Climate Now

The financial value of healthy ecosystems

November 14, 2022 James Lawler Season 1 Episode 74
Climate Now
The financial value of healthy ecosystems
Show Notes Transcript Chapter Markers

How many crises can we address at once?

In October of this year, headlines broke that the global animal population in 2018 is 69% smaller than it was a half century ago, in 1970. It is the latest bad news in a string of studies on biodiversity loss, which is happening at a rate not seen on this planet since the last mass extinction. It also follows on the heels of an analysis from the U.N. World Food Program, estimating that due to Russia’s war in Ukraine, a record 345 million people are at risk of starvation this year, and that it is likely that by the end of this decade, the cumulative progress made in reaching the U.N.’s 2015 goal of eradicating hunger by 2030 will be 0%.

Conservation of natural lands and freshwater ecosystems are critical to biodiversity preservation efforts, but how do you feed the world without agricultural development, and how do you stem the impact of climate change without developing land-intensive clean energy solutions like wind and solar? It turns out, solutions to these issues do not have to be mutually exclusive.

Melissa Ho, Senior Vice President of the World Wildlife Fund, joined Climate Now to discuss how WWF addresses the competing priorities for humanity and the natural world, and why a holistic valuation of the services healthy ecosystems provide can help us develop co-beneficial solutions to all of these crises.

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Introduction

[00:00:00] James Lawler: Welcome to Climate Now where we explore and explain the ideas, technologies, and the practical on-the-ground solutions that are needed to address the global climate crisis and achieve a net-zero emissions future. I'm James Lawler, and today we're going to speak with World Wildlife Funds' VP of freshwater and food, Melissa Ho, about how we can both feed everyone and protect healthy ecosystems.

[00:00:27] But first, we're gonna spend a few minutes discussing climate news this week, and to do that, today I have the pleasure of being joined by Monica Varman, who has joined us before on this podcast. Monica, welcome. Great to have you.

Monica Varman, Partner, G2 Ventures

[00:00:48] Monica Varman: Thanks, James. It's great to be here.

[00:00:50] James Lawler: So, Monica, just remind us who you are, where you work, and how you got there.

[00:00:54] Monica Varman: Absolutely. I'm a partner in G2 Venture Partners. We're a late-stage venture growth fund focused on climate tech and companies that are digitizing traditional industries, so that includes energy, manufacturing, logistics, agriculture, et cetera. We're typically investing in Series B through pre IPO and helping these companies scale.

[00:01:13] And before G2, I worked at Tesla and their business operations team, and at McKinsey in their sustainability practice. And I actually spent a bit of time at the World Wildlife Fund as well, working in Dubai on their sustainable seafood program.

News from COP27

[00:01:26] James Lawler: Amazing. So Monica, this week seems to have been dominated by US election news, Elon Musk Twitter news, and we're starting to now hear some COP27 news. COP27 has just recently kicked off, it's the 27th Conference of the Parties to the UN Framework Convention on Climate Change. The biggest climate conference in the world brings together leaders from 197 countries just to discuss how we're going to tackle climate change broadly. What are some of the things that you've noticed so far coming out of this year's COP?

[00:01:58] Monica Varman: So this year's COP is happening against a backdrop of extreme disruptions in the energy supply chain. So that's a really interesting twist that no one necessarily predicted. Typically, the way COP works is: every five years is a flagship or more important COP. So 2016 had the Paris Agreement, which is still one of the more significant climate global agreements we have.

[00:02:22] And then last year in Glasgow was an important, significant one as well. And so no one necessarily expected 2022 to be as much of a milestone, but given all the backdrop of the Russia—Ukraine war, it actually has ended up being a little bit more galvanizing than expected. So in terms of stories emerging, you know, people hadn't necessarily prepared massive announcements for COP.

[00:02:48] So we've seen a lot of, like, more of the same. So the Kerry team had announced the first Movers Coalition last year where they basically had partnered with flagship companies from hard-to-decarbonize sectors like shipping and steel, et cetera, to create essentially advanced market commitments for decarbonized alternatives.

[00:03:07] And so they've announced some expansions at COP this year. John Kerry also announced like a global carbon credit mechanism to help mobilize financing for developing countries to transition to a cleaner energy future. That is still very much an idea stage, and you know, it has sort of criticism on both sides in that countries are saying it's not enough and that there needs to be a much stronger mechanism put in place to help mobilize funding to help them transition. So we'll see what happens with that.

[00:03:38] James Lawler: Yeah. So one other story that we've tracked is — and this was published just a few days ago, there was an article in the New York Times on this: 'Developing Nations Have a Message at Global Climate Talks: Polluters Pay Up'.

[00:03:49] This has been a running theme for, probably since COP started to some degree, that developing countries are paying the price of climate change, but their populations aren't responsible for historic emissions or the quantity of emissions that larger, more prosperous countries emit every year today. Monica, do you have a sense of what is different, if anything, at this COP?

[00:04:16] Monica Varman: So, for 30 years this conversation has been happening, and so it's funny, the cynic in me is often — sees these as sort of platitudes because rich countries say every few years that they'll help, but when it actually comes to the money flowing, we don't see much.

[00:04:28] But it does seem like the move this time, or the change that happened, was the quantification of damage and the quantification of what that loss might be, which, as you can imagine, is hard to do and hard to quantify. And so I think in the past that was used as an excuse to just not address it at all. So I think the steps toward defining it and quantifying it are meaningful. I am looking forward to seeing the funds starting to flow.

[00:05:03] James Lawler: Anything else from COP that we should be paying attention to?

[00:05:11] Monica Varman: I think the Biden administration has been mobilizing significant funding for nature-based solutions, and at COP they presented the nature-based solutions roadmap.

[00:05:16] A lot of it wasn't necessarily that new, it was highlighting pieces of the Infrastructure Act and the Inflation Reduction Act that were focused on nature-based solutions. So I would say in terms of net new policy, that wasn't the case. But I think the focus and the commitment to developing some sort of standard accounting system was new, and the emphasis on nature-based solutions I think is sort of something that I haven't seen in other COPs.

News on biodiversity mapping regulations

[00:05:42] Monica Varman: Melissa Ho, whom you'll hear from in this episode shortly, talks about the World Wildlife Fund's work to map biodiversity and freshwater resources, both to understand threats, for example from energy infrastructure like hydropower and renewables, and opportunities to create shared value. Interestingly, we're seeing regulations emerge around the world to push project developers to map, measure, and mitigate the biodiversity impacts of their projects.

[00:06:07] So in the UK for example, the Environment Act was passed in 2021, which requires all planning permissions granted to deliver at least 10% biodiversity net gain by the end of 2023. And our portfolio company AiDash has been working with utilities to help them comply using satellite imagery analysis.

[00:06:26] Monica Varman: The government was supposed to deliver by October 31st clear targets that were against sort of normalized baselines.

[00:06:33] So the way AiDash is helping their customers do it today is they analyze the type of ecosystem that the land is on. So they have, say, 16 different classifications of whether it's a swamp or a forest, a redwood forest versus some other forest, and estimates. You know, it's a bit like estimating your carbon footprint or estimating caloric intake in a diet app.

[00:07:01] It's probably not extremely precise, but it is directionally correct 

[00:07:09] James Lawler: Yeah. Thanks so much, Monica.  

[00:09:15] Monica Varman: Thanks for having me.

Introducing our guest this week, Melissa Ho, World Wildlife Fund

[00:07:18] James Lawler: Now, to the interview segment of the podcast. Today, we are very excited to speak with Melissa Ho. Melissa is Senior Vice President of Freshwater and Food at World Wildlife Fund, or WWF. Her work is focused on protecting freshwater resources and conserving critical landscapes, while strengthening food systems in a more climate and eco-friendly way.

[00:07:38] In 2021, nearly 1 billion people faced food insecurity, and that number is trending upwards. The United Nations has a stated goal of ending world hunger by 2030. But increasing agricultural production to meet that goal presents enormous challenges for ecosystem conservation and climate change, because clearing natural lands for agriculture development releases stored CO2.

[00:08:02] It also removes the natural CO2 sink that forest lands provide, and it destroys natural habitats. So what do we do? Can we address global hunger without exacerbating the global biodiversity and climate change crises? Can we consider healthy ecosystems as economic resources and give them a financial value so they're better valued in our capitalist society?

[00:08:24] These are the challenges that Melissa spends her days working to address. Melissa, thank you so much for being with us today. It's really a pleasure to have you on.

[00:08:33] Melissa Ho: Thanks so much for having me. It's a pleasure to be here. I look forward to our conversation.

[00:08:37] James Lawler: So, Melissa, I wonder if you could tell us about WWF's mission today and how you accomplish that in your work, in particular, with the organization.

WWF’s mission and work

[00:08:48] Melissa Ho: We are one of the largest conservation organizations in the world. We are a federation with over a hundred offices and really we come together as citizens around the world on a common mission to think about building a world where people and nature thrive. And it's as much about the people part of that equation as it is about the nature, the wildlife, water, land.

[00:09:11] And I think we do that through trying to balance out both these development and the conservation goals, and then really trying to drive the storytelling, the narrative, about why it's in our own self-interest as humanity to protect the planet, to conserve these natural resources and biodiversity, and to try to connect back on why it's important for each of us to care.

[00:09:33] We sort of have two big pillars and approaches that we think about as WWF more broadly, not just my team, but in general. And then I'll give some examples of what that looks like in the world and on the ground.

[00:09:43] So one area that we really care about are what we call place-based solutions. So it's the core of really looking at iconic and really high conservation value landscapes where we touched down on the ground and sort of doubled down on really protecting places like the Amazon, like the Cerrado and Pantanal in South America and Brazil. Also though, the Northern Great Plains here at home is one of the last remaining intact temperate grassland ecosystems and really important globally in that respect.

[00:10:14] The second real area that we focus on, what we call whole planet solutions, which often are market, commodity-driven types of things. So we partner a lot with the private sector, we work on sort of global-level platforms, and we try to really address things upstream. So it could be platforms and sourcing commitments from global companies or traders to really say 'Hey, we don't wanna be responsible for deforestation or conversion in our supply chains, and we're gonna try our best and make really concrete commitments'.

[00:10:51] Pre-competitively, it's not just one company. It could be all of them that are then selling it, you know, the commodities, into a bunch of other products. And so we will make commitments that we will signal to the world we will not source from these sensitive and really high important areas.

[00:11:08] James Lawler: So when it comes to the sort of boots-on-the-ground work, what are the levers that WWF has to pull in terms of securing some of those natural resources?

Protecting rivers

[00:11:16] Melissa Ho: Yeah. Let me use an example from our freshwater work infrastructure over several years. It comes from Zambia. I think first and foremost, we often promote, sort of, thought leadership on the issues and the importance of, for instance, the conservation value of free flowing rivers. My colleague, Michelle Thieme, who's been at WWF for more than two decades, and colleagues from our science team and other organizations, have really rallied around mapping and identifying the world's last remaining rivers that are connected from source to sea, and that really are where the remaining freshwater biodiversity remains, and they provide so many ecosystem services and value and protection.

[00:11:57] And so, not surprisingly, they are at risk and threats from lots of things because they're the last remaining rivers that have really intrinsic properties, and then they're found in places like the Amazon and the Mekong and the Salween and Southeast Asia, et cetera.

[00:12:12] So the idea is: first we have to elevate where they are and why they're important. And then our teams have also, through peer review literature, cited what are the biggest threats. And it really is dams and hydro for infrastructure development for energy. But then in Zambia, for instance, over the past two years, and it's with funding with USAID and other partners, we've really worked with the government to come up with a more holistic approach to energy sector master planning.

[00:12:39] It includes a lot of analysis and data for where and how to site and incorporate renewables, solar and wind. And then absolutely yes, where dams are a part of the mix and hydro should be there, we have another sort of planning tool and spatial data analysis, something that we've worked with the government and also worked and partnered with stakeholder engagement, right?

[00:13:00] The decisions for these kinds of things are not just based on a government's perspective, but you really need to engage the stakeholders on the ground.

[00:13:08] So we also facilitated a basin report card process that brings stakeholders together, creates a shared vision for how resources should be used and allocated, as well as valued — there's cultural value in river resources as well — and then talked about what is the current status of the health, both social and biophysical health of the system, and then where do we wanna go from here in terms of planning and implementation of projects to improve the health, but also to create shared value for development purposes.

Balancing the climate mitigation wins of renewable energy sourcing with the biodiversity impacts

[00:13:42] James Lawler: Wow. Very interesting, that was a great example. And actually it connects to our next question, which I'll set up by saying that climate change mitigation, environmental protection, on the surface I think seem like they should really go hand in hand and that there should be kind of a common agenda that would suffice, but they can work at cross purposes.

[00:14:02] Hydropower would have very, very minimal, if any, CO2 emissions. So it's good for climate, but of course, damming these free flowing rivers is devastating for ecosystems and biodiversity. So in these cases where the climate prerogative and the biodiversity prerogative are at odds, how do you think about that?

[00:14:23] And a corollary question is that solar and wind also have biodiversity impacts, land use impacts. So the answer can't always be well, just tile the landscape with solar. So I'm curious, what is the right methodology or so the right process to try to engage with that question?

[00:14:45] Melissa Ho: The answer I would give is that you have to get on the ground and work with stakeholders and understand the local constraints and conditions. It's not that solar is always the thing, or dams or always not the thing, and I think our context for working on free-flowing rivers and alternatives to hydro wasn't saying 'No, no, no, dams are bad and no hydro.' It was more of that, 'Hey, let's be careful and be conscientious,' that dams and hydro are considered a low carbon footprint source of energy. At the time, they were also very cost effective per kilowatt, and so there was a lot of big infrastructure projects rolling out, saying this is the answer to the climate solution to move us away from fossil fuel dependency, which is not not true, but I think our teams were really sounding the alarm bells.

[00:15:39] But like now we're putting all of our eggs into hydro, there are consequences and trade-offs. And when all of that hydro was targeted to the world's last remaining free flowing rivers, and we have communities depending on fisheries, we've got ecosystems and these rivers feed the landscape downstream of agriculture and wildlife and humanity downstream. We also need to think about what the trade offs are to nature and not just climate. And then you make a really good point about in land-poor areas, solar, there's competition for land, right? And same thing for wind.

[00:16:15] There's a lot of challenges in the ocean and other things. And so I think the way we are looking at it now is: we need more sophisticated planning tools, we need much more engagement with communities and stakeholders to understand the pros and cons, both from an environmental footprint, nature and climate, but also from the economic and the development side.

[00:16:36] And then we also need to kind of curb that we may not be able to have endless production. We can't have it all anymore. And so there might be other sorts of hard decisions we make as well.

Climate impacts of agriculture 

[00:16:47] James Lawler: So I'd like to ask you a little bit more about agricultural production. Agriculture's obviously very emissions intensive, destructive to critical ecosystems that are natural carbon sinks like rainforest and grasslands, can be depleted of clean water resources, so there are several overlapping challenges when we talk about feeding the world. You have the climate challenge. This is an emissions challenge: how do we reduce emissions that are associated with agriculture? You have a water challenge: how do we source the amounts of water that we need to create the food for humans on the planet without destroying ecosystems?

[00:17:22] And then finally, you have land use, which is: how can we make sufficient amounts of land available for growing food without destroying more ecosystems and rainforest? So we have these three very difficult things that we have to sort out when it comes to agriculture. What is the right way to think about balancing those problems as we try to feed the growing population?

[00:17:44] Melissa Ho: First of all, you know, folks probably know that agriculture contributes about a third of emissions, or really food systems more broadly contribute about a third of global emissions, 70 to 80% of fresh water consumption. It's the largest driver of land use change, and about half of our arable land is in agriculture. And that land use change is the largest driver really of biodiversity loss and nature degradation everywhere in the world.

[00:18:12] So it is a big deal, and yet we need to eat. And agriculture is the unique sector that can be part of the solution for all of these things too, right? It's absolutely critical for our survival that we have the ability to shift how we grow food and do that in balance with nature where we can not only save water, we can reduce our footprint and even, you know, ag lands can be a source of carbon sequestration.

[00:18:35] But we kind of have to think about how to bootstrap the system from different examples, both of the commodity and market pieces, but then also of where the front lines of where agriculture is causing the most damage in real places.

[00:18:49] So some of those are the critical landscapes that we talked about. So the Amazon and the Cerrado, the Chaco, and the Panal in Brazil, ag impacts are being felt really urgently and we see tons of conversion, and that's bad for nature and climate. So we have to double down our efforts on the front lines of where ag expansion is happening.

[00:19:08] But one example I'll give — what does a systems approach mean? How do we address this at these different levels? I'll say regenerative ag, right? That is a topic that is so hot right now in the US. It's maybe more felt as agroecology in Europe and in contexts, but the idea of moving beyond just sustainable agriculture, trying to think of things that have circularity or really focus on not just doing less harm, but really restoring soil health, right? Rebuilding social justice and sort of equity and also even thriving farmers, not just thriving soil and health of the land. There's a lot of focus on cover cropping, the practices and principles, no till, benefits of soil health.

[00:19:50] We agree with all of those, but I think there's also sort of an existential definition we have in that you cannot be having regen-ag on lands that probably shouldn't be in ag in the first place, right? On converted lands. And so we really are trying to connect the dots on this concept of regen-ag with one of the existential things that ag is doing in the world, which is this land use change, deforestation and conversion issue. Which again, conversion of tropical rainforests, of grasslands, even here in North America, temperate grasslands, is one of the largest source of agricultural based emissions.

[00:20:30] It is also obviously one of the sources of habitat degradation, when you take the habitat away and make it into ag. So it is then one of the largest sources of pollution in water, but also starts on water consumption. So that is embedded in how we think about regenerative ag. It's not just the practices on the field, it's sort of how do we even think about where ag and food production should be in the world.

[00:20:55] James Lawler: I wonder, we have these situations all over the world of farming, the expansion of farming, the incursions into critical ecosystems. How does WWF work to stop that? Or what are the levers that can be pulled to reduce those activities, given that you're dealing with the sort of fundamental economic pressures in these regions which are very hard, I would imagine, to do anything about. So what is there to be done in those situations?

[00:21:24] Melissa Ho: Similar theme of that, it depends, and all of these things take local solutions, but I think the high level theme is that you have to create alternative value proposition for folks, right? And that you have to also hopefully work with them to come up with solutions of where a conservation-based approach for livelihoods is sustainable for the people and communities that live in those landscapes. They've got to be part of the solution and their economic wellbeing and livelihoods matter.

[00:21:53] So a couple examples I'll give: in the northern Great plains, again, I mentioned conservation of temperate North American grasslands, especially where it's still intact in the northern part, WWF's learning is that we started out going in thinking we're gonna create a protected area, and sort of a park mentality, if you will. But that quickly was not gonna work for lots of reasons. It really alienated the community. It was never a model that would get us to scale.

[00:22:20] There is still a place and a role for putting grasslands in protection. That's not to say it's not a bad one of the levers to pull, but when you have 60 to 70% of those lands in private hands by ranchers and another 20% or or so in Native Nations, large tracks of it, you're not gonna get to scale very quickly to reach the entire landscape.

[00:22:41] So the team over the last decade has really pivoted to partnering directly with the ranching community as again, part of the solution. And so improve ranching practices rather than conversion to crops, this is an economic decision they are making all the time. Many of them are coming from a cultural background of ranching and would prefer and love to keep that in their families, and how they do their livelihoods.

[00:23:06] But sometimes the opportunities and the economics are causing pressure. There's lots of policies and programs and external factors that make crop production increasingly more attractive for lots of reasons. Not always good ones, right?

[00:23:21] And so how do we help preserve the ranching way of life where it's appropriate to keep these marginal soils and grass, and where cattle production can mimic what ruminants and bison did on the landscape previously? And then how do we improve the practices so that ranching doesn't degrade the ecosystem, but really keeps it intact. And there's lots of ranchers who get it and are wanting to be part of that solution. But it's hard, right? These choices are hard.

[00:23:48] James Lawler: So whose interests should be prioritized as more and more of the world is kind of feeling the direct impacts of the changing climate and perhaps becoming more sensitive to the value of these local resources. Does that calculus change do you think?

[00:24:04] Melissa Ho: There's several layers to thinking about who has the right to choose, and then what is the value we should bring in supporting it as a global good. I feel like, is it a country and a government's decision? A lot of the last remaining lands, whether it's water or land, actually belong in indigenous hands.

[00:24:24] There's a lot more evidence now and peer reviewed studies showing that where there have been, and still are, remaining tracks of land under indigenous and local community hands, there's better stewardship and there's more biodiversity remaining on the planet. And so some of the decisions of Brazil to think of developing the Amazon, it is not necessarily of the local communities who are the stewards of this land. It's sort of even above them and how the decisions are being made around them. I think how do we develop the mechanisms to provide incentives and value? What are those? Are they governments providing resources to countries to conserve tracks of land?

[00:25:07] Is it market-based mechanisms for carbon markets or ecosystem services that companies provide? Is it how consumers make choices in deciding to abide by not sourcing from there, and then how can we have mechanisms so that there's accountability in that? There's a role for all of us to play to say we value these things.

Ecosystem services

[00:25:25] James Lawler: Right. Melissa, you mentioned, and this has come up a couple times in this conversation, this concept of ecosystem services, and I think generally when we say ecosystem services, the term is meant to capture this idea that the natural ecosystems that are at work on earth provide these essential goods to us, to human beings, that are services that we take for granted. We don't pay anything to breathe the air.

[00:25:51] Melissa Ho: Yeah. Oh gosh. Thanks for raising this. Yes. Pollinators, pollinators, loss of insects and degradation of biodiversity. How much of our crop production is dependent on functioning ecosystems for pollination, right? And then there's been lots of studies showing the billions of dollars of loss and then the gap in productivity when you don't have good pollinators. Soil health is another one. Lots of lost economic dollars calculated with the erosion of topsoil.

[00:26:19] Same thing with what grasslands provide in terms of water filtration, small municipal water systems, the hundreds of millions of dollars that is incurred on them to do more filtering out of sediment and toxins because you didn't have functioning grassland systems to take that out of the water that comes to them. So many different places, the whole body of literature trying to translate the economic benefits and sort of the justification for why these ecosystem services matter.

[00:26:50] James Lawler: That was Melissa Ho with the World Wildlife Fund. I just want to add some additional context around this idea of ecosystem services.

[00:26:58] A paper in nature about 25 years ago estimated the global value of ecosystem services at $33 trillion per year. For context, global gross national product at the time was 18 trillion. A follow up study in 2014 estimated that the annual loss of ecosystem services due to land use changes was between four and 20 trillion dollars a year.

[00:27:20] It might seem odd to attach dollar signs to nature, but it's important to understand that that's not actually what we're doing. We're putting a value on the actual services that are rendered to allow us to live the way we want, to allow our economic system to work the way that it does. And it's important to quantify that value as we prioritize solutions to the climate crisis and where we put our investment dollars.

[00:27:48] That's it for this episode of the podcast. For more episodes, videos, or to sign up for our newsletter, visit climatenow.com. We hope you'll join us for our next conversation.

[00:28:00] Climate Now is made possible in part by our science partners like the Livermore Lab Foundation. The Livermore Lab Foundation supports climate research and carbon cleanup initiatives at the Lawrence Livermore National Lab, which is a Department of Energy applied science and research facility. More information on the foundation's climate work can be found at livermorelabfoundation.org.


Monica Varman, Partner, Monica Varman, Partner, G2 Venture Partners
News from COP27
News on biodiversity mapping regulations
Introducing our guest this week, Melissa Ho, World Wildlife Fund
WWF’s mission and work
Protecting rivers
Balancing the climate mitigation wins of renewable energy with the biodiversity impacts
Climate impacts of agriculture
Ecosystem services