This story was originally published by Inside Climate News and is reproduced here as part of the Climate Desk collaboration.

In an era of rapid globalization, economic growth has come with trade-offs. To make room for urban development or fossil fuel extraction, countries often clear forests, pollute water and decimate wildlife populations.

However, while nations and businesses build lucrative markets around these activities, destroying nature often comes at a cost—literally. Natural resources underpin the global economy, from pollinators supporting agricultural supply chains to forests ensuring water quality and availability. One estimate suggests that more than half of the world’s gross domestic product is moderately or highly dependent on the environment.

Research shows the services that nature provides are diminishing as we degrade it. Now, a growing number of economists and ecologists around the world are helping decisionmakers understand the full extent of the contributions to local and national economies made by plants, animals, or entire ecosystems—and what’s at risk financially if they are lost.

Since time immemorial, humans have relied on natural resources like clean water, forests, and soil to prop up economies. As Stanford University ecologist Lisa Mandle put it to me bluntly, “if there were no nature, there would be no economy.”

But it wasn’t until fairly recently that experts formally started to catalogue the environment’s financial contributions to society through an approach dubbed “natural capital accounting.” In 2005, a report compiled by hundreds of scientists from around the world, which was called for by the United Nations, estimated that human activities had driven the decline of two-thirds of ecosystem services on Earth, including freshwater supply, climate-change mitigation, and disease control.

Pollinators contribute $800 billion in gross economic value annually, including $34 billion in the United States.

Dubbed the “Millennium Ecosystem Assessment,” the report also revealed how much was not known about the environment’s financial contributions, finding that the costs of degrading nature were rarely tracked in local and national economic accounts. Since then, experts have scrambled to fill these gaps.

Mandle is the co-executive director of Natural Capital Alliance, a Stanford-based collaboration of research institutions and nonprofits such as the Nature Conservancy working to help countries better understand their natural resource availability and how to balance those benefits with development.

For example, the group recently worked with the Colombian National Planning Department to calculate the economic value of the country’s Upper Sinú Basin. Using input from locals and complex financial models, they found that ecosystems in the region deliver around $100 million in benefits to hydropower production and the delivery of clean water to households and economic sectors—nearly 2 percent of the region’s GDP.

“In many decisions, nature has been treated as essentially worthless or of negligible value when compared to other kinds of human activities,” said Mandle. “Natural capital accounting is an effort to correct that and to shine a light on the many different ways that nature and biodiversity supports human well-being and the economy.”

It’s not just governments using this type of data; businesses around the world are increasingly required to disclose the biodiversity risks of their operations, the Financial Times reports. At the same time, investors have shown more interest in companies that can show they are environmentally friendly, Viorel Popescu, an ecologist at Columbia University, told me.

Large corporations are major contributors to biodiversity loss, but Popescu said they are also at “the forefront of being able to do something about it,” and can often move at a faster pace than governments. With this in mind, Columbia University announced in September the creation of a master’s program focusing on biodiversity data analytics. The idea is to help businesspeople understand the implications of corporate operations on nature.

“We’ve been training ecologists to do ecology forever, and they don’t always get into places where they can actually make decisions, unfortunately,” said Popescu, who is the director of the program. He has been an ecologist for more than two decades and stressed that the new program is “trying to get people that don’t have necessarily an ecology or a conservation background…but are in the position of making a difference.”

Ecosystem accounting has revealed some staggering stats on nature’s financial contributions. Pollinators contribute $800 billion in gross economic value annually, including $34 billion in the United States. A recent federal report found that US birders spent an estimated $108 billion related to their pursuits in 2022 alone, which is almost six times the total revenue generated by the National Football League that year. Mangrove forests prevent more than $65 billion in property damage around the world each year, according to a 2020 study.

Even a single species can bring in the big bucks: The National Oceanic and Atmospheric Administration estimates that the endangered North Atlantic right whale generated $2.3 billion in sales for the whale-watching industry and across the broader economy in 2008 alone. Conservation groups often use these analyses to make the case for protection of plants and wildlife.

“To participate in the commodification and financialization of our Relatives is an affront to the Natural Laws.”

Experts recognize that natural capital accounting has limitations, largely due to the diversity of ecosystems and what values different groups of people put on various services. Additionally, interactions across a single ecosystem can be incredibly complex, and “it can be hard to tease out what the value is of an individual component, because its value is not just [that component], but it’s how it interacts within this system to sustain life,” Mandle said. The UN has a framework to help countries track ecosystem services, though much of these processes are case by case.

In recent years, new markets have emerged to commodify nature-based solutions through the sale of carbon offsets or “biodiversity credits,” which represent a measured unit of biodiversity protection that companies can purchase to support conservation. However, critics say the “financialization of nature” fails to recognize its intrinsic value, and could actually work against its protection.

“Only humans would have the audacity to assign ‘financial value’, in their colonial thought process ways, to the Sources of Life and the living beings that are our relatives,” Casey Camp- Horinek, an elder of the Ponca Nation of Oklahoma and chairwoman of the Indigenous Council of the Global Alliance of the Rights of Nature, said in a statement on the group’s website. “We do not own anything that is called Nature, we are Nature, and to participate in the commodification and financialization of our Relatives is an affront to the Natural Laws and quite simply wrong.”

Popescu said he’s “conflicted” about assigning financial values to ecosystem services. “But at the same time, I’m well aware that if we don’t try to do that, you’re not going to advance the conversation,” he said.

Echoing this sentiment, Mandle said that while it’s crucial to also consider the intangible values of nature, “there are some decisions that get made, you know, comparing numbers, lines on a spreadsheet, or weighing costs and benefits.”

It’s a “head approach and a heart approach,” she said. “I think they work together.”

In any case, it’s clear that environmental degradation and climate change are already taking a heavy toll on the global economy, costing trillions of dollars annually, according to a UN report released in December. “I think [natural capital accounting] has become especially relevant recently as the size of the human enterprise relative to Earth systems has grown,” Mandle said. “Many of these values have only been apparent once they’ve been lost.”

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