Rethinking Natural Capital amidst the U.S. Infrastructure Bill
By Amy Myers Jaffe
Amy Myers Jaffe has written this blog post in celebration of the 51st Earth Day.
In 1862, American philosopher and poet Henry David Thoreau published an essay on “walking” in The Atlantic in which he prophetically declared, “In wildness is the preservation of the world.” Thoreau advised, “I believe that there is a subtle magnetism in Nature, which, if we unconsciously yield to it, will direct us aright. It is not indifferent to us which way we walk. There is a right way…”
The American conception of Nature has evolved over time. In recounting our early years as an American nation, historians often present a romantic imagery of pioneers taming the wilds of nature to make it yield to our human needs. Then, in the onset of the industrial age, natural resources were conceived as a means to an end – input to material aspirations. The voraciousness of that era spawned a conservation movement that segregated huge swatches of wilderness into preserves and national parks so that nature could be protected.
Today, our relationship with Nature is again transforming. New concepts of conservation aim to protect the natural bounty of “what’s left.” The Intergovernmental Panel on Climate Change (IPCC) estimates that around 1 million animal and plant species are threatened with extinction due to global warming. Failure to address climate change increases the probability of massive erosion of coastlines, topsoil loss from flooding and drought in farm regions, and a deterioration in air and water quality.
As the U.S. Congress weighs passage of an infrastructure bill, conservation should be a guidepost. The Global Infrastructure Outlook, published by Oxford Economics and Global Infrastructure Hub in 2019, estimated that the United States will need to increase infrastructure investment by more than $3.8 trillion by 2040 to address needs for clean water, energy and electricity, transportation networks and telecommunications. Integrating this investment with climate change and nature-based solutions should be the cornerstone to any U.S. effort to restore and improve national infrastructure. The Biden $2 trillion infrastructure plan includes the creation of a $10 billion Civilian Climate Corps that would add new jobs through federal funding for activities such as managing forestland and cultivating wetlands and coastal sea grasses as well as $882 million dollars for Superfund remediation of toxic contamination. But exactly how this spending would tap into protecting U.S. natural capital resources remains to be explored.
It has been estimated that the United States benefits from $23.2 billion worth of natural storm protection services in the form of wetlands, dunes, and riparian forests that absorb storm waters and buffer shorelines from waves and erosion. Restoring wetlands, mangroves, and green space has been shown to be a cost-effective way to avert climate related damages to local communities. In Houston, restoration of parks and green spaces in flood prone areas through a combination of public funding and new zoning restrictions should be a major part of improving resilience and sustainability in low lying areas of the city.
Federal tax and bond policies, including a new kind of resilience bonds, can promote investment to restore and expand such nature-based solutions. Farm subsidies, politically expedient in the United States, could be targeted to favor both biological sequestration of carbon and promote soil health and development. Any new infrastructure legislation should integrate federal funding with green bonds and other kinds of investment vehicles that incentivize conservation of natural capital.
It should be obvious that business needs to consider preserving natural capital as part of their forward strategies. Electric utilities have to consider the long run availability of fresh water. Agri-business needs to look at local climate change trends to consider the long-range condition of topsoil. Coastal manufacturing has to consider sea level rise and coastal erosion. Increasingly, shareholders, insurers, credit agencies, and banks are worrying about these risks. They need to be a major part of the federal effort on infrastructure.
Ambition on preserving natural capital must go beyond the forestry programs companies like Royal Dutch Shell are launching to generate carbon credits that can then be sold to customers of its oil and gas products. Advances in artificial intelligence, machine learning, satellite imaging and high-performance data processing and computing mean that it could become easier now to track and quantify investments in natural capital beyond forestland. Increasingly, we can measure forestry in scope as a carbon sink. We can assess soil moisture and quality. We can track how fast fisheries are reproducing.
These kinds of technology breakthroughs mean that we can undertake natural capital accounting with greater real time transparency and disclosure. It allows not only for more accurate verification of carbon offset programs, but it can also enable better information about nature’s health and performance. The latter could be used to foster restorative investment, financed by innovative financial structures that reward stewardship, restoration, and mitigation.
Beyond public funding and bond issuances linked to infrastructure development and improvement, establishment of private derivative credit markets for the stewardship of natural capital remain a mostly unexplored option. Such systems could be modeled after certification and credits that now promote biofuels use and investment in the U.S. or the implementation of recs in renewable energy markets. State regulators could set targets for conservation of kinds of natural capital in their jurisdiction and then issue tradeable permits for companies who expand or restore assets that have been deemed as those with vital ecological value.
As the Biden administration and Congress considers infrastructure development, greater consideration and discussion is needed on how best to propel smart conservation and natural solutions. Preserving nature should be prioritized, before considering other kinds of proposed solutions like fortifying sea walls. Research shows that coastal wetlands prevented more than $675 million in property damage from storm surge during Hurricane Sandy in 2012. Before we lay more cement, policy makers and the public need a better understanding of the proposed public-private partnership to expand natural solutions to climate change.
Amy Myers Jaffe is the Managing Director of Climate Policy Lab and a Research Professor at The Fletcher School, Tufts University.