A Green Thumb for the Invisible Hand
Ecosystems, Markets, and Beyond
Where are We?
The Man-made Planet
75% of the infrastructure that
will exist on the planet in 2050
has not yet been built
Two Systemic flaws
First we don’t value nature...
We neither see nor pay for the
services it provides
It doesn’t show up on anyone’s books
Secondly, we don’t learn from
nature...
We don’t see it as technology to be
emulated... and valued
Bio-mimicry to a new level
True Value
Take nature’s services for
granted
What isn’t valued is overused
Think what would happen if
electricity were free
Then think what would
happen to generating
companies
That is what is happening to
nature
The Ecosystem Services
Provisioning
Food
Fiber
Genetic resources
Biochemicals
Fresh Water
Cultural Services
Spiritual and religious values
Aesthetic values
Recreation and ecotourism
The Ecosystem Services
Regulating Services
Air quality regulation
Climate regulation
Water regulation
Erosion regulation
Water purification
Waste treatment
Disease regulation
Pest regulation
Pollination
Natural hazard regulation
“A Cynic is someone who knows
the price of everything and...
... the value of nothing.”
Oscar
Wilde
“If all economists were laid end
to end, they would not reach...
... a conclusion.”
George
Bernard Shaw
“Irrigation of the land with
seawater desalinated by...
... fusion power is
ancient. It's called rain”.
Michael
McClary
12
Financial Need for
Conservation
13
Size of Financial Assets
Investment: A New Hope?
Wealth
Transfer
• The next two
decades will witness
the biggest
generational transfer
of wealth in human
history: somewhere
north of $30 Trillion!
• Will change
managers
16
Study on Conservation Investing
Encourage, TNC, JPMorgan, Packard, and
Moore are conducting a study on impact
investing in conservation
Surveys sent to over100 investors
Investment defined as “at least return of
capital”
Sectors are food and fiber, water, and habitat
No clean-tech
17
Financial Need for
Conservation
18
So What is a Committed
Environmentalist to Do?
19
The Barriers to Investment
Given the need, and the
projected increase in capital
allocation, what are the barriers
to channeling more money into
conservation?
Track record
Appropriate risk/return
Difficult exits
Lack of fund structures at scale
Insufficient
ratings/benchmarks/metrics
i.e. market immaturity
20
Sources of Capital and Needs
Capital source
Key Characteristics
Key challenges
Investment Example
Institutional investors
• Valued at $62 trillion
• Growing 5%/year
• Long-term investment horizons
& stable returns
• Liquidity less important
•
•
•
•
Foundations & other
mission-aligned
institutions
• Movement from PRIs to
exclusively MRIs that align with
core values & maintain
fiduciary duty to society
• Screening to divestment
• Risk levels can be undercompensated
• Lack of impact measurement
• CFLC investments
• Lack of track record
• Lack of impact measurement
• Risk levels can be undercompensated
• Need managers
• NatureVest
• TONIIC
• SONEN an others
HNWIs & UHNWIs
• Bankable assets are $46 trillion
• Ticket sizes usually at least $1
million
• Interviews indicate would
welcome more wealthpreserving investments with
impact component
• Valued at $53 trillion, excluding
life insurance and pension
assets
• Growing 2%/year
• Lower risk profile &
expectation of returns than
HNWIs
• Products too bespoke,
• Minimum investment too high
• Too risky for non-accredited
investors
• Conservation Notes
Retail investors
Lack of track record
Small project size
Risk levels under-compensated
Looking for un-correlated
assets
• Forestry assets, such as
Conservation Forestry or Lyme
Timber
21
Sources of Capital and Needs
What does this mean for NAS?
You need to insert science and
research into the feedback loops,
into decision-making
That isn’t only policy, but is
investment
That means helping design,
measure, monitor, and evaluate
metrics for impact.
How do we know the impact of
investment on sustainability?
That is a key question
Galileo Galilei
“What greater stupidity can be imagined
than calling jewels, silver, and gold
‘precious’ and earth and soil ‘base’?
People who do this ought to remember
that if there were a greater scarcity of
soil as of jewels or precious metals,
there would not be a prince who would
not spend a bushel of diamonds... to
have enough soil to plant a jasmine in a
little pot, or to sow an orange seed and
watch it sprout, grow and produce its
handsome leaves, it fragrant flowers, its
fine fruit.”
“In theory there is no difference
between theory and practice.
... In practice there is.”
Yogi Berra