A Green Thumb for the Invisible Hand Ecosystems, Markets, and Beyond

Transcription

1 A Green Thumb for the Invisible Hand Ecosystems, Markets, and Beyond

2 Where are We?

3 The Man-made Planet

4 75% of the infrastructure that will exist on the planet in 2050 has not yet been built

5 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

6 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

7 The Ecosystem Services Provisioning Food Fiber Genetic resources Biochemicals Fresh Water Cultural Services Spiritual and religious values Aesthetic values Recreation and ecotourism

8 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

9 A Cynic is someone who knows the price of everything and the value of nothing. Oscar Wilde

10 If all economists were laid end to end, they would not reach a conclusion. George Bernard Shaw

11 Irrigation of the land with seawater desalinated by fusion power is ancient. It's called rain. Michael McClary

12 12 Financial Need for Conservation

13 Size of Financial Assets 13

14 Investment: A New Hope?

15 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 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 17 Financial Need for Conservation

18 18 So What is a Committed Environmentalist to Do?

19 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 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 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 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 HNWIs & UHNWIs Bankable assets are $46 trillion Ticket sizes usually at least $1 million Interviews indicate would welcome more wealthpreserving investments with impact component Lack of track record Lack of impact measurement Risk levels can be undercompensated Need managers NatureVest TONIIC SONEN an others Retail investors 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

21 Sources of Capital and Needs 21

22 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

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25 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.

26 In theory there is no difference between theory and practice.... In practice there is. Yogi Berra