Book Excerpt: Valuing Nature

Copper Creek, courtesy the Conservation Fund, photo by Bill Mullens

How do you ascribe dollars to this? (Photo by Bill Mullins, courtesy the Conservation Fund)

Island Press’ publication of Valuing Nature: A Handbook for Impact Investing by William Ginn is a moment for reflection. The 2005 release of Ginn’s first book Investing in Nature occurred alongside a wave of foundational literature which helped establish and define the practice of conservation finance, including A Field Guide to by Story Clark and Walden to Wall Street, an edited volume by Jim Levitt. These titles continue to provide education and inspiration for practitioners around the world. They even spurred Island Press to partner with the US Department of Defense’s Readiness and Environmental Protection Integration Program to incubate a fledgling collaborative effort among leading practitioners—the Conservation Finance Network—which is now based at The Conservation Fund and has grown into a vibrant community of practice.

While the lessons captured in prior works still ring true, the conservation finance field has experienced rapid growth in recent years—much of which is captured in Valuing Nature. But the book does more than catalogue these advances. Ginn reflects on decades of personal experience alongside that of his peers and colleagues to highlight recent deal activity and the broader context of conservation investment. The book works its way across a range of geographies and ecosystems, looking at the application of conservation finance tools and approaches across freshwater, oceans, land, and natural climate solutions. It incorporates insight from sectors like community development while calling out issues which must still be addressed.

Valuing Nature will serve as a font of knowledge in understanding the evolution of conservation deal-making over the past decade. Ginn makes no mistake that the real work lies ahead, but offers great insight, framing, and expertise for practitioners to draw on.

--Leigh Whelpton, Director, Conservation Finance Network

Bill Ginn's new capstone book

Decades of insights, just in time. (Courtesy of Island Press.)

The more we value nature, the more likely we are to protect it, but what we each value is not the same. For some of us, nature is our cultural identity; for others, it is beauty and emotional connections; for others still, it is a recreational paradise. These values have been and will continue to be important drivers in supporting the environmental movement across the world. The concept of valuing also has an economic element, and when we begin to think of nature as an economic asset, with tangible financial value—as natural capital— things become far more complicated. Consider the following examples:

• High demand for campsites in Yosemite Valley has led to a black market for reservations; some campers have paid resellers as much as $700 for three nights’ stay. The park, however, receives no benefit, and regular campers now have less access than the wealthy patrons who can use the park without waiting in line.

• In an effort to prevent poaching, the sale of elephant ivory has been illegal for many years, and legal supplies are now few. But continued demand from places like China and the Philippines has driven up the price of ivory dramatically, as high as $4,620 per pound. As a result, sophisticated illegal poaching cartels are exploiting the value of ivory to fund civil wars and corruption across Africa. Elephant populations continue to plummet, having lost 30 percent of their population since 2000. The value of ivory has led to the loss of—not the conservation of—elephants.

• In Maine, wildlife authorities raise funds by holding a regular lottery for the chance to hunt moose. If you do not win the lottery, though, there is another way: an auction that gives licenses to the highest bidders. In 2017, ten bidders paid a total of $150,000 for the right to shoot a moose. Similarly, in some African countries, wildlife departments fund their operations by charging to hunt, from $3,000 for a giraffe to $9,900 for a lioness to $35,000 for a black male lion. Trophy hunting selects for the fittest animals and may be decreasing the population’s vitality.

• Paying for the carbon stored in forests should reduce the pressure to cut trees or convert forests to agriculture. But in many of the remaining big forest landscapes like the Amazon, these trees are claimed by both the government and indigenous people. As one leader observed, “A family gets 300 reais, . . . which isn’t enough to live on, and then they’re . . . prohibited from going into the forest, so . . . the government can sell carbon credits to multinational corporations . . . to offset their pollution.” For these tribes, this scheme amounts to nothing more than a land grab.

• In late 2018, France erupted with protests from the Yellow Vests, a group of mostly poor, rural citizens reacting to new taxes designed to incentivize a switch to climate-friendly electric cars. To these rotesters, it was little more than a tax on the poor. As one commentator suggested, President Emmanuel Macron has had a modern-day “let them eat electric cars” moment.

• In January 2019, Japan’s self-described king of tuna, restaurateur Kiyoshi Kimura, paid more than $3 million for a 612-pound bluefin tuna—about $4,900 per pound. Responding to tuna’s high value, fishermen have put the species’ population on the verge of collapse. Japan consumes 80 percent of all tuna consumed in the world and thus bears the greatest burden of increasing scarcity and price, yet the Japanese government continues to resist restrictions.

These examples show the pitfalls of using the economic value of nature to shape the management of our ecosystems. Consider these questions:

• Higher prices can reduce demand, but should only the rich have access? (campgrounds in Yosemite)

• Can restricting natural resource exploitation lead to dwindling supplies and drive the prices higher, further accelerating declines in natural capital? (tuna, ivory)

• Should we be selling wildlife so as to pay for its management costs? (Maine and Africa)

• Who owns natural capital, and who has the right to benefit from its use? (forest carbon and indigenous people)

• Can taxing bad practices have unintended impacts on the most vulnerable people? (carbon taxes in France)

Traditionally, policy makers have responded to these challenges with regulations and laws that force companies and individuals to consider their impact on nature while creating a safety net for the most vulnerable. But businesses argue that government should compensate them if the government wants change. Furthermore, many environmentalists contend that there is no price that can be put on natural beauty, endangered species, or critical ecosystems. They fear, perhaps rightly, that reducing nature to a commodity market will undermine, not increase, protections of critical habitats and culturally important landscapes. And auctioning off nature to the highest bidder, as we have seen, does not necessarily mean that wise choices will be made.

On the other hand, economists argue that the root of many of our environmental problems is our failure to account for the economic value of the world’s natural capital—its climate systems, freshwater, forests, soils, and biodiversity—in our decision-making. Even when there is a price charged for exploiting these public resources, it often fails to cover the full costs to our ecosystems. Without an economic feedback loop that accounts for these costs, we have overused many of our natural resources to the long-term peril of the planet and its people.

Who is right, and how do we navigate between these two polls—that nature must be valued for its economic contribution if it is to be saved and that nature is priceless?

A look back 

In 2012, a consortium of the World Wildlife Fund, McKinsey, and Credit Suisse, among others, assessed the problem this way: it estimated the funding necessary to provide for global biodiversity and ecosystem protection at $300 billion to $400 billion per year. Against this need, the group calculated that governments were investing around $41 billion annually, and all other sources, including private philanthropy, were contributing another $10 billion per year, which left a gap of $250 billion or more between the cost of protection and currently allocated resources.9 Yet it is difficult to make the case that either governments or charitable contributions can fill this huge gap—five times the size of their current contributions—especially when much of the most productive natural capital left in the world is in poor, weakly governed countries. The gap grows even bigger when accounting for the compounding impacts of long-term degradation due to climate change.

A central thesis of this book is that the only practical way to fill this gap is through empowering the private sector to invest in nature. To make that happen, we will need to find practical solutions to the equity issues, policy challenges, and perverse incentives that such efforts could engender. Finding a way forward is not a preference; rather, it is essential to ensuring our own survival. We need the private sector, empowered by thousands of entrepreneurs, to be working on solutions to the biggest problems facing the world. What’s more, we need to align business with nature and not against it.

Not everything in nature can be priced or treated as an economic asset, but there is a set of new nature-based investment areas that offer opportunities to bring private capital to bear on important problems. 

Although it is easy to find critics of the use of market mechanisms to solve environmental challenges, we need to move beyond simplistic debates about whether it is just a pay-for-pollution solution. A thoughtful conversation is needed about how we create the resources we need for the challenges we face and when and how to engage the private sector in this work. The good news is that there are emerging examples of how markets are transforming the management of our natural capital in sustainable and equitable ways, building on a long history of how other sectors have leveraged private investment to advance people’s lives. This book chronicles some of these successes and highlights the work ahead.

Recent years have seen the growth of the impact investment sector. Investors in this sector take an entrepreneurial approach to addressing societal problems and, with patient, or long-term, capital, help reduce the risk—derisk—early-stage investment in high-risk strategies. A good working definition for impact capital is “investments ‘made with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return.’” Impact investing is rapidly becoming a third leg alongside philanthropy and government funding, providing a new source of capital against the challenges we face today.

Natural Asset


Sample Transactions


Incentivize forest landowners to keep forests as forests by valuing their ability to store carbon

  • Kenya (International Monetary Fund and Conservation International)
  • Working Woodlands Program (TNC)
  • Cumberland Forest Fund (NatureVest)
  • Forest Resilience Bond (Blue Forest)


Create property rights in fishing stocks to improve incentives for marine conservation

  • Morro Bay Project (TNC)
  • Cape Cod Fisheries Trust

Green infrastructure

Make investments in green landscapes to solve pollution problems

  • DC Stormwater (TNC)
  • Greenprint Partners
  • Prince George’s County (Corvias)

Small islands and ocean protection

Reduce the debt of small island nations in exchange for conservation commitments

  • Seychelles Conversion (NatureVest)


Create salable water rights to incentivize increased water use efficiency to benefit people and nature

  • Murray-Darling Basin Balanced Water Fund (NatureVest)
  • Water Asset Management Fund (private)

Land conservation

Use private partnerships to conserve high-priority conservation lands

  • Cumberland Forest Fund (NatureVest)
  • Great Western Checkerboards Project (NatureVest)

Soils and food

Grow more food sustainability

  • Livestock to Markets— Kenya (NatureVest)
  • Happy Seeder Project— India (TNC)
  • Improving Cattle Production in Mato Grosso (Althelia)
  • Sustainable Soy Lending Facility (Bunge, Santander, and TNC)

A 2017 study by Forest Trends and sponsored by The Nature Conservancy (TNC), JPMorgan Chase, and others put the current privates sector investment in natural capital–related projects at $8.2 billion across 1,300 transactions. That amounts to a growth of 4,000 percent since 2003, when the figure was less than $200 million. Through investments in social services, health care, and natural assets, impact investors advanced more than $15 billion to more than seven thousand projects, and more is already in the pipeline. These figures bode well for the continued growth of impact investments as a vehicle for advancing natural solutions to water shortages, agricultural productivity, biodiversity conservation, and climate change, among other areas.

A look around

But why is private philanthropy not enough? For one, it has been growing much more modestly than impact investment, at about 4.1 percent in 2015. In the United States, the environmental and animal welfare sector garners only 3.5 percent of the $359 billion in charitable contributions given each year, or about $10 billion in 2015, which is dwarfed by the $120 billion given to religious causes and the $57 billion given to education, and environmental giving is the smallest of all the categories tracked.13 Of note is that impact investments in natural capital have already exceeded annual charitable contributions for this category. Not only is investment capital from the private sector essential to fill the gap, but it is also growing much faster than charitable sources.

It would be a mistake, however, to think that the sole rationale for engaging the private sector is about money. Although resources are important, there are other reasons to engage the private sector. The first is the amazing capacity of entrepreneurs to invent new ways of solving problems through technology or new services: witness the power of Grameen Bank in revolutionizing how development projects are designed across the world with its brilliant microfinance idea. Second, if business is not with you, it is most likely against you. Finally, the financial and political power of businesses increasingly eclipses that of government and certainly that of charities. We need business to find reasons why investing with nature, or alongside it, is a more attractive approach than investments that destroy the world’s climate or undermine the sustainability of essential resources like water and soil.

Despite the opportunity, early-stage investors in natural assets report significant challenges in achieving both positive impacts on conservation and environmental issues and competitive financial returns. Among the challenges are few incentives and little policy support for natural capital projects when compared to low-income housing or community development projects, lack of deals that meet their financial return expectations as well as their impact goals, and inadequate measures upon which to judge environmental and social results alongside financial metrics.

In the United States, good examples of markets created for investors by governmental policy can be found. For example, the provision of federal tax credits for developers of housing for elderly and low-income citizens has resulted in an estimated 2.9 million housing units and a private-sector investment of at least $250 billion.14 Similarly, in 1977, the Community Reinvestment Act began requiring banks to meet the credit needs of the local communities in which they were chartered, which meant that they must lend money to members of all the communities they served, not only those from affluent neighborhoods. Filling this need incentivized banks to support nonprofit community development and financial institutions (CDFIs) to provide these services. Today, hundreds of CDFIs across the country originate, structure, and lend to a wide array of community needs from women-owned businesses to farms and fishing activities to housing and real-estate projects such as food pantries and daycare centers.

Tax incentives offered for wind and solar development across the United States and much of Europe are credited with jump-starting the renewable energy market. We are at or near the point where solar and wind reap the benefits of large-scale manufacturing and improving technology and are, without subsidies, competitive with coal and natural gas. Without governmental incentives, the growth of renewables would have been slowed, but without the private sector, none of it would have been possible. Government simply cannot do what the private sector can.

There is no guarantee that well-meaning policy and incentives will always generate positive outcomes, however. The billions of dollars spent on ethanol is a case in point. Early expectations that ethanol would be a sustainable biofuel option led to the issuance of mandatory requirements to blend ethanol with gasoline, which, along with tax credits, dramatically lifted the fortunes of corn farmers. Growing corn for energy proved to be so lucrative, however, that it also led farmers to plant even marginal lands for ethanol production. Critics contend that such actions are not only driving up the cost of food products but are also contributing to further land conversion and degradation along with the release of additional carbon emissions as ethanol is burned for fuel. The agricultural lobby is powerful, though, and funding for ethanol has become a sacred cow.

Finding investable deals that further sustainable and climate-friendly agriculture, support freshwater conservation and water-efficient uses, grow the markets for green infrastructure, and drive sustainable forest management practices is a challenge. That is at the core of the rationale for why my colleagues and I created NatureVest, a project of TNC and its initial collaborator, JPMorgan Chase. NatureVest operates like an investment bank within TNC, structuring business transactions to fund projects that engage private investors. Many of the examples in this book are drawn from TNC’s experience in developing the NatureVest platform. As one of the oldest and largest global conservation charities in the world, TNC is realigning its business model to include partnerships with investors as a path to scaling its impact. NatureVest has a goal of putting more than $1 billion in investments to work by 2020 and, in its first years, has mobilized more than $600 million of private capital in its work.

The goal for NatureVest was not simply to establish another private equity fund making passive investments in other’s projects; rather, it is to create a dynamic project development group that brought TNC’s long history of deal-making to the private sector. Building investable transactions that make financial sense and have real impact remains one of the central challenges for the sector. Many of the climate and environmental funds created by government and private-sector stakeholders have underperformed. One example is the Land Degradation Neutrality Fund. Initially chartered with aspirations of putting $300 million toward improving agriculture, forests, and water use in developing countries, the fund has closed only a handful of transactions despite substantial efforts. It is clear that having investment capital available is important, but it is not sufficient to getting this industry off the ground. A big challenge is capacity—or lack thereof—to implement; most of the developing world struggles with providing financial and technical services to the poor communities most in need of improved water access, sustainable agricultural practices, or other sustainable development skills. This so called last-mile capacity is one of the biggest barriers to attractive investments essential for the development of the natural assets–based industry.

The search for meaningful ways to report on the impact of individual investments and funds also continues to be elusive. In a survey commissioned by TNC, only a third of investors believed that they were getting clear and effective reporting on impact measurement for the transactions they have funded. Unless this problem is solved, it will be hard to sustain enthusiasm for investors who, in exchange for taking early-stage business risks, want to at least know that these risks are being offset by improving environmental and conservation outcomes.

Can conservation groups pivot to embrace the challenge of making deals that foster entrepreneurial investment, or will we need wholly new institutions with the skills to advance these strategies? For years, the basic qualification for employment at an environmental organization like TNC was a degree in a natural science. Today, TNC employs more than six hundred scientists, but the skills to manage and develop new business models for nature rest with a new cohort of MBAs and financially oriented people working alongside these scientists. This shift will require new skills, new hiring, and, frankly, new missions for many organizations. At the same time, conservation’s historic donors will need to become comfortable embracing investing as well as giving, which has proved, in NatureVest’s experience, to be harder than first thought. Although donors consider TNC highly effective in its charitable work, they need to be convinced about its track record in managing profitable investments. Interest is growing, though.

Foundations are increasing their allocations to two forms of impact investing-program-related investments and mission-related investments (see chapter 11). Giving Pledge supporters, like Pierre and Pamela Omidyar of eBay, are transforming their foundations and personal investing toward mission-related investing (see chapter 12). Private wealth managers across the spectrum report increasing interest in projects and programs that their clients can feel good about, albeit with good financial returns as well. Providing products and approaches that service this need must quickly become core competencies for the conservation and environmental community if the full potential of investment-oriented approaches is to be achieved.

A look ahead 

In the subsequent chapters of this book, two main themes will be explored: the natural capital sectors that are most ready for investment and the practical tools needed to build the capacity to invest. Part I (chapters 1–7) details case studies of projects, deals, and investment approaches that demonstrate how private capital can be used to achieve more sustainable use of our natural resources without the unintended consequences plaguing so many of our current efforts. Part II (chapters 8–12) provides tools and a roadmap for investors and organizations to consider as they develop their own projects, from understanding the legal and regulatory environment to meeting the expectations of investors to tips on how nonprofit organizations can successfully navigate this new space.

From Valuing Nature by William J. Ginn. Copyright © 2020 William J. Ginn. Reproduced by permission of Island Press, Washington, D.C.

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