Why Nature’s Worth More Than We Think | Image Source: Images.pexels.com
OTTAWA, Canada, February 4, 2025 – An innovative report from the Intact Centre at the University of Waterloo on climate adaptation changes the way municipalities view nature not only as a picturesque landscape, but also as a valuable financial asset. This guide, entitled “Bringing nature into financial reporting”, encourages local governments to attribute monetary value to natural features such as wetlands, forests and coastal dunes. This new approach aims to integrate the economic value of natural ecosystems into municipal accounting systems, which could transform urban planning and conservation efforts across Canada.
Why attribute monetary value to nature?
At first glance, the idea of putting a price tag in nature might seem controversial. However, according to Joanna Eyquem, the main author of the report, it is necessary to ensure that natural resources are taken into account in economic decisions.
Money talks. Nature has no voice in economic decisions when it is not denominated in dollars “
Eyquem explained in an email. Without such financial recognition, vital ecosystems are often neglected in urban development projects, resulting in irreversible environmental losses.
Canada’s alarming statistics highlight this point. The country has already lost more than 70 per cent of its wetlands, and in densely populated areas this figure is incredible at 98 per cent. By quantifying the services provided by natural resources, such as flood mitigation, water purification and carbon storage, munitions can better promote their protection.
How are natural assets assessed?
The guide describes an integral valuation methodology for natural assets. It highlights the concept of “ecosystem services”, which refers to the tangible and intangible benefits of ecosystems. These services are as follows:
- Provisioning Services: Products like food, fresh water, and timber.
- Regulation and Maintenance Services: Benefits such as climate regulation, flood control, and water purification.
- Cultural Services: Recreational, aesthetic, and spiritual values.
Municipalities begin by identifying the natural characteristics of their territory, evaluating the services provided by these regions, and then converting these benefits into monetary terms. This process involves working with environmentalists, economists and planners to ensure accurate assessments.
Examples of the real world: Communities in the lead
While national accounting standards for the valuation of natural assets are still being developed, many Canadian municipalities are already adopting such practices. In Rossland, B.C., the team of Financial Director Mike Kennedy created a “natural property inventory” that allocates dollar values to local forests and wetlands.
For example, forest slopes surrounding an artificial reservoir are valued at $26 million per year because of their role in reducing erosion, mitigating flooding and creating recreational opportunities. Wetlands, essential for water filtration, are estimated to provide $2.8 million per year. Kennedy notes that ratings may vary considerably depending on location:
“A land at two different points in our city could provide very different assessments. “
These figures are not only academic exercises, but also refer to critical municipal decisions. By evaluating development proposals that may affect natural areas, planners can now compare the economic benefits of preserving ecosystems with the costs of artificial alternatives, such as the construction of new water treatment facilities.
The wider impact on urban planning and urban policy
The valuation of natural assets is more than an accounting exercise; It is a powerful tool for sustainable urban planning. In Calgary, climate adaptation specialist Jillian Prosser has been integrating natural asset data into the city’s financial statements for the past six years. This information has shaped initiatives to improve and maintain forests, river roads and parks.
Prosser highlighted Ralph Klein Park as a prime example. This urban green space not only offers recreational opportunities, but also serves as a natural storm water treatment system, thus reducing the need for costly infrastructure investments.
“By including this value, we can better understand the services they provide and recognize the importance of investing in these areas
explained.
Challenges and considerations related to nature assessment
Despite obvious advantages, the attribution of monetary value to nature is not without problems. The lack of standardized accounting guidelines makes it difficult for municipalities to achieve consistency. In addition, some critics argue that reducing nature to financial terms could undermine its intrinsic value.
Mike Kennedy acknowledges these concerns, noting that valuations of natural assets are complex and context-dependent. Variables such as land location, ecological health, and community priorities influence assessments. However, he believes that the process is invaluable for informed decision-making.
The guide also addresses possible obstacles, noting that assessments of natural assets should complement – not replace – traditional conservation strategies. The objective is to improve environmental management by promoting economic viability.
What’s next for natural asset accounting?
As experts become aware of the valuation of natural assets, they expect national accounting standards to be established. The Intact Centre Guide provides a roadmap for municipalities wishing to move the curve forward by providing them with step-by-step instructions and resources to implement natural asset accounting systems.
For local governments, the message is clear: nature is not a luxury, it is an essential asset that provides measurable economic value. By recognizing this, communities can build a more resilient and sustainable future.
In Joanna Eyquem’s words:
“When we begin to see nature as part of our financial systems, we begin to really appreciate its value, not only for what it provides today, but also for future generations who will depend on it. »
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