We put a value on land, buildings, roads, power stations and data centres. We calculate the worth of companies from cash flows they might produce decades into the future. Yet what value do we place on a forest that regulates water, stores carbon, stabilises soil, supports biodiversity, cools its surroundings and provides livelihoods to thousands of people?
Usually, surprisingly little. Until somebody cuts it down.
That contradiction sits at the heart of one of the great mispricings of our time. We depend entirely on Nature; in fact, we are part of it. Yet we have built an economic system that behaves as though Nature were a free input drawn from an infinite well.
I felt the absurdity particularly sharply this past summer, watching fields turn brown in England, the Rhine run extraordinarily low in Basel and ancient olive trees struggle in Puglia. Perhaps that is my utopian side, but I would rather help preserve the Paradise we already have than spend our energy preparing for a hellish future.
Can business and finance help make a living ecosystem worth more than a destroyed one?
That question was at the heart of a recent lunch EthicalFin hosted in Milan with Josep Oriol and Tom Hancock of Terra Labs. At a quintessential Milanese establishment dating back to 1696, we brought together a small group of Italian families to discuss Nature-based Solutions and the role private capital might play in scaling them.
The conversation began not with finance, but with a moral question: what obligation do we have to protect the natural environment on which our lives depend?
There is clearly a moral case. What interested me more was whether it needs to conflict with the economic one.
Across Africa, hundreds of millions of people live in rural communities whose livelihoods depend directly on Nature. Forests provide fuel. Land provides food. Natural resources provide income. It is easy for somebody sitting in London or Milan to insist that a forest remain untouched. It is much harder to make that argument to a family living beside it if cutting trees is the only available way to put food on the table.
If destroying a natural asset creates immediate income while protecting it creates none, we should not be surprised by the result.
A dead forest being worth more than a living one is not only a conservation problem. It is an economic incentive problem.
Philanthropy remains essential. Some ecosystems should be protected simply because they matter, whether or not anybody can construct a spreadsheet around them. But philanthropy alone cannot provide all the capital required, everywhere, forever. The more interesting question for investors is whether we can build and scale companies whose economics depend on protecting Nature.
Tom’s experience at BioCarbon Partners (BCP) offered a compelling example. BCP has developed large-scale conservation programmes across Zambia and Mozambique, working with communities, traditional leaders and governments to protect millions of hectares of forest.
What struck me was the alignment. Communities are not passive beneficiaries of conservation imposed by outsiders; they participate economically in protecting the ecosystems around them. Revenues support locally determined priorities such as education, healthcare and infrastructure. Local people are employed as conservation scouts, while satellite monitoring and independent verification provide evidence of what is happening on the ground. More communities want to participate because they can see the model creating value. Organic growth testament of a paradigm that works for everyone.
For an investor, several characteristics sometimes presented as weaknesses of Nature-based Solutions look different through this lens. These businesses take time to build because relationships with communities and governments cannot be downloaded from the internet. Environmental outcomes need measuring because credibility matters. Technical complexity rewards specialist knowledge, while long development periods favour patient capital. Greater scrutiny should ultimately reward higher-quality projects.
The lessons from BCP also help explain the logic behind Terra Labs.
Terra Labs is being built as an operating holding company that backs businesses protecting and restoring ecosystems, then provides capabilities that entrepreneurial companies often struggle to build alone: capital, governance, technical expertise, monitoring, market access, buyer relationships and practical operating support. Shared standards, services and commercial relationships can also improve quality and efficiency across the portfolio.
This matters because Nature does not conveniently operate according to the life of a private equity fund. Forests, soils, watersheds, communities and ecosystems have their own timescales. Permanent capital can allow businesses to develop according to the time needed to create lasting environmental and economic value, rather than an arbitrary exit clock.
Carbon is a mechanism. It is not the thesis.
Carbon markets are one of the more developed attempts to place an economic value on ecosystem services. They remain imperfect, but they offer a practical route for some nature-based initiatives to generate revenue.
A forest, however, is worth considerably more than the carbon contained within its trees. It regulates water, creates habitat, stabilises soil, supports biodiversity and sustains agriculture, tourism and livelihoods. Healthy soils retain water, make agriculture more resilient and can store more carbon. Coastal ecosystems can protect both communities and economies.
The opportunity is therefore much wider than carbon credits. Carbon, biodiversity, water and other environmental markets are different attempts to answer the same economic question.
How do we make preserving natural capital economically more attractive than destroying it?
That question also connects Nature with climate adaptation. How do we make agriculture more resilient to heat and drought, retain more water in landscapes, protect soils from erosion and reduce wildfire risk? Protecting Nature and adapting to climate change are not separate agendas. Very often, they are the same investment.
For decades, we have treated environmental protection predominantly as a cost: something governments regulate, charities fund and businesses occasionally sponsor. But we would never allow a bridge, electricity grid or water network to deteriorate indefinitely because maintaining it costs money. We have effectively been doing exactly that with soils, forests, rivers and biodiversity.
Perhaps our business mindset and accounting practices have simply not caught up with reality.
Nature is infrastructure. Vital infrastructure.
Recognising this does not mean financialising Nature or pretending that markets can solve everything. It means designing economic models in which protecting Nature creates livelihoods, communities share in the value created, companies secure credible environmental outcomes and patient capital supports businesses capable of scaling those solutions.
In a well-designed nature business, financial sustainability should be the natural consequence of creating genuine value. The pun is entirely intended.
At EthicalFin, we continue to explore how commercially sustainable models can channel capital towards climate adaptation, ecosystem protection and Nature-based Solutions. Our family office working group is examining the main barriers to investment and the structures most likely to overcome them.
This article is not investment advice. Any investment opportunity presented by EthicalFin is intended for qualified investors only. Early-stage investments are high risk and illiquid, and you may lose all of the capital invested. Terra Labs is a client of EthicalFin under an advisory and introducer engagement.
EthicalFin hosted this lunch with Josep Oriol (Okavango Capital Partners) and Tom Hancock (BioCarbon Partners) as part of our ongoing work helping family offices deploy capital into nature-based solutions. To learn more about Terra Labs or our nature investment ecosystem, get in touch.
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