Accounting for nature
The phrases “ecosystem services” and “natural capital” are moving from the realm of policy and research into the language of business.
Both relate to the resources and processes that are supplied – usually free of charge – by nature (some people call them “nature services”) and that fuel our industries and enable business to operate. Examples of ecosystem services include the supply of clean fresh water (which is a key service to many diverse industries), the biodiversity of soil microbes that release nutrients for plants to grow, and pollination services provided by bees and other insects that are critical to the production of fruit, vegetables, pasture, and of course, honey.
A useful analogy describes the concept of ecosystem services as the cash flow of nature (i.e. it shows the flow of services/value), while natural capital can be represented as a balance sheet for the same services and values.
Throughout history the development of our economies and lifestyles have depended on these ecosystem services but only recently has there been work to quantify their condition and value and start to understand how businesses depend on, and impact, them.
Primary sector businesses are, by their very nature, direct users and beneficiaries of ecosystem services and therefore there is a growing level of interest in the sector to understand these dependencies and recognise their value, researcher Cerasela Stancu says.
“For example, businesses that rely on a continuous supply of fresh water face operational risks when deforestation upstream alters the timing, quantity, or quality of the water they consume – in addition to increased flooding risks. This is becoming a real concern for many New Zealand companies as there has not been concerted action to assess dependencies on ecosystem services.”
Equally, if a company negatively impacts one or more ecosystem services, it can be exposed to legal or reputational risks, she says.
“There are examples of businesses in various sectors in New Zealand and overseas that have faced such business risks because their activities have degraded ecosystem services that were valued by local communities or by other companies.
“Generally we found that businesses tend to be more aware of their impacts on ecosystem services than what their dependencies are.”
She says that because companies both impact and depend upon ecosystem services, ecosystems’ conditions and trends matter to the corporate bottom line.
Landcare Research is currently deepening understanding of the importance of ecosystem services and developing tools for issue identification and prioritisation. We are also working to understand the relationship between corporate initiatives and landscape context and how to integrate ecosystem services in corporate strategy and decision making.
Kiwifruit producer ZESPRI® is an example of a business taking steps to identify and act on ecosystem services.
Landcare Research initiated the renowned World Resource Institute’s corporate Ecosystem Services Review (ESR) application at ZESPRI, the first pilot-test of ESR in New Zealand. ESR is a step-by-step methodology for identifying risks and opportunities from ecosystem services. The work identified priority ecosystem service that ZESPRI depends on or has an impact on. We also collated knowledge about the condition and trends of these priority ecosystem services and identified the gaps in knowledge. The outcomes for ZESPRI included an improved understanding of priority ecosystem-services interventions and investigation of potential response strategies.
The project at ZESPRI provided useful information to help both researchers and the businesses themselves progress their understanding of ecosystem services in New Zealand while also contributing to international research in this area.
“Landcare Research will continue to look for avenues to show the relevance of our ecosystem services work to businesses and engage with broader business platforms like the Sustainable Business Council to further our research agenda,” Cerasela says.