Cost effective monitoring and pricing of biodiversity

Companies and banks increasingly want to understand the effects of production and investment on biodiversity and natural capital. There is also a great demand to identify where action can be taken to reduce the negative effects on biodiversity or to turn them into positive effects.

For example, ASN Bank wants all its financing and investments to have a positive effect on biodiversity by 2030. The bank's impact is created through the companies to which it lends money or in which it invests. For ASN, biodiversity is part of its sustainability strategy. ASN wants its investment activities to contribute to the preservation and protection of biodiversity and, where possible, to the strengthening of existing biodiversity. Other banks, such as Triodos, Rabobank and Caisse des Dépôts, formed an alliance with ASN in a Partnership for Biodiversity Accounting Financials (PBAF).

This projects aims to give insights that are relevant for (policy of) governments, companies, and consumers to reduce their negative effects on biodiversity in a cost-effective manner. Taking into account economic principles, all decisions must be based on social cost-benefit evaluations to reach optimal well-being.

The question is: How can global society reach biodiversity goals, like stopping further net biodiversity loss, at the lowest societal costs? This implies that all relevant aspects of biodiversity must be included, and that implicitly or explicitly prices are used in decision-making that equal to marginal abatement costs as well as marginal biodiversity benefits. All decisions should be consistent with these prices, and this requires an accounting system.

This analysis is relevant for policy, but also for companies that want to be part of the process towards biodiversity conservation, and for consumers. We want to develop a methodology that is able to evaluate the impact of economic activities on biodiversity from an economic perspective, which implies that it must provide information that also gives insights in the costs of different measures to reach biodiversity targets. The analysis gives not only information on the question how actions have to be changed to reach global biodiversity targets (like no further loss in biodiversity), but also how institutions and government regulations (including property rights, subsidies and taxes) have to be changed to make these actions profitable within the global market system.