Making investments in natural capital count

Abstract

The disconnect between land managers bearing the cost of restoration and land management, and society benefitting from the ecosystem services flowing from natural capital, leads to sub-optimal investments in restoration and land management. To bridge this disconnect a system involving easement agreements is proposed whereby the issuer of the easement (the investor) is buying the right to determine the management practices on the land from an easement holder (the land manager). In return the marginal change, or additional value generated by the restoration and/or land management, through an easement intermediary, features as an asset value on the balance sheet of the easement holder. This catapults investment in natural capital from the expenditure realm, and the minimisation thereof, to an option of portfolio diversification and value addition while contributing to general economic welfare. In this way it is possible to invest in natural capital and make that count – by accounting for it on an entity’s balance sheet as an asset.