Natural capital valuation with the World Bank
Working pro bono, Ben Groom participated in a World Bank funded project led by Moritz Drupp at Hamburg University to investigate how natural capital should be valued over time, reflecting the growing physical scarcity and degradation of natural capital and biodiversity.
Policy context
Ecosystem services and biodiversity are becoming increasingly scarce globally and yet this fact is not reflected in the way in which impacts on ecosystem services and biodiversity, and natural capital more generally, appear in and are valued by appraisal of public investment and regulations using Cost Benefit Analysis.
The World Bank provided funding to investigate how natural capital should be valued over time. Our research, explained in this paper explains that the relative prices of ecosystem services should increase to reflect the fact that incomes and hence willingness to pay is increasing over time for ecosystem services and biodiversity, and to reflect the growing physical scarcity of natural capital and biodiversity.
What we did
On the back of this work we made a default policy proposal to the World Bank, for inclusion in all Cost Benefit Analysis (CBA) and valuations of natural capital: ensuring that prices used for ecosystem services and biodiversity in CBA increase at the rate of income growth. This work is set out in this paper. We also submitted the same proposal to the public consultation on the US Office of Management and Budget proposal on the valuation of Natural Capital for Natural Capital Accounting purposes and the OMB public consultation on the A4 circular in 2023.
KEY PAPER: Accounting for the incrasing benefits from scarce ecosystems
Drupp, M. A., Groom, B. et. al. (2024), Science
KEY PAPER: Limited substitutability, relative price changes and the uplifting of.....
Drupp, M. A., Turk, Z. M., Groom, B. and Heckenhahn, J. (2023) arXiv PRE-PRINT
