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The sum of nature’s goods and ecosystems services – this idea of natural capital – is the world’s stocks of natural assets such as geological resources, water, air, soil, and living things. From the diverse mix of our world’s natural capital, we derive all sorts of benefits which we call ecosystem services. This includes the air we breathe, the food we consume and the water we drink. Other ecosystem services include climate regulation and the pollination of crops by insects. Without these many services humanity would not exist. Indeed, by several difference estimates, the value of ecosystem services which support our global social and economic well-being may on the order of $125 trillion or more annually. Because we don’t track these benefits as we do for normal business activities, we are largely unaware of them. But new tools enable us to understand and act in ways that improve the quality of ecosystem services. The graphic image below summarizes what we might think of as “the many interconnected elements of life” that does, in fact, enable our social and economic well-being.
One person who is actively looking for ways to better understand, analyze, and value Natural Capital is Gretchen Daily. She is a professor of biology at Stanford University who focuses heavily on the concept. Daily and her colleagues at Stanford have developed the InVEST Natural Capital Project which is a free open-source software used to map and value the goods and services from nature that assist human life.
The purpose of InVEST is to help decision-makers identify areas where investment in natural capital can strengthen human development and conservation. The software contains models for ecosystem services such as terrestrial, freshwater, marine, and coastal ecosystems so it covers a wide range of services provided by the ecosystem. The software also contains “helper tools” that help locate and process data that the user inputs to better understand and visualize the software’s outputs.
The software has endless applications but can be used to estimate numbers such as the average quantity and value of hydropower produced by reservoirs. It was also used to help identify how much water yield or value each part of the ecosystem contributes to yearly hydropower production. The software broke the numbers down into three main categories: water yield, water consumption, and hydropower valuation. To achieve the desired results, the software estimates the amount and value of water involved for hydropower production from each sub-watershed in the region selected by the user. When analyzing data on hydropower production of a specific area the software requires several different data inputs from the user such as average precipitation of the area measured in millimeters per year, a vector mapping the boundaries of the watershed’s being analyzed, a map of root restricting layer depth measure in millimeters and several others.
The results that the software will return are formatted in a text (.txt) file located in the workspace chosen by the user. The software generates outputs in 3 separate folders: (i) the first containing the per-pixel data separated into three different values (water yield per pixel, evapotranspiration per pixel, and the mean fraction of precipitation that actually evapotranspires at the pixel level); (ii) next is a folder which contains a table of the biophysical output values per sub-watershed; and (iii) a folder containing the output values per watershed broken down into precipitation, potential and actual evapotranspiration, mean water yield and volume of the water yield.
Two of the most significant outputs for the annual water yield model, however, are the “hp_energy” and “hp_val” files which can be used to evaluate the landscape for investments that will maintain or improve water yield for hydropower production. The hp_val file represents the revenue obtained from each watershed over the predicted lifetime of the hydropower facility or the amount of time given by the user. The hp_energy file shows the quantity of energy produced by the hydropower facility over the specified time span that can be credited to each watershed based on its contribution. Using these two files and comparing them with land use scenarios would allow the user to understand how different management plans will affect the landscape in the chosen area.
Not only does InVEST break down traditional economic factors like contribution to GDP and quantity of the resources, but it breaks down some non-traditional economic factors that policy-makers could take into account such as people’s dependency on the resources and supporting dual conservation and development goals. Instead of just taking into account the supply or what is potentially available of the ecosystem service, InVEST takes into account the demand for the ecosystem service as well as the beneficiaries (population, infrastructure, and cultural relevance) of the ecosystem service. The software can analyze all sorts of ecosystem changes that could potentially change the flow of benefits provided to the people. Other scenarios that InVEST can analyze include crop production, wave energy production, carbon storage, and sequestration, along with several others. InVEST provides policymakers and investors with a plethora of new methods to assess natural capital in ways to help better understand how various project activities and investments will affect the ecosystem and the ecosystem benefits provided to the people.
The Natural Capital Project is currently using InVEST in over 60 countries, and from their experience using InVESTcan help shape decision-making in regards to our ecosystem services. The Natural Capital Project works in a large range of places with many different goals including building resilience to climate and coastal hazards in Belize and the Gulf Coast states of the United States; guiding development planning in China, British Columbia, The Bahamas, and Myanmar; and managing corporate risk in global sourcing decisions for Unilever; informing impact assessment and permitting for the Colombian Ministry of the Environment.
Through discussing with policymakers, communities, and conservation groups about landscape use and how ecosystem services may be affected by new policies by developing scenarios to explore the consequences of changes to the natural resources. During this process, InVEST can be incorporated to estimate the number of ecosystem services that are provided by the landscape currently and in future situations. The results from InVEST can be shared with stakeholders and decision-makers who came up with said scenario to inform on upcoming decisions. Implementing the software is an iterative process, and stakeholders will constantly create new scenarios to run through the model based on the previous results until they are able to find a suitable solution.
If we step back and imagine new analytical tools like the Natural Capital Project’s InVEST Software, we can also open up all kinds of new possibilities for policymakers to enable their use of such tools to better analyze the ecosystem services which enable our social and economic well-being. Incorporating InVEST into decision-making will help society to get a better understanding of its natural capital and ecosystem services and allow for more efficient management of said resources. The project is already being implemented across the globe but if society is able to incorporate it on a larger scale it would lead to better protection and management of our natural resources as well as discovering new methods of utilizing our natural resources.
Should society continue only with the conventional economic tools, and fails to include more in-depth tools like InVEST, our natural capital will continue to be mismanaged, and someday will likely be depleted. On the other hand, should we keep developing innovative tools like InVEST, we will be able to maintain a symbiotic relationship with the planet and its resources instead of a more parasitic relationship. Tools similar to InVEST are being made more and more accessible to policymakers by the day such as the Rocky Mountain Institute’s State Highway Induced Frequency of Travel (SHIFT) Calculator which generates a reasonable estimate for induced vehicle miles traveled at the appropriate order of magnitude for a given area. Theorists producing useful tools like InVEST and the SHIFT Calculator, however, can only do so much. It is up to businesses, policymakers, and government officials to encourage and implement such tools and to make their decisions accordingly.
There is neither a law of physics nor economics that prevents us from quadrupling the productive use of energy and other resources. Rather, it is much more an issue of imagination and our political will to get it done.
– John A. “Skip” Laitner