photo-1417632993443-302f4897cf67.jpg

News

Environmental financialization: what could go wrong?

Written by Eric Kemp-Benedict and Sivian Kartha via Stockholm Environment Institute on 3/19/2019

The full piece can be accessed here.

Valuation demonstrates how ecosystems contribute to human well-being, but has arguably also encouraged the creation of environmentally-based commodities and tradable financial assets, a process that has been called the “financialization of nature”.

The authors argue that the abstractions needed to make financial assets usable makes them unsuitable for that purpose. They identify some partial exceptions, including tradable permits to place non-specific pressure on ecosystems and socially responsible investment (SRI). However, those exceptions hold only under highly restrictive circumstances.

They further acknowledge that valuation can demonstrate the importance of ecosystems in contexts where monetary values carry substantial weight, but the streams of value are diffuse and in nearly all cases cannot be appropriated. Moreover, appropriation creates an incentive to maximize income-generating services over broader ecosystem function.

Matthew Wisner