Speculating on Nature

Categories: economy, environment
Tags: financial instruments, finance

What? The film “Banking Nature” explores some of the risks of using financial instruments to help maintain or restore biodiversity and ecosystem services. Putting a price on the services that ecosystems provide is intended to protect those services from exploitation and destruction (e.g. forests can help sequester carbon) and compensating the owner can help to avoid clearing the forest for other economic activities like logging or agriculture.

So what? "Nature credits" that help fund projects to maintain or restore ecosystem services are now being traded and bundled much like other financial instruments. Indeed, some are being bundled, sold and subject to speculation much like what happened with housing mortgages during the financial crisis of 2008-2009. If the speculative value drops, ecosystem services under protection may become under-funded or be sold for other more profitable uses. If the goal is the preservation of the ecosystem functions that support life on the planet, putting the future of these essential services in the hands of speculators may need some re-thinking, regulation or oversight.

Source: Banking Nature, a documentary The Big Business of Endangered Species and the Commercialization of Nature - The Passionate Eye

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