Natural capital monetization and unified environmental intelligence could answer today’s most pressing sustainability challenges in win-win-win propositions.

Sustainability is a top global concern today. Amid intensifying climate change and missed targets, there is an urgent need to address sustainability with novel solutions and new, scalable strategies.

Here is an idea: What if we could convert the natural resources of a country synthetically into money, and utilize the latter to fund sustainable development initiatives to protect these natural resources? 

Known as “natural capital monetization”, this process creates a virtuous circle of sustainable development that nurtures and preserves the natural environment while facilitating economic growth. 

Levelling the playing field 

Natural capital monetization already takes place around the world, though it generally happens on a very limited scale. Note that the lack of scale does place severe constraints on what can be monetized, as it is far easier to monetize and trade a larger volume of carbon credits on carbon markets.

As an example, consider the province of Bali in Indonesia, where the average rice farmer works on slightly more than four hectares of land. The smaller plots of land effectively keep individual farmers from accessing the carbon markets or larger financial markets. 

One way to affect change is to partner with sovereign and sub-sovereign entities for natural capital monetization on a much larger scale. This opens the door to broader market access, bringing with it economies of scale that level the playing field for smaller producers, and ensuring equitable benefits.

Crucially, this also makes sure that the resultant finances go to the correct stakeholders, fostering sustainable farming methods to simultaneously drive environmental and economic progress.

Of course, natural capital monetization at scale does present a new challenge: How can we accurately and efficiently map every tree and every square meter of foliage across vast swathes of land, and do it all year around to ensure records are up-to-date?

Alex Leong, Managing Director (Technology), Temus

The science of environmental intelligence 

Perhaps this is where technology could lend a hand with the development of a scalable ‘environmental intelligence platform’ to support natural capital monetization.

Some factors to consider would be the technical barriers, which are non-trivial:

    • Complex and vast torrents of data sets are collected, analyzed, and stored.
    • Data can come in the form of unique identifiers tagged to individual trees or imagery from satellites that comes in varying resolutions, from multiple generations of satellites.
    • One way to tackle these issues would be to amalgamate the readings from a plethora of data sources like IoT sensors, satellite imagery, and other data repositories. Big data and AI techniques can be used to process the trove of data and derive the requisite insights.
    • Leveraging data sources such as land registries is necessary to pinpoint the natural capital being monetized. This allows the sharing of revenues directly with stakeholders, ensuring that they are rewarded for their stewardship of the land.
    • To take it a step further, solutions should incorporate strong human-centric designs. Beyond simply monetizing natural capital, this ensures that the solutions will be useful to all stakeholders, including the landowners themselves. For instance, farmers could use it to learn more about the condition of their fields. By offering data and social equity, everyone is lifted together.

A unified environmental intelligence platform will enable solutions to the perennial challenges facing the voluntary carbon markets — including the lack of governance and unified standards. When we are able to tackle some of these issues, hopefully we will be able to develop a more standardized carbon trading system where more stakeholders can benefit. 

Shaping the future of sustainability

While carbon credits traded across an exchange are generally at low volumes today, a foundation of transparent and verifiable data can serve to bring more organizations onboard. Done properly, it will allow businesses to confidently participate in carbon markets and put their resources unreservedly into protecting our planet.

Even as public and private sectors work together to address some of the above issues, the solutions that technologists build will play a pivotal role in bringing transparency and a level of data pedigree to the table. Only with a robust data-centric foundation in place will further innovation be possible.

It is my fervent hope that establishing a virtuous circle of sustainable development will further encourage efforts to protect and preserve our environment in APAC and beyond.