How much is a lake worth? Or a forest? Can you put a price tag on air? Some of the world’s largest banks are now trying to put dollar signs on the Earth’s natural resources, such as clean water and land.
Why? The banks argue that people need to value the planet’s resources differently because they are being used up. So the banks want to put a price tag on those resources, to be charged when companies and governments use up a lot of them. These resources are called natural capital.
At a meeting held by the United Nations last year, representatives from many different countries and organizations got together to talk about how to help the environment. Almost 40 of the world’s most powerful banks then signed an agreement called the Natural Capital Declaration. (A declaration is an official statement or announcement.) The agreement says that a system would be set up by the year 2020 to determine prices for “the Earth’s natural assets (soil, air, water, flora, and fauna), and the ecosystem services resulting from them, which make human life possible.”
PAYING TO USE THE PLANET
How would this work? The Natural Capital Declaration would ask that banks pressure governments and companies to tell them how much of the planet’s resources they use each year. If they use too much, they should pay. If they use very little, they should be rewarded.
It may be difficult to get governments to agree with this plan. But it’s also difficult to determine how much a company should pay for destroying a forest, for example. Trees in forests—which companies can cut down to sell wood or build houses—help clean the air, collect rain, and create food and homes for animals. A clean river—which can be polluted (dirtied) by a factory—provides drinking water to people and animals, water for farming, and homes for many different species.
A committee has been charged with figuring out the costs of excessive use or destruction of these resources. According to the declaration, exploiting, or overusing, resources, as some companies have done, could cost trillions of dollars every year.
“At the moment overuse of natural capital is not seen as a business risk,” said Liesel Van Ast, who manages the committee set up by the banks. “We are hoping to change that attitude and get companies to pay a price for overuse of natural capital.”