NAC, NAC. Who's there? - Part 1

Welcome to the Nature Monetisation Era

Audio version of the article right below the paywall

Above our house there’s a mountain. It’s not particularly high or particularly magnificent but it’s got a pretty dense forest coverage. There’s a river running through it and some wildlife.

The nearby slope is a great place for some forest-bathing or, as the Japanese call it, shinrin-yoku (thank you, Rose_Anne!). It’s a great place for collecting pine cones for the fireplace or pine needles for the garden. And it might become a great place for natural asset investing.

The idea of natural asset companies as investment vehicles is barely a couple of years old. Ostensibly, the purpose of natural asset companies is to enhance conservation efforts in line with the 30x30 plan to expand protected land and ocean areas to 30% of each by 2030.

Not so ostensibly, NACs are a way to put a price tag on nature and make some money from it through what is described by proponents as the monetisation of underlying ecosystem services. Possibly a lot of money.

A bit about those underlying ecosystem services. Everything we take for granted such as clean water, breathable air and food is actually an underlying ecosystem service.

Drinking water from natural reservoirs is a service. Timber is a service. Air, filtered by trees and grasses, is a service. So is the prevention of soil erosion by trees. So is plant pollination by insects and waste decomposition by bacteria. Nature, as it were, is a host of services.

Until now, these services have been largely taken for granted by everyone but this is about to change. Because we need to double down on conservation and what better way to do it than to turn the object of that conservation into an investable asset? What better way to protect nature than to turn this protection into a profit opportunity?