New software puts a price on nature’s loss

From the newsletter

Estonia-based technology firm Endangered Wildlife has launched a platform that calculates the financial value of biodiversity. Named the Biodiversity Valuator, the tool uses artificial intelligence and scientific data to assign monetary worth to ecosystems and species in specific locations. It aims to help governments and companies account for environmental loss.

• The Biodiversity Valuator models ecological functions, and replacement costs and economic dependencies such as tourism, with results presented in monetary terms.

• This could potentially be a help for African countries seeking impact investments or biodiversity-linked funds. 

More details

• If adopted and accepted by the sector, the platform would enable financial institutions, policymakers and corporations to incorporate biodiversity into economic planning. According to chief executive Shana Vida Gavron, the tool places biodiversity on the balance sheet and uncovers the hidden costs associated with species loss. The software is a response to the increasing regulatory interest in environmental, social and governance-linked disclosures.

• Gavron stated that while biodiversity is more challenging to quantify, it is equally urgent. She highlighted that the software allows decision-makers to assess the impact and potential for intervention in financial terms, making the issue more tangible. To illustrate its functionality, Endangered Wildlife OÜ assessed the Great White Shark population in South Africa’s Western Cape. The study, commissioned by the United States non-profit Shark Allies, estimated that the recent decline in shark sightings could lead to losses exceeding $241 million, factoring in tourism, media and ecological impacts.

• The Biodiversity Valuator is already in use. Bwildi, a conservation travel firm, employs the software to generate impact reports for donors. These reports assign a monetary value to the projects supported, providing funders with a measurable understanding of their environmental contributions. According to the platform, one collared lion contributes approximately $1.4 million in ecosystem services.

• The Financial Sector Deepening Africa report on Financing for Natural Capital in Africa reinforces the urgent need for tools like the Biodiversity Valuator. The report emphasises Africa's heavy reliance on natural capital and the continent's significant vulnerability to biodiversity loss. It notes that 60% of Africa’s natural capital has been lost in the past 45 years, yet only 3% of global biodiversity finance flows into Africa. Without mechanisms to value nature in economic terms, these ecosystems remain overlooked in mainstream financial planning.

• The report outlines that establishing a natural capital asset class is essential for attracting private finance. Tools that convert ecological services into measurable, investable metrics, such as the Valuator, facilitate this transition. It addresses key investor concerns regarding returns, risk and verification. The platform bridges this gap by providing credible, standardised valuations, which is precisely what the report identifies as necessary to shift biodiversity from a cost to an asset.

Our take

• Nature underpins both the global and African economies. Approximately half of the world’s economy, estimated at around $44 trillion, relies on healthy ecosystems. Moreover, over a quarter of development finance is directed towards projects that depend on nature.

• Safeguarding natural resources enables communities to better adapt to climate change. Instruments such as the Biodiversity Valuator effectively demonstrate the economic value of nature, facilitating investment decisions, supporting communities and protecting the environment.