Paula DiPerna on Pricing the Priceless

In 1989, the Exxon Valdez tanker ran aground in Alaska, spilling 10.8 million gallons of crude oil into Prince William Sound. Paula DiPerna, who was there to make a film with oceanographer Jacques Cousteau, vividly remembers watching people with toothbrushes clean the oil from the eyelashes of seabirds. Alongside the devastation to wildlife, she was struck by the scale of the tragedy: not only was a finite natural resource being taken out of the ground at such a low price, it was then being wasted.

Paula advanced this theme during her 2016 Bellagio Center residency, where she examined the shifts in how society captures and acts upon the value of natural resources. This led to her 2023 book Pricing the Priceless: The Financial Transformation to Value the Planet, Solve the Climate Crisis, and Protect Our Most Precious Assets.

Paula is a writer, public speaker, and environmental finance pioneer, as well as special advisor to CDP, formerly known as the Carbon Disclosure Project. She has served as President of the international division at the Chicago Climate Exchange, the world’s first cap-and-trade system; President of the Joyce Foundation, a U.S. philanthropy; and Vice President for International Affairs at the Cousteau Society, where she worked for 20 years.

How is your work helping to address the climate crisis?

I’m a special advisor to CDP, the preeminent platform for securing environmental disclosure from the world’s largest public companies and suppliers. CDP exists to put environmental information at the center of financial decision making. My role there is to keep the organization in the vanguard, thinking well beyond the minimum information that companies must disclose for financial responsibility.

I see climate change as a problem of alignment. The necessary forces – science, policy, capital – are all working on different timelines. Just like when you play a slot machine, you want cherries all across – if you get cherries, bananas, and lemons, you don’t win anything. Until science, policy, and capital come together and work more or less on the same timelines, feeding each other in sync, we cannot solve the climate crisis.

I am, primarily, a writer. My book Pricing the Priceless is trying to channel these three forces toward addressing climate change. It asks: what is the purpose of money in a world facing so much social and environmental distress? Why can’t we channel a big chunk of that money toward the investments necessary to avoid what is categorically a worsening environmental default? We must rethink how we account for the natural resources that are feeding the economy, and treat them as indispensable financial assets, not merely raw material inputs.

What is the purpose of money in a world facing so much social and environmental distress? Why can’t we channel a big chunk of that money toward the investments necessary to avoid what is categorically a worsening environmental default?
Paula DiPerna

What breakthroughs need to happen for us to both avoid the worst impacts of climate change and prepare communities to adapt to the new challenges that will arise?

We need to publicize financial solutions; we have an investment shortfall to address. For example, the Forest Resilience Bond – a pilot project launched in California – offers a realistic and potentially scalable answer to wildfires. It enables capital to come in early to be applied to what the forest needs most, which is resilience building. This means hiring enough people to clear out growth, strengthen firebreaks, and prepare for the reality that climate change is going to make everything drier. The Forest Resilience Bond brings together differentiated sectors – insurance, hydropower, forest products – around a financial tool that securitizes risk. It treats forests as infrastructure and funds them as such.

There’s also coral reef insurance. 50% of the world’s coral reefs are already lifeless, and are going to stay dead because it is so difficult to fight rising sea temperatures. But what about the 50% that still have a chance? Coral reef insurance funds amazing reef services, putting trained divers into the sea after raging storms to try to put Humpty Dumpty back together again by hand. In the meantime, in laboratories worldwide there’s significant ongoing research to develop coral that is more resilient to climate change.

In addition to these new financial approaches, there is ESG [environmental, social, and corporate governance], which is vital but slowed by headwinds, like suspicion over greenwashing. But the reality is there is no perfection in any system. What would you rather have: all the trillions of dollars in the world going the wrong way, or redirecting some of those funds the right way?

We need to set aside the hope of perfection and work with the forces at hand. I’m not an apologist for capitalism – chasing profit for its own sake has caused much of the environmental degradation we now face – but Pricing the Priceless is about reinventing capitalism. If you have your profit going up and your cost to nature going down, that’s cherries all across. That’s the jackpot.

What would you rather have: all the trillions of dollars in the world going the wrong way, or redirecting some of those funds the right way? We need to set aside the hope of perfection and work with the forces at hand.
Paula DiPerna

What keeps you up at night about achieving these goals? What makes you optimistic?

I’m pessimistic about the decline in leadership, the absence of consistent policy, and the incoherence of action. Something I learned from Cousteau is that most people protect what they love, and not much more. He said, “If all this depends on sacrifice, you can forget it.” And we have been sold the story of sacrifice.

But I’m hopeful about the next generation of wealth transfer, which will capture an attitudinal change. I could add a fourth force in addition to science, capital, and policy: intergenerational responsibility. This has to come into alignment as well. By this I don’t mean youth, necessarily, but new thinking. The other positive is that there are phenomenal technologies out there that we can tap into, if we can get them to scale. We need to focus on breakthrough applications – like hydrogen fuel cells – that are still looking for financial investment.

For the moment, science and capital are running ahead of climate policy globally. One way for policy to catch up and really unlock change would be an accelerated push for a global integrated carbon price, based on mandatory emission reduction targets. When you price carbon, you’re not pricing nature, per se: you’re pricing the scarcity and the preciousness of the 60 miles above us – that’s all that is protecting us from solar heat. If we can robustly price the value of atmospheric scarcity – and realize it didn’t cause a metaphysical collapse – we can be comfortable with other forms of pricing natural assets. An international carbon price would be the linchpin that I would certainly pull – it’s very doable.

Learn more: Read about the CDP, the Joyce Foundation and the Cousteau Society.

For more on Pricing the Priceless, watch Paula discuss the book with Amanpour & Company on PBS, or read about the book’s connection to the Bellagio Center in the Bellagio Library. Pricing the Priceless has been selected as one of the Best Summer Books of 2023: Economics in the Financial Times.

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Bellagio Perspectives: Climate Change

Climate change is the challenge of our lifetimes. The latest Bellagio Perspectives features 11 climate-leader alumni who are driving a range of breakthroughs to tackle the climate emergency, from financing and governance to advocacy and on-the-ground activism.