in decision making (as well as their uncertainties) and to seek to use the world’s limited economic resources in the best way possible by recognising explicitly the inevitable trade-offs which all decisions imply. A further consequence of not explicitly valuing natural capital, of course, is that it all too often gets assigned a value of zero. This leads to opportunities to enhance sustainable growth being missed and it leads to unsustainable degradation of natural assets.

2) Who should be involved in valuing nature in your country? Who should not be involved? e.g. government, accountants, business, indigenous peoples…

It is important to appreciate that valuing nature (or any other goods and services that are not traded in markets) is not simply about ‘assigning’ a value or discovering ‘the’ value of some change in it. Economic valuation is about trying to understand and quantify preferences for environmental changes versus something else that may enhance (or reduce) wellbeing. Ideally, this would reflect the values held by everyone affected by the goods and services provided by nature. This could be all those citizens within a country. Plausibly it could be people living elsewhere too. The important thing is that values do not reflect special interests to the exclusion of other parties who should count in decision making.

A separate but very important issue is who uses those estimates of value to inform which decisions. Ideally, this would be done by everyone: Government would include them in policy development; businesses would include them in their investment and production decisions; and households would include them in their decisions about what and how much to consume – all subject to their own respective budget constraints.

3) How do you think different stakeholders including governments, companies, and indigenous peoples will value nature? e.g. are certain stakeholders more likely to use monetary or non-monetary values?

Stakeholders are likely to be interested in trying to value natural capital in ways which are most useful to their organisation’s purpose. For example, for the private sector, taking account of the natural capital they own or are responsible for, could help them manage their operations more efficiently or sustainably which could have both economic and corporate social responsibility benefits. Government is likely to take a wider perspective, thinking more in terms of how changes in natural assets affect societal wellbeing. Local communities are perhaps less likely to use monetary estimates of the value of nature, giving greater weight instead to other cultural aspects that currently do not lend themselves easily to quantification.

4) To make a successful business case to protect nature do you think a monetary value has to be placed on nature? Would a non-monetary value be as effective?

This is in part answered by the response to question 1. Monetary valuation is preferable in most cases, particularly where there are high levels of confidence in those estimates (i.e. they are deemed robust). Quantification and monetisation enables much better comparison with other factors, as it allows different and disparate issues to be compared in a common unit of measurement. From a business perspective, this seems essential. This is not to say that non-monetary indicators are not important. Information about the numbers of people becoming ill as a result of urban air pollution are surely as important as placing this information in money terms.

The choice is not necessarily whether one approach or the other should be taken. In some instances valuation may not be possible currently. By necessity, in the interim, then some other metric is needed. In other cases, effectiveness will depend on the audience for the information and the policy question being asked. However, the hard fact is that for many of the purposes of protecting nature that we need to build cases for — whether this be for a business or the broader societal case — monetary valuation is not only crucial but unavoidable.