At the online session on “Sustainable Finance” at the ETU Initiative Conference organized by EMEA at Sant Pau, Dr. Ralph Chami made an amazing presentation on nature-based, sustainable and shared development. The online session took place on 17 March 2022, and it was moderated my EMEA President Prof. Rym Ayadi.
Dr. Chami is Assistant Director in the Institute for Capacity Development at IMF – expert on fragile and low income states, he is co-founder of Rebalance Earth and we area also honored to have him as a member of the Advisory Boards of the Euro-Mediterranean Economists Association – EMEA and the EU-Mediterranean and African Network for Economic Studies (EMANES, formerly EMNES).
Ralph has developed an innovative financial model for valuing natural capital, including for species such as elephants and whales, and a framework for developing the natural capital markets for ecosystem services.
· In his presentation on nature-based, sustainable and shared development, Ralph Chami explained that current human behaviour assumes a paradigm where the economy exists outside of nature, and we can therefore extract from nature with impunity, and pollute it with impunity. As we are learning, such behaviour is unsustainable, and is leading to two severe risks: climate change, and natural capital risk and loss of biodiversity.
· The truth is that our economies and societies are nestled within nature: if nature grows, we grow, and if nature is stressed, we are stressed. Nature is macro-critical not only to human health but also to the sustainability of our economic system.
· Science tells us that nature is valuable: oceans, whales, elephants, trees and blue carbon assets such as saltmarshes and seagrasses sequester significant amounts of CO2, as well as providing other ecosystem services. We can perform a market valuation of these services: the value of carbon sequestration by a single whale is estimated to be over $2 million. Worldwide, seagrass carbon sequestration services are worth over $1.3 trillion.
· In order to create markets and economies around nature, we need policy action, and a legal framework of the rights, protection, monitoring and management of nature. This can then turn natural assets in to natural capital that can enter balance sheets and therefore change their net worth. Markets will take notice that there is a new class of assets around which they can build services: they can sell the services of carbon sequestration, not the assets themselves, to those that need to offset their carbon footprint. The money from the sale of carbon offsets should then look after both natural assets and the stewards of nature, being local communities and indigenous populations, in perpetuity.