In part 1 of this series - Rethinking carbon valuation to decarbonise infrastructure, we discussed how carbon emissions can be factored into projects to ensure that infrastructure investment decisions reflect net zero targets, but what about natural value? How can we protect biodiversity, and natural capital to reap the benefits that they bring us as our cities and populations grow?
Biodiversity, and broader conservation management will require major reinvestments across long timeframes to reverse deteriorating trends and meet the UN’s global target to halt species loss by protecting 30 per cent of Earth’s marine and land area by 2030. As societies become more aware of the importance of nature in a thriving society, it is likely to become a non-negotiable consideration for Future Ready™ organisations and projects.
The economic benefits of industries such as agriculture, forestry, fisheries, energy, pharmaceuticals, and transport are clear. However, many other benefits we get from nature are less well-recognised. Quantifying the ecological, cultural and health benefits of nature, and its carbon capturing capabilities is difficult, and it’s even harder to assign a numerical value to the intrinsic benefit of conserving the richness of life.
Ecologists, economists, and planners are increasingly investigating how to represent the value people place on the simple existence of biodiversity, on the option to enjoy it in the future, and on the value of leaving a biodiverse legacy for future generations.
Despite the complexities, WSP’s Alex Cockerill has seen how assigning even a rudimentary monetary value to biodiversity can drive better environmental performance.
“If your project is going to impact nature,” says Alex, “it’s possible to assign a dollar value to the disturbance and what it will cost to avoid, mitigate or offset it,” he says. “That dollar value is significant, and it is driving avoidance.”
WSP’s Kanya Raj agrees, but notes that in urban areas a project might only affect a small pocket of green space, so “the traditional hectare-for-hectare costing approach used for carbon offsets won’t work on this scale, where the value to the community is disproportionate to the size of the disturbance.”
“In the same way that there is currently a realignment of how we understand the actual value of carbon,” she says, “there needs to be a similar approach that explores and quantifies the real value of urban green space.”
What’s good for nature is good for business
Alex is pleased to see increased requirements and expectations from stakeholders in relation to biodiversity, as well as greater sophistication and ambition from many of WSP’s clients.
“Where once we might have had clients who were unsure of how to deal with biodiversity constraints, now we see clients understanding the need to protect nature and considering avoidance and opportunities for biodiversity improvements right from the earliest stages of planning,” he says.
By conserving, or even boosting, biodiversity in their projects, businesses can attract investment, improve their bottom line, and deliver greater social value. In other words, looking after nature is good for business.
As part of WSP’s Future Ready™ methodology, we are helping many clients prepare for future realities by incorporating key trends in our advice including valuing natural capital. We know from our research that Australia’s biodiversity is under increased threat and has, overall, continued to decline. Our current investments in biodiversity management are not keeping pace with the scale and magnitude of current pressures.
For many project proponents, social conscience is a key driver, as is the desire to build ongoing social value for the project’s community. There are also sustainability rating tools that provide a framework for design of infrastructure that drive better biodiversity outcomes. This is investor and shareholder driven, demanding a high standard of ESG design, delivery, performance, and operation. These ratings can deliver the measurement and benchmarking needed to achieve improvements to project footprints, and outcomes for nature and communities.
“Maintaining or improving the biodiversity in the locality of a project may mean greater expenditure on design and engineering to change the project alignment, or to incorporate the appropriate structures and features to protect a species, but these efforts will be valued by the project’s community, and this will ultimately increase support and remove barriers for the project.” says Alex.
The puzzle of how to assign value
There’s no single way to assign value to biodiversity – but progress is being made on increasingly sophisticated approaches that encompass a broad range of nature’s values.
One challenge is how to determine a value that can be agreed and used consistently across the long lifecycle of an infrastructure project, and across multiple projects.
Alex explains the conventional cost-based approach: “The traditional method considers the project’s potential impact after attempting to avoid and mitigate disturbance. It looks at the types of natural values in the area that will be disturbed, and then determines what it would cost to achieve comparable biodiversity values in an area of similar size.”
“The cost isn’t only the land purchase price,” says Alex. “It also needs to include the cost of managing biodiversity there over time.”
“In NSW we have a market trading scheme where there are dollar values that make up those components,” he says. “These costs can now be included in the business case for a project and are taken into account in options analysis and decision making.”
One of the main limitations of this method is that there is still an inadequate understanding and corresponding lack of data for many species and ecosystems. Another is that ecological systems are complex, and difficult to capture in simple models.
Describing her experience in a recent project, Kanya says, “We found that many of the datasets necessary to undertake the economic analysis – such as land use datasets or threatened species and ecological communities – were either incomplete or out of date. Without properly understanding what the existing biodiversity value is, we can’t properly assess the impact of a project.”
Both Alex and Kanya agree that valuation of biodiversity needs to encompass cumulative value across time and geographies as well as the wide range of flow-on impacts.
Tackling urban biodiversity
While Kanya has applied economic modelling to biodiversity in rural settings, she is also tackling new approaches to valuing biodiversity in urban areas, and place-based developments.
Kanya is helping to cost the benefits of upgrading or creating new parks, and increasing canopy coverage to provide shade and cooling. A consistent approach to valuing these factors is still being developed, such as using people’s stated preference on the value they place on having the feature rather than not having it, but there’s much more that can be considered.
Kanya explains: “For example, if you’re valuing the investment in new parks, you could incorporate estimates of increased property values in the local area, or the reduction of health costs when people are more active in their travel and recreation. You can also connect canopy cover and green space to reduce temperatures, which reduces heat stroke incidences.”
Governments and councils are recognising that these natural features need to be valued – and valued consistently. They can then be incorporated into the cost-benefit analyses and business cases for new infrastructure projects.
Valuing biodiversity brings new opportunities
Preserving or restoring biodiversity on private land is creating new opportunities for win-win solutions, including financial returns.
Alex has observed a significant uptake in private land conservation as well as large-scale investment in biodiversity protection.
“We’re seeing an increasing shift with landholders evaluating whether there are secondary income opportunities they can get from biodiversity protection on their land,” he says.
“There are also large-scale organisations looking to invest capital in biodiversity protection, even though the markets and mechanisms are not yet formed.”
New opportunities for biodiversity are also arising in the clean energy transition.
Alex is thrilled that Project Energy Connect has acquired and protected properties that create a corridor connecting some of the most important biodiversity hotspots in Australia.
“Yes, there’s a large transmission line that’s required to help us with the green transition for our power networks, but it has also delivered a conservation outcome that you couldn’t believe,” he says.
WSP is also supporting clients in the resources sector to incorporate biodiversity considerations into their plans for mine closure.
“Quite often, when communities are asked about what they want to see in these old mining landscapes in coming decades, they indicate a desire for connected biodiversity and good ecological outcomes,” Alex says.
“If the owner can move towards a plan for the future use of the site that meshes with the values of the community, they’ll have a better chance of finding a buyer or operator for a new business venture at the site.
Alex also notes that the urban biodiversity focus is increasing in the construction sector, particularly through Green Star and other building ratings.
“Clients seeking those optimal building sustainability ratings will need to look at what biodiversity options and improvements they can cost into a project,” he says.
For example, WSP recently assisted Glenroy Community Hub to achieve a Petal certification from the Living Building Challenge, and this involved incorporating a ‘pocket park’ and community garden, which maximised value for the community to enjoy.
Putting a value on biodiversity encourages change
Assigning a value to nature is an important step in incentivising conservation efforts and maximising the sustainability of infrastructure projects.
“I’ve already seen so much deterioration in biodiversity in my life,” say Alex. “It’s not just happening globally and in the scientific literature. It’s right here, right now, in a very obvious way in our local environments. I love all the bits and quirks of the natural environment and protecting it is essential.”
For Kanya and Alex, valuing nature is all about influencing meaningful change and achieving good conservation and liveability outcomes rather than “ticking boxes”. And it’s exciting.
“When I'm out walking and I find a rare orchid or see a big old tree,” says Alex, “I still get that buzz.”
If you’d like to learn more, contact Alex Cockerill or Kanya Raj.
You can find out more about WSP and our capacity to create purposeful impacts for communities around the globe in our 2022 ESG Report.
