How to Valuate a Rainforest? Ask Canopy Capital
Sunday, November 23rd, 2008Earlier this year, I wrote about the Prince’s Rainforest Project website. One of the main aims of that project is to make the world’s forests “more valuable alive than dead”.
To recap, this is what Prince Charles says this about how to save the rainforests:
It seems to me that the central issue in this whole debate is how we put a true value on standing rainforests to the world community – we simply have to find ways of putting a price on them which makes them more valuable alive than dead
Well, one company is attempting to do just that.
Canopy Capital, which was established in 2007, is a company that is attempting to drive capital into rainforests.
They have already entered a partnership with Iwokrama International Centre (IIC) in Guyana in a deal that is believed to be the first of its kind.
How do They Valuate a Rainforest?
Canopy Capital believes that a rainforest should be valuated based on the services it provides. Just as your gas company provides a service, a rainforest also provides a service.
More importantly, a rainforest can only provide these services while its alive.
What Services Does a Rainforest Provide?
Canopy Capital believes that the ecosystem services that rainforests provide us with, should not be taken for granted. The services that rainforests provide include:
- generate rainfall
- cool the atmosphere
- store carbon
- moderate weather conditions
- sustain biodiversity
These are services that we currently get for free, but perhaps we should be paying for them? If all the world’s rainforests were chopped down, how would these services then be provided?
Canopy Capital say:
It would take the equivalent of 50,000 times the daily energy output of the world’s largest hydropower station to evaporate the 20 billion tonnes of water coming off the Amazon each day
“What’s the point of making a machine to capture carbon out of the atmosphere when rainforests do it for free? It’s cheaper to maintain that than to build a new one” says Andrew Mitchell, Director of the Global Canopy Program (GCP) and a partner in Canopy Capital.
Even Prince Charles shares this sentiment. He has described rainforests as “Giant global utilities providing an essential service to humanity on a vast scale”.
About paid rainforest services, Mitchell says “Paying communities and governments to maintain forests for us, like a global utility benefiting the world, will one day be as natural as paying for your electricity bill”.