Environmental Stewardship through Innovative Finance, From Forest to Coast
When Earth Day launched 47 years ago, its founder Gaylord Nelson had an ambitious vision of building a new relationship between society and nature based on respect and stewardship. Even in the midst of the Vietnam and Cold Wars, he framed the battle for respect of the environment as a tougher challenge than any other war in the history of man. Success in all other critical issues like race relations, poverty, or inequality were, in his view, further exacerbated by the core issue of the environment on which we all rely.
Despite Nelson’s optimism, environmentalists have always faced challenges getting the public to view the issue of the environment as an urgent one. In its coverage of the inaugural Earth Day, The New York Times noted pushback from groups working on issues of racial inequality and the Vietnam War, who felt the campaign was a diversion from more serious and pressing problems. They argued that while the environment is important, challenges like sea level rise or ocean acidification are projected to occur in the future, anyway. Issues like racial or gender discrimination, job loss during economic turmoil, and war, on the other hand, should be at the forefront of the public’s attention. So how do we still mobilize action in the face of this urgency challenge?
As our knowledge of how Earth’s ecosystems work continues to improve, we now see an exciting opportunity to bring the finance community to the fight.
In the decades since the first Earth Day, the urgency is shifting. We are seeing the negative effects that decades of poor environmental preservation have made, which frame the issue as much more relevant to our lives now. And to that end, we’ve seen tremendous efforts from the science community to grow our knowledge and understanding of how nature intersects with our lives. It’s the latter shift that opens up the greatest opportunities for innovative finance to channel critical capital toward protection and stewardship of the earth. This is one way The Rockefeller Foundation can contribute to building Nelson’s vision.
For example, a 2014 report summarized hundreds of studies on the coastal protection benefits of coral reefs and found they have the ability to reduce wave energy by 97 percent, providing a natural seawall that defends our coastlines against waves and flooding. The picture above shows the Mexican coastline—on the left side of the point, a coral reef causes waves to break well before hitting the shoreline. To the right is the primary hotel zone for Cancun, which has lost its reef over the years and is now exposed to the full brunt of any incoming surges and increased beach erosion from constant wave force.
Armed with the science around the benefits of coral reefs, The Nature Conservancy is building a “Reef Resilience and Insurance Facility” to restore and protect the reef. Unlike past efforts, they can now position the reef as an alternative to man-made seawalls because they have the ecosystem performance data to back up the claim. What’s more, the coral reef requires less ongoing maintenance than a concrete seawall and generally outperforms.
Another example is Blue Forest Conservation’s development of the Forest Resilience Bond. In the western United States, the dry forests of the Sierras have become significantly overgrown with up to ten times more trees per acre than the historical balance has been able to support. This poses a problem as small fires—once able to roll through quickly—are now able to feed on the extra vegetation and grow to become the “megafires” we so often hear about today. These forests are overgrown because nearby human settlements have interfered with naturally occurring smaller wildfires that have historically controlled the balance.
Here’s where science again catalyzes opportunities for new financial thinking. A 2011 study found that forest restoration work—thinning the forests to their more natural healthy state—simultaneously significantly reduces the severity of wildfires and increases the water yields available to communities by up to 16 percent. This reframes the forest as a critical water infrastructure asset, which is ultimately what spurred Blue Forest Conservation to drive capital into forest restoration and preservation via the Forest Resilience Bond. Similar to the reef resilience project, Blue Forest Conservation is now able to quantify exactly how our forests positively impact our communities.
These projects both highlight how better science supports better investments in our ecosystems. By quantifying the performance of nature, we are able to consider it as an alternative to gray infrastructure—whether that be a costly seawall to protect our coastline, or expensive solutions for accessing water in California. What’s exciting is natural infrastructure is proving to be cheaper and more effective than man-made alternatives.
The challenge of protecting the Earth is proving to be one of the greatest fights in human history—but this is our home and it is critical we get this right. As our knowledge of how Earth’s ecosystems work continues to improve, providing clear evidence and data to support this growing understanding, we now see an exciting opportunity to bring the finance community to the fight.
This piece is part of our 2017 Earth Day series.