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www.pwc.com
Prepared as an input to the OECD Seminar on ecosystem service
valuation in public policy 1 February 2013, OECD Conference Centre
William Evison, Associate Director, Environmental Economics,
PwC
Recent developments in the corporate application of ecosystem
valuation and lessons for public policy
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PwC
Contents
Business dependence on ecosystems
The business case for ecosystem valuation
A proliferation of initiatives...
...with increasingly significant results
Lessons for public policy – time to be bold?
2
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PwC
Natural capital
Corporate supply chains depend on ecosystem services
Bio-mimicry
Climate stabilisation
Operating environment
Va
lue
Marketing & Sales
Design
Manufacture
Logistics
Sourcing
Raw materials
Pollination
Fertile soils
Erosion control
Water
3
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PwC
Business locations are reliant on ecosystem services
Pollination
Erosion control
Soil fertility
Pest control
Water quality and quantity
Hydro facility
Erosion control
Urban area
Factory
Forestry
Mine site
Agriculture
Flood control
Water quantity and quality
Freshwater
Freshwater
4
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...and businesses are beginning to realise that the rules of the
game have changed
Then... ...now
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An explosion of corporate interest in ecosystem
valuation
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http://www.cpsl.cam.ac.uk/Business-Platforms/Natural-Capital-Leaders-Platform.aspxhttp://www.cpsl.cam.ac.uk/
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Cost Project increases cost of operation, and requires
additional expenses for each unit of water savings.
Saving
Project reduces costs, and generates additional income for
each unit of water savings Each project has a specific water
saving and timeline
Reducing water consumption at least cost: An application of
water MAC curves
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Justifying natural capital investment: A comparison of the costs
and benefits of engineered vs. Natural capital solutions to
water treatment
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PwC
Market and non-market valuation of threatened wetland sites to
influence regulators and indentify potential buyers of ecosystem
services
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PUMA’s Full E P&L Results
Valuing the full societal costs of environmental impacts: To
identify future risks, inform strategy and improve operational
management, provide radical transparency and to lay down the
gauntlet to others...
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INCYCLE T-SHIRT: 33% GHG SAVINGS
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Site: A B C D E
Water use (m3) 100 1,000 300 800 1,700
Traditional reporting
Site: A B C D E
Water use (€) 50 2,300 700 900 1,800
EP&L values
Site: A B C D E
Water use per
profit (€/100€)
3.7 8.5 11.2 1.5 6.0
Impact intensity by profit
Example: Water use – which factory should I work with?
Improving operational risk management
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What do they all have in common?
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• An objective to positively influence policy-makers
• A push from leading businesses to level the playing field
http://www.cpsl.cam.ac.uk/Business-Platforms/Natural-Capital-Leaders-Platform.aspxhttp://www.cpsl.cam.ac.uk/
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PwC
Lessons for public policy – time to be bold?
• Businesses are ready to engage at scale with market
instruments for conservation.... PES, biodiversity offsetting,
habitat banking, natural capital investments, water quality trading
etc. – enabling policy is needed
• Businesses have engaged with and driven ecological
certification and product standards, but financial returns remain
elusive – regulatory endorsement and green public procurement can
help
• Some companies have moved beyond compliance leaving policy
makers and regulators behind
• Certain leading companies are trying to give timid regulators
the courage to act
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http://www.naturalcapitaldeclaration.org/
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Thank you
This publication has been prepared for general guidance on
matters of interest only, and does
not constitute professional advice. You should not act upon the
information contained in this
publication without obtaining specific professional advice. No
representation or warranty
(express or implied) is given as to the accuracy or completeness
of the information contained
in this publication, and, to the extent permitted by law,
PricewaterhouseCoopers LLP its
members, employees and agents do not accept or assume any
liability, responsibility or duty of
care for any consequences of you or anyone else acting, or
refraining to act, in reliance on the
information contained in this publication or for any decision
based on it.
© 2013. PricewaterhouseCoopers LLP. All rights reserved. In this
document, “PwC” refers to
PricewaterhouseCoopers LLP which is a member firm of
PricewaterhouseCoopers
International Limited, each member firm of which is a separate
legal entity.
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1,000
500
250
100
50
Fiscal crisis
Extreme consumer price volatility
Slowing Chinese economy
Corruption
Terrorism
Unlikely Likely Very likely
Regulatory failures
Asset price collapse
Geopolitical conflict
Extreme energy price volatility
Ex
pec
ted
imp
act
(B
illi
on
US
D)
Likelihood over next 10 years
Environmental risks
2009 2011
Climate change
Flooding
Storms and cyclones
Air pollution
Water security
Biodiversity loss
Economic and geopolitical risks
2011
Source: World Economic Forum Global Risks Report (2009 –
2011)
Environmental risks including water security a growing concern
for business leaders
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The business case for water valuation
17
