Should We Put a Price on Nature?

The question of whether we should put a price on nature is complex and fraught with ethical and practical considerations.

To begin with, what are we really pricing? Are we attempting to assign a monetary value to land, to individual species of flora and fauna, or to entire ecosystems like wetlands?

What criteria should we use for such pricing? These are critical questions we must address.

Many thought leaders, including Daniel Christian Wahl and Charles Eisenstein, argue that we cannot put a price on the sacred. I agree with them. The sacredness of nature cannot be reduced to a mere quantitative value. However, we do need to find a way to value nature — acknowledging its intrinsic worth and understanding it as living capital.

Our current financial system is fundamentally extractive. It is characterized by its focus on extraction, competitiveness, and a disregard for externalities. This system is driven solely by profit and growth, often at the expense of environmental and social health. Such an approach fails to account for the true costs of its activities, leading to the degradation of the natural world upon which all life depends.

Today, a hectare of deforested land in the south of Brazil, ready for soybean production, is worth more than the Mata Atlantica full of biodiversity. This is why we are deforesting at a rate of 13 million hectares per year, the size of one Switzerland.

We need this system not only to acknowledge the value of nature but also to work in favor of its regenerative development.

Embracing Nature Finance

This is where the concept of Nature Finance comes in, a topic I will elaborate on in my next article. We need to find a way to value and incentivize the financial system to shift from its extractive perspective to one that creates wealth for all, including the environment..

Nature finance, is the science of valuing the ecosystem services that nature provides. These services include clean air, water filtration, carbon sequestration, pollination, and healthy soil.

By assigning a value to these services, we can create financial incentives that drive conservation and regeneration efforts. This approach does not commodify nature itself but recognizes and values the essential services it provides.

Nature finance might be a way to solve the multipolar trap that is currently devouring nature. With nature devoid of price, it becomes an externality without value, making it susceptible to degradation.

Businesses and governments that degrade nature at no cost gain a competitive advantage, creating an incentive to participate in this destructive cycle. If one organization refrains from degrading nature, another will step in and do so, maintaining the advantage. This is how we have lost 70% of all living nature on land and 50% of all marine life in the last 50 years. This trend shows no sign of stopping, with deforestation rates remaining alarmingly high.

A multipolar trap is characterized by each player acting in their own self-interest, leading to a collectively destructive outcome. To avoid falling into this trap, we must counterbalance it. Nature finance provides a mechanism to place value on ecosystem services, thereby aligning economic incentives with environmental preservation and regeneration.

Solving this challenge is akin to solving a game theory problem. We can dissolve an existing multipolar trap by changing its direction.

Activism, ecological organizations, NGOs, and even some politicians have tried to change direction by confronting the system. While their efforts are vital, I believe we need to change direction from within, using the intricate energy of the prevailing system to steer it away from its self-determining course. If we don’t, the existing multipolar trap will continue to consume nature beyond its resilient capacity. We have already surpassed the threshold of planetary boundaries of biodiversity. Nature finance is a way to solve this multipolar trap, creating a new rule for this game. It’s applying game theory to change how the game is played, switching from a finite game to an infinite game. By placing value on ecosystem services, we align economic incentives with environmental preservation and regeneration. This strategic shift is essential to ensure that our financial system supports the sustainability and resilience of our natural world, securing a future for humanity.

The time is now

As António Guterres, Secretary-General of the United Nations, has stated, “This is the last decade to make a difference in combating climate change and preserving biodiversity. The actions we take in this decade will define the future of humanity moving forward.”

The urgency is clear: Using the energy of the financial system, hacking it, or being tricksters into feeding what it devours, is the fastest and perhaps only way to reverse the degradation of nature.

Nature finance is a pathway to divert the financial system towards regenerative development. However, to achieve this transformation, we must meet the system where it is, leveraging what it knows and what it is currently feeding on. This means understanding its existing frameworks and incentives and gradually steering it towards more sustainable and regenerative practices.

Consider the analogy of a Neanderthal accustomed to throwing stones. If you handed him a machine gun, he wouldn’t know what to do with it. Instead, you give him a spear or train him to use a bow and arrow — tools that build on his existing knowledge and skills. This approach is about meeting the system where it is and gradually steering it toward a more advanced and beneficial state.

Another example can be found in the early stages of the internet. When the internet first emerged, many people were skeptical and didn’t understand its potential. Companies and individuals used the internet primarily for basic email communication and simple web browsing. Introducing advanced concepts like e-commerce platforms and cloud computing at that stage would have been overwhelming and ineffective. Instead, the gradual introduction of user-friendly websites, online banking, and social media platforms familiarized users with the internet’s capabilities. These incremental changes paved the way for more complex applications, ultimately transforming the internet into a critical component of modern life and business.

So, should we put a price on nature?

Not if we are pricing its sacredness. But given the urgency of the moment, nature finance can put a price on the ecosystem services it provides. By doing so, we can find a way to value it within our financial system, stopping the devouring rate of nature degradation and potentially moving it towards regenerative development.

While we cannot put a price on the sacredness of nature, we must find ways to value it within our financial system. This shift will require redefining wealth and progress to include ecological health and sustainability. By doing so, we can transform our financial system into one that supports the regeneration of our natural world, ensuring a thriving planet for future generations.

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