8th Global Policy Forum on Natural Capital

Hinzugefügt: 2026-06-09

[00:00:42]Hey, hey, hey.

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[00:17:12]Nakamat.

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[00:24:04]Good morning. Good morning. Good morning everyone.

[00:24:08]Can we get started please?

[00:24:12]Can I call the house to order please?

[00:24:15]Good morning everyone. Hello.

[00:24:26]We are getting started. One, two, three.

[00:24:29]One, two, three. We are getting started now. Please take your seats.

[00:24:35]Good morning.

[00:24:43]Um, good morning, good afternoon, good evening.

[00:24:48]Um a very warm welcome to the AE global policy forum on natural capital to all of you who are um here in Bangkok and uh to all joining us online. I know that there are several hundred people who are registered online and tuning in now uh globally. Um we are so delighted to to that you could join us today and uh and a warm very warm welcome again to everyone.

[00:25:19]My name is Beck Alles shifer and I'm the program manager for the world bank's global program on sustainability GPS. We call it in short GPS all protocols in observed.

[00:25:34]Before um we go into the official opening part of the the session, allow me to say a few words about the global program on GPS on global program on sustainability GPS.

[00:25:48]Uh GPS is um a multi-donor trust fund managed by the World Bank um and generously supported by uh the governments of United Kingdom, Germany and Switzerland. We are so delighted to have some of the the our donors also participate in this in this discussion in this meet in this forum today. GPS is a world bank's technical assistance facility um in integrating natural capital into economic and financial decision making. As you know, mainstream uh economic analysis and traditional metrics such as the GDP do not always include non-marketed and natural capital and ecosystem services into into policy and investment decisions. This is a huge consequential omission affecting people, economies and the planet as a whole. GPS focuses on this systemic failure and aims to help countries integrate the true value of natural capital and ecosystem services into economic and financial decision-making processes. And it um it endeavors to help countries measure in mainstream this into measuring economic pro progress itself and also sustainability.

[00:27:08]Um over these two days you'll hear a lot about natural capital. Just why it matters just a few words about that. As you know all economies are actually embedded in na nature in natural capital and more than half of the global GDP itself is significantly dependent on natural capital and ecosystem services.

[00:27:28]This is particularly the case for many developing countries where nature is foundational to their economic systems.

[00:27:37]GPS research has showed that um for for low-inccome countries renewable natural capital for example renewable natural capital like land forest uh water soil and so forth accounts for about 20 up to 25% of the total wealth of countries compared to about 10% in lower middle inome countries and about 1% in high income countries. For many countries that exhibits high such high dependence on on nature and ecosystem services, uh sectors like agriculture, forestry, fisheries, uh tourism and um associated industries in these value chains um are extremely important into the national economy in terms of providing jobs, productivity, income and and and economic growth. We cannot end poverty in these countries without protecting and safeguarding safeguarding natural capital and nature itself. Recent GPS research as well showed that subs Africa and South Asia for example could be hit um particularly hard by um collapses or declines in ecosystem services losing up to 10% of their uh GDP um by 2030 for example that's for subsaran Africa and for South Asia it was estimated to be about 7%. This is very significant by 2030. However, despite nature's recent um nature's critical role for sustainable economic growth, our research also documented in a change what what you call the changing worlds of nations report shows um very important distinct patterns whereby um really real uh overall wealths per capita for about 150 countries uh increased about by 65% over 25 years since 1995. This is if you just look at it overall wells, that's what it shows. But if you look at renewable natural capital, unfortunately it has declined over this 25 years by more than 20%.

[00:29:51]Um and and for Africa this uh goes up to 44% for South Asia about 30% and about 10% Eastern Southeast Asia uh the region that we are in today. On the other hand, nonrenewable natural capital has has also you know increased globally. So renewable cap natural capital which supposed to actually grow has declined.

[00:30:14]Non-renewable cap natural capital per capita has increased by 30%. This means that we are getting richer per capita in the short term but this it is coming at the expense of actually destroying uh the very basis of our of of life itself on on on on the planet by destroying renewable natural capital. richer but less wealthy growth that destroys nature is flowed economics that could lead to slow days to our common future. So GPS is actually designed to contribute to addressing this global uh challenge and p and uh and will and aims to provide data um knowledge and data knowledge to avoid such catastrophic setbacks at the global level. Over the past five years alone, GPS has worked in terms of supporting countries in over 45 countries around the world, especially in the developing regions in terms of, you know, measuring natural capital through natural capital accounting, valuations uh of natural capital and ecosystem services and mainstreaming this values into policies, investments and financial decision-m processes. So coming back to the AIDS forum uh we are delighted uh to be in Bangkok for this AIDS global policy forum. Um and of course deeply grateful to the government of Thailand for hosting us in this beautiful city and and and country. The global forum as you have noticed brings together analysts, policy makers in the private sector to advance the use of data and evidence on natural capital into decision-m processes. I said is this is the last the ACE forum is the last of the the series under what we call the first phase of GPS and as a result we are covering very important critical parts of what we have been doing during the the last five six years and um in day one the focus will be on investments and policies and day two will particularly zoom down to looking at nature finance in both case both will be able to discuss um the progress in terms of embedding integrating natural capital and uh and its values into future directions and the future directions for mainstreaming natural capital into decision-m processes and it will provide a road map for what we ought to be doing during the next phase of also GPS the global program and sustainability that we call GPS.0 Following this um official opening, we'll kick off each day with a inspiring keynote presentations. We are delighted to have two distinguished um speakers who will be providing keynote addresses for the forum. Uh this will be followed by several lightning and enlightening panel discussions and dialogues over two days. Um so you are all very welcome.

[00:33:17]Thank you very much for joining us uh today for this for this forum and um and we'll now proceed to the rest of the official opening process and I will hand it over to Craig, my colleague Craig.

[00:33:30]Thank you.

[00:33:47]Thank you so much and welcome once again uh to the global policy forum. My name is Craig Meisner. I'm a senior environmental economist at the World Bank and I'm uh really happy I'll be moderating the next couple of sessions uh with you and what I would like to do is just turn to the formal opening right now which includes introductory remarks uh from several distinguished uh speakers uh who will join us on stage. I would actually ask like to ask them to come up now. uh Valerie Hickeyi uh Arnong Sonbat and Doc Dr. Roger Heath.

[00:34:22]Um and I'll just do some brief introductions uh with them. And first I begin with Dr. Valerie Hickeyi. Uh she's a director of environment at the World Bank. She leads a global team that leverages data, knowledge, and partnerships to ensure that the World Bank Group's public and private sector investments in nature, natural resource management, and pollution management and circular economy generate more and better jobs uh in more places and in reducing poverty. Since 2003, she has led teams in Latin America, uh Europe, and Central Asia, and East Asia Pacific on issues related to climate change, sustainable forestry management, and agriculture, pollution management and environmental health, environmental economics and environmental risk management.

[00:35:08]Our second guest is Dr. Ara Chong Sakondat who uh currently serves as the acting senior adviser on policy and planning and as a director of macroeconomic strategy planning at the office uh of national economic and social development council central planning agency under the prime minister's office in government of Thailand. with more than 25 years of working working experience at NESDC. She has been engaged in macroeconomic analysis and forecasting and provides policy recommendations as well as uh drafting the five-year national economic and social development plans in the area of macroeconomics to the government of Thailand. And finally, uh Mr. Roger Heath. He's the deputy director of international uh nature, climate, and development at the UK Department of Environment, Food and Rural Affairs, or DERA. He has 18 years of experience in leading complex policy, finance, and program delivery across climate, nature, agriculture, and international development. He has an extensive international experience including uh leading largescale overseas development programs and diplomatic postings in uh Ethiopia, Lebanon, Malawi and representing the UK in multilateral forums. Uh his work focuses on nature finance, sustainable food systems and land use bringing together uh policy uh public investment and markets to deliver uh real world impact. And with that, um, we'll begin our opening. And I would like to turn this over to Valerie, uh, for her opening comments.

[00:36:44]Good morning everybody and good afternoon and good evening to our folks online. I have to say I am just so excited to get to sit among so many friends in this wonderful Kingdom of Thailand. to continue this wonderful momentum that we're on to make sure that nature for ecosystem services are counted because we all know this. We heard from Michaela this morning. If something isn't counted, we're not going to care about it.

[00:37:23]We're not going to take it into consideration in our decision making. We know that. We haven't. It's partly why we're in the situation we are today.

[00:37:33]But when it comes to counting and making decisions, I have to admit I'm on a campaign to make boring great again.

[00:37:43]Because the truth is what we need to influence are those boring parts of government that have existed forever.

[00:37:50]It's the system of national accounts that are the everyday decisionmaking infrastructure within government.

[00:37:59]It's about figuring out how do we make sure we're not talking about creating parallel systems or trying to be innovative, but instead tapping into plugging into what already exists so that the data we're providing under natural capital accounts feeds into the system of national accounts and arrives at the desk of the Minister of Finance so that she knows how to read that D. It's part of her daily briefing.

[00:38:30]It's part of how she makes decisions.

[00:38:32]This is about making natural capital accounting as boring as we need to make it so that it is part of that decision making.

[00:38:43]And the good news is when it comes to data and decision making, it is a good news agenda.

[00:38:51]Let's just talk about data for a minute.

[00:38:54]So we're increasingly in a world where data is becoming AAA.

[00:38:59]It is much more accurate than it ever was.

[00:39:03]In 2000, there were fewer than 30 satellites that could provide geospatial data at a 30 meter resolution. Here in Thailand, if you wanted to get satellite information on a piece of the forest, you could get that data every 16 to 26 days.

[00:39:27]Today, with more than a thousand satellites in the air, many of which, particularly the commercial satellites that are providing geospatial data at less than a one meter resolution, you get that same data on that same piece of forest here in Thailand.

[00:39:43]Not every 16 to 26 days, but 16 times a day. That's the difference. We have more data than we've ever had. But it's not just that our data is more accurate. It's that our data is more accessible.

[00:39:58]AI means that that data can be translated into local languages at a at the push of a button. It can be shared across communities, across countries, and even across continents in real time.

[00:40:11]And It's more affordable than ever. And that matters to make sure that natural capital accounting isn't simply something that upper middle income or advanced economies get to do. It's something that every country can do.

[00:40:27]But why are we counting at all? Why does nature matter to the Minister of Finance? Why do we want to make sure she has access to this data in a way that helps her make decisions?

[00:40:40]It's because ecology is economy.

[00:40:44]Yesterday was World Ocean Day. The ocean is economy.

[00:40:50]It's still the most reliable, affordable transport system in the world. That's why 80% of trade comes by sea.

[00:41:00]It's why for the four billion people who suffer from water insecurity at least one month a year, four billion people who go thirsty one month a year, desalinization is becoming a lifeline.

[00:41:16]It's also an engine of jobs, more and better jobs. Just in the fisheries and aquaculture value chain, 260 million people put money in their pockets and put food on their table. And by the way, food on everybody else's table because 20% of the animal protein we consume globally comes from the ocean.

[00:41:36]For small islands, for people in small islands, for people in coastal states, that's 80% of their animal protein. And these are markets that are huge. The seafood market alone is worth $425 billion dollar a year. The ocean is economy.

[00:41:54]That's why counting whether or not the ocean is healthy and translating that data for decision making is absolutely vital because if we don't know how healthy it is, if we don't know when that health is deteriorating, we are putting our entire global economy at enormous risk.

[00:42:17]That's why we're here. That's why we're going to be spending the next few days together to share the lessons and the ideas and the innovations across the 35 countries that GPS works with. We're going to hear from incredible partners and the global platform that we have to really share experiences not just around why we do this. We all know why we do it, but how we do it because it's in the how that we have impact. And that's what GPS is all about. accelerating impact for people, for profits, and for the planet. And especially, it's about helping families get out of poverty and into the middle class in exactly those natural landscapes and seascapes that they call home. Because as Bele said, our job at the World Bank Group is to end poverty on a livable planet. And the truth is there is never going to be a world without poverty in a world without nature. Thank you.

[00:43:23]Thank you so much, Valerie. And now I think we'll turn to Dr. >> Good morning distinguish guest, ladies and gentlemen, and also those who are online. First of all, I would like to thank you the World Bank for organizing this event and for inviting NSDC to share in the opening session and also choosing Thailand as a host country. It is very great pleasure and an honor to join all of us today to discuss a topic that increasingly shape the future of economies around the world. Natural capital and how we can transform our understandings of nature into the meaningful impact through policy finance and innovation. For many decades, economic growth and environmental conservation were often view as competing objectives. Developments was major by how much be produced and consumed. While the value of ecosystem and natural resources remain largely invisible in our economic system. Today the perspective is changing. We are beginning to recognize a simple but profile reality. Nature is not external to economy. It is the foundation.

[00:44:43]The challenge is therefore not merely to protect nature but to integrate nature into the way we make decisions.

[00:44:52]This is what I mean by moving from inside to impact. Thailand provides an interesting example of this transition as we recognize that sustainability is not only illog ecological issue but also an economic necessity. We put natural resources and environmental sustainability as a top priority in our long-term national strategy and also the five-year national plan and realize the effective management of natural resources and sustainability is a key factor in enhancing productivity, competitiveness and uh sustainable growth.

[00:45:31]Nature should not simply view as something we extract from. It should be viewed as a source of innovation, knowledge, and a new economic opportunities.

[00:45:42]As the global economy transitions towards sustainability, I see four major opportunities for Thailand where natural capital can become a powerful engine of growth. First is sustainable agriculture and food security. Thailand is already one of the world's leading food producers and exporters. However, climate change, water scarcity, and land degradation pose increasing challenges to agriculture productivity. Future competitiveness will depend on producing more with fewer resources. Precision agriculture, biodiversity friendly production systems and climate smart technologies can improve productivity while protecting ecosystems.

[00:46:28]Second opportunity is bioeconomy and biotechnology sector. Thailand's biological diversity provides a variable platform for innovation in bioeconomy as well as advanced manufacturing.

[00:46:43]The third opportunity lies in sustainable tourism and nature-based experiences. Tourism remains a cornerstone of Thai economy. Yet the future of tourism will increasingly depend on environmental quality and ecosystem integrity.

[00:46:59]to travel around the world while becoming more conscious of sustainability and authenticity.

[00:47:06]The fourth opportunity is perhaps the most transformative nature-based solutions and ecosystem service markets.

[00:47:14]Thailand's forest, mangroves and coastal ecosystems have significant potential to contribute to climate mitigation while creating new source of income and investment.

[00:47:26]One important commitment is Thailand support for the global 3030 framework which seat to conserve at least 30% of the world's land and marine area by 2030.

[00:47:39]At the same time, Thailand has extra very ambitious climate goals including achieving net zero greenhouse gas emissions by 2050.

[00:47:50]To support this transition, the Thai government requires coordinated action process multiple policy areas. First, we need stronger national climate target with commitments to reduce net greenhouse gas emission by 47% below 2019 levels by 2035.

[00:48:11]Second, we must accelerate the transition towards renewable energy and lowcarbon technologies. Thailand's long-term strategy projects renewable supplying around 74% by 2050.

[00:48:24]Third, we must strengthen sustainable transportation and energy efficiency initiatives across all sectors. Fourth, Thailand is developing carbon pricing mechanisms as a key marketbased mechanisms to encourage emission reductions together with accelerating the climate change legislation as a comprehensive legal framework for climate governance.

[00:48:51]And lastly, we must support industrial decarbonization together with green financing. These include green bonds, sustainability link finance, biodiversity credits, carbon markets and innovative public private participations.

[00:49:08]The objective is clear to ensure that protecting nature is not only environmentally responsible but also economically rewarding.

[00:49:18]Yet achieving such ambition and zero emission goals requires more than good intentions. It require better measurements.

[00:49:26]Traditional economic indicators remain important but they do not fully capture the value of ecosystems or the cause of environmental degradations.

[00:49:37]Natural capital accounting can thus help bridge this gap by making nature visible within economic systems. We thus realize the importance of incorporating natural capital accounting into our national planning and decision making. Ladies and gentlemen, the transition toward a nature positive economy is one of the defining challenges of our generation.

[00:50:01]What we need now is implementation.

[00:50:04]We need to move from awareness to action, from measurement to investment, and from insight to impact. Thailand's commitment to conservation and climate action provide a strong foundation, but the journey ahead will require collaboration across governments, businesses, financial institutions, researchers, and local communities. If we succeed in aligning policy, finance and innovation with the value of nature, we will not only protect our ecosystem for future generations, but we also building a stronger economies and more prosperous societies. Thank you very much.

[00:50:56]>> Thank you very much, Dr. S. Uh it's uh was really inspiring actually. Uh it's great to see the Thailand's commitment.

[00:51:03]I think that that's it's really great to hear. I think I'm hoping that we'll hear more of that over the next few days as well. Reinforce that. Um finally, uh Dr. Roger Heath.

[00:51:22]>> Morning everybody. Thanks Craig. I've been upgraded to Dr. Roger Heath, which is great. Unfortunately, I am not I'm just a standard mister, but I'll take it for today.

[00:51:31]Morning everyone. It's a pleasure to be here and to reflect on how we move from insight to impact because as we just heard, we're no longer short on of insight. We can measure, map, and model the value of nature with far greater precision than even just a few years ago. So the real test now isn't whether we understand the problem. It's whether we use that insight to shape decisions about what we prioritize, what we finance, and what we build. And that's not just my view. The recent ITBZ business and biodiversity assessment launched in Manchester in the UK brought together thousands of studies and experts from over 150 governments and delivered a clear message. We already have the data, the tools and the methods needed to act. The challenge now is implementation. Being clear about what information we need to act and when we know enough to get on with it. Because this matters. Nature isn't peripheral.

[00:52:27]It is the critical infrastructure underpinning our economies, our livelihoods, and our well-being. And yet, the global picture is stark. The latest changing wealth of nations shows that while human and produced capital have grown, renewable natural capital has declined. And that isn't an abstract problem. In the UK, our recent national security assessment identifies nature loss as a systemic risk to both our security and prosperity. And I can tell you as as a person whose team published that report, we've had more interest in that report in the UK than anything my department's uh published. So, it's really landed with the public and parliamentarians.

[00:53:10]But this is not just about risk. It's also about opportunity. Investing in nature supports growth, creates jobs and strengthens resilience. In the UK, nature related sectors are already generating billions annually and the global potential is far greater. So the challenge is actually quite simple, even if delivering it isn't turning insight into action and embedding natural capital into the decisions that shape our economy. I'd like to give a few UK examples. So through our Treasury's green book and our natural capital guidance, we're increasingly reflecting the value of nature in appraisal and investment decisions. And the UK's Office for National Statistics natural capital accounts give us much stronger evidence base, helping us measure what matters, track progress, and improve accountability.

[00:54:03]But recognizing value is only part of the job. We also need to shift financial flows public and private towards nature positive outcomes and in a tighter fiscal environment that means using public finance differently. So the UK is moving from a traditional donor mindset to an investor mindset focusing on partnerships impact and leverage particularly private capital. That means creating the right conditions for private investment to grow with confidence and integrity.

[00:54:35]The UK's biodiversity net gain scheme is one example of this where developments are made more nature positive while supporting a growing market for biodiversity units and we're already seeing hundreds of habitat backs emerging across thousands of hectares.

[00:54:51]Alongside that, we're investing in frameworks that underpin credible markets through the British Standards Institution. We're developing UK nature investment standards, helping provide consistency, transparency, and trust while guarding against greenwashing.

[00:55:07]We're also using public finance to crowd in private capital through schemes like landscape recovery, supporting largecale, locally led ecosystem restoration.

[00:55:18]Internationally, we're working with partners to align financial flows with nature positive outcomes, including through the Biodiversity Finance Initiative and the African Natural Capital Alliance. And we're a long-standing supporter of initiatives such as the task force on nature related financial disclosures, helping embed nature into risk management and reporting.

[00:55:38]But despite these efforts, this is not something any government can deliver alone. Moving from insight to impact means embedding nature into decision- making everywhere across governments, financial institutions and businesses into investment strategies, supply chains, risk management and public policy. And it means working collectively, sharing experience, building consistent approaches and ensuring that progress in one part of the system reinforces progress elsewhere. And that's why we value our partnership with the World Bank on the waves and now the GPS program as a strategic delivery partner helping to shape enabling conditions, inform major investments and support implementation on the ground. Programs like GPS are already informing billions of dollars of investment across the World Bank Group and demonstrate the potential of the bank and the wider multilateral system to scale impact much further. So to wrap up, we have the evidence, we have the tools, and we have real momentum. And then task now is to act and to act at scale. And I really look forward to hearing about how we're going to do that over the next few days. Thank you very much.

[00:56:51]>> Okay. Thank you so much for uh the opening speeches. Um I would just like to congratulate and thank you all for your opening speeches. And we're going to now over to the keynote speech. So, your job is done for now. Stage left.

[00:57:06]Thank you so much.

[00:57:12]>> Yeah, in the interest of time, I think that we might be able to start uh maybe with the keynote and um I think we'd just like to keep things going. So, um I'd like to uh call Dr. Nicola Ranger up to the podium. uh just to in by way of introductions she is the executive director of the earth capital Nexus and professor in practice of natural capital risk and finance at the grant research institute on climate change and the environment at the London school of economics and political science. She leads uh interd disciplinary research and policy engagement at the nexus of finance, investment, natural capital, resilience and sustainable development with a global focus. Her research focuses on integrating climate and nature risks into financial decision-making, developing innovative financial instruments, green fiscal policy, debt sustainability, and mobilizing investment for sustainable development. And so now I would like to turn it over and invite Nicola to the stage. Thank you.

[00:58:20]>> Good morning everyone. It's a huge pleasure to be with you today and uh hello to folks online as well.

[00:58:27]Um wow, what a what an honor to be here as part of the global program on sustainability. It's a it's really a program that does amazing work all over the world and I'm I'm so um excited to hear about that over the next couple of days. So I've been asked to give some initial framing remarks and I really want to build on one of the themes that came out of the the last um discussion and also the the theme of this conference about insight to impact. So how can we take this fantastic work in measurement and move it into implementation and particularly investment mobilization. So in my work I particularly look at the money side. So I work with ministries of finance, with investors, with banks and others to try to bring all of this great knowledge into action into to real investments.

[00:59:18]So I'm and I'm I'm not required to do this as a British citizen, but I thought I'd do it anyway. Start with a quote from the king.

[00:59:28]So So this was a a quote from his recent speech um to the US Congress in April.

[00:59:34]And he said amongst a 40-minute speech um our generation must decide how to address the collapse of critical natural systems which threaten more than the harmony and and essential diversity of nature. We ignore at our peril the fact that these natural systems nature's own economy provide the foundations to our prosperity and national security. Now why did I think this quote was so important? Well, obviously, you know, if we're here, we we're bought into this statement. But I felt that the fact that, you know, someone of of this seniority was making this point at a time in the world of great volatility and uncertainty and still talking about why nature is so important was was really a a key moment. And I think the fact that it really reflects that at again this time of volatility, of many many issues, a recognition that actually The erosion of natural capital is one of the drivers of volatility and an increasingly important driver that we'll see over the next decades. So the need to even in in a moment of difficulty to really recognize and invest in in protection of natural capital.

[01:00:51]And this topic of uh critical natural systems is one I'm going to come back to um throughout this keynote. And Actually, if I just go back to this wonderful picture. So, um, for those of you from the region, you might recognize this as the Meon River. I want you to think about that topic of critical natural system. So, what for you is a critical natural system? I'm going to talk about this in a moment, but just try to visualize for you what would you see as a critical natural system in your own region or globally.

[01:01:23]Now here is a system actually that for from my own country we I would regard as a critical natural system. And so this picture here is of an algal bloom in Loch Nay which is one of actually our biggest water body uh in the UK.

[01:01:41]So this is a water body for the last three years has seen an unprecedented algaal bloom toxic algo blooms that is so vast you can actually see it from space.

[01:01:52]So why you we heard from Roger Heath all this fantastic work that's happening in the UK you know why when we have these systems of measurement these great integration into our fiscal policy are we still seeing these types of uh events and really it's because there is a the we're measuring nature but it is still invisible in many areas of economic and financial decision- making. So in this case here in the UK this um al bloom is driven by um runoff from agriculture into the the lake as well as issues around wastewater treatment. Uh it's it's in this particular part of the UK there's a big focus on agricultural development. So this is one of the consequences of that. It's actually also linked to the removal of the forests around the lake over many decades which has led to more runoff into the lake from the water. So all this increased runoff from agricultural land is pushing particularly fertilizers and others into the lake and leading to these toxic algal blooms. So what's going on um in general and I I've got two other quotes here again from a couple of British people so apologies in advance for that.

[01:03:06]one um very famous in the UK um Sapatha descriptor who led our um review of the economics of biodiversity in the UK a couple of years ago now and he talked about the problem of models which I'm going to touch on as well and the fact that these macroeconomic models which are used to underpin many types of economic and financial decisions do not incorporate nature routinely.

[01:03:30]So he talks about you know why that is.

[01:03:33]Um he talks about so nature entered macroeconomic models in an inessential way in the 1970s but still the basic assumption of these models is that the human race can overcome nature's scarcity um and uh basically break through the constraints of nature. So we can basically substitute nature with other things. So that's a core assumption of many of the models that are used.

[01:03:57]That assumption is not the case.

[01:04:00]And we can talk about the evidence for that. Going back all the way to the 1930s now to John Maynar keynes who was actually very involved in the setup originally of the World Bank and the IMF. Even back to the 1930s he was talking about the fact that nature is missing from economic and financial policy. So he talked about the inappropriate inappropriate unappropriated splenders of nature have no economic value. we are capable of shutting off the sun and the stars because they do not pay a dividend.

[01:04:33]So you know even back to the 1930s we realized that this was a big issue. So what do we do about it?

[01:04:41]So just to give you some sort of statistics again around the the scale of the issue and I'm again talking here from a very sort of financial perspective. So we know from the recent UNEP uh report, state of nature finance report that um about 7 trillion a year of financial flows is still going into areas that are damaging to nature. Part of that is actually is public subsidies.

[01:05:04]So at least around 2.4 trillion of that is public subsidies going into things like agricultural policies, um fossil fuels, etc. I've seen numbers as high as 7 trillion, sorry, 5 trillion or more for these public subsidies. Only about 1% of publicly listed companies are mentioning biodiversity in their disclosures. So this was a conclusion of the recent ITB best report that um Roger mentioned in the beginning and we've done some recent work looking at the globally systemically important banks. Has anyone heard of a globally systemically important bank? So these are the two big to fail banks, the ones that were sort of identified after the global financial crisis. Um of which a number of those are from from the region in Asia. So 29 big banks, only very very few are even monitoring risks related to water, let alone nature overall. So of those they they're beginning to talk about it, but actually including it in their pricing of risks in their investment decision- making is very very low. So there's a big gap between the measurement and the implementation of this in terms of actually steering financial flows.

[01:06:19]So I want to talk about then is how do we go from measurement into investment in particular and one of the key lenses I want to talk about is the lens of risk um which isn't a sort of standard way of looking at it in terms of natural capital accounting but I think is increasingly important particularly when you start talking about finance applications.

[01:06:39]So why do I want to talk about risk? So if you look at for example how does the IMF think? What gets the IMF out of bed?

[01:06:48]It's macrocritical risks and I'll talk about their definition in a moment. What gets central banks out of bed? It's when we talk about financial stability and monetary policy implications. So we need to speak that language with investors.

[01:07:01]They want to see where are assets being underpriced and where is that underpricing lead to both a risk and an opportunity. So again it's there's some translation that's needed there and I think we would all agree that actually nature is the biggest underpriced asset in our economy and the biggest underpriced opportunity. So I want to focus there in in this talk. So I've got three main areas I want to talk about.

[01:07:24]So one is the evidence around nature as a macroeconomic risk.

[01:07:30]Two is about then how do we bring to embed that into decisions and I'll talk about three examples from our own work.

[01:07:36]And then finally, how do we link this to investment pathways?

[01:07:42]So firstly on the risk side. So I mentioned critical natural systems. So what do I mean by critical natural systems? So there's been a number of um definitions that have been proposed uh in in the academic world. So n natural capital that's responsible for important ecosystem functions or environmental functions which cannot be substituted.

[01:08:03]So back to this important point about substitutability.

[01:08:06]Um the recent really landbreak um landmark paper by um Chaplain Kramer and I know some authors in the room here also looked at how do we measure this globally our critical natural capital.

[01:08:19]So they look at critical natural capital as those um semi-natural terrestrial and aquatic ecosystems which are maintaining 12 of nature's key uh nature's contributions to people. 90% of those and they find that actually that's concentrated in particular land areas.

[01:08:36]So these are really important um contributions. Now how does the IMF think about this? Um so the IMF which is not talking about nature but in general what things are macrocritical to the IMF talks about macrocritical as things that have the potential to affect domestic or external stability. So this stability language is something I'll talk about today.

[01:09:01]I think this is something that for us interested in natural capital is something that we need to really focus on like how do we show that this is not just valuable but macritical that it's essential for our growth for our poverty alleviation but also for stability and again Roger earlier on mentioned the report that was put out earlier this year from UK government on on um national security nature and national security and the reason why that had so much traction is because it really looked at this critical risks perspective.

[01:09:36]So what does this how do we value nature from a financial perspective? I think one of the the key things that um we've found researching in this is that actually when we look at how we measure the the value of natural capital, we're often not picking up these critical levers into the financial sector and the wider economy. So we've tried to it's you know it's a very very complex web tried to just illustrate it here. So for example what does it mean in terms of our global supply chains? What does it mean in terms of revenues? What does it mean in terms of inflation on the finance side? What does it mean in terms of sovereign debt? How can we calculate that? And what we find when we look into this is that these important transmission channels are very interconnected and have the potential to compound and amplify and cascade globally. So actually this value of natural capital is as we know foundational to our economy and being and actually cascading through the entire economy and the entire financial system. So how can we measure that wider value of natural capital? Actually the the central banks have been really leading the way on this. So a couple of years ago uh the network for greening the financial system put out a fantastic um set of reports around the relevance of natural capital to the financial system. Um this picture here is by Frank Elderson who's on the board of the European Central Bank. We work very closely with the European Central Bank on these issues at the moment helping them to value the natural capital to the European financial system. But what's important here is that you can see these what we call these transmission channels through from nature both physical risks associated with nature but also the transition risk. So this is how policy can impact on the financial system looking both at the micro scale. So what does it mean in terms of um jobs? What does it mean in terms of specific businesses? But then also up to the macro scale. How does it impact prices?

[01:11:38]How does it impact labor productivity?

[01:11:40]how does it impact on fiscal balances?

[01:11:42]So they put together a framework to do this and now many many central banks around the world actually spearheaded um by the Malaysian central bank was one of the first central banks um to do this analysis um really putting numbers on this economic dependency of our financial system.

[01:12:00]So, so this I think is a really important starting point to to start to build that wider narrative around the importance of nature to finance.

[01:12:10]I want to pick up an example here about to really try and capture this value in some numbers. So, the World Bank put out recently a fantastic study looking at the value of the Congo basin. Um so this was a report that came out last year and estimated the value of the Congo basin um ecosystem to be around 1.14 trillion a year.

[01:12:35]So how was that broken down? So around just over a trillion of that was the carbon retention value. So this is a global value of the carbon stored in the Congo rainforest to the whole rest of the world um based on a social cost of carbon and then estimated a domestic um value of around 8 billion a year in 2020 which comes from issues around uh or values around sediment retention, the wood produce, the food production, tourism.

[01:13:09]So we've been thinking about what are the wider values of this and trying to put some numbers on this. So this plot is actually one that's very much hot off the press um produced by one of my my team um Emma O'Donnell who looks at the the green water value of nature in the Congo basin. You might have seen another fantastic report put out by the World Bank last year um Richard Demenia and team which looked at particularly at green water. So we've taken that data set and looked at if you estimated the value of that green water from the Congo basin, what would be both the value for Africa but also the global value. Um so we find that um the direct benefit of that um green water is around 30 billion a year in terms of GDP of the Congo basin countries. So this is so for those of you that may not have come across the concept of green water, green water comes from the evapor transpiration of the forest. So the forest lead to evapo transpiration and then that rains and many economic activities are dependent on that. Now this is a very conservative estimate because it doesn't take into account for example that a lot of this rain then flows through the rivers and powers hydropower which powers much of Africa. So for example um the the rainfall from the Congo bas is one of the major sources for the Congo River and the Zambzi River. And the Zambesi River in particular is important to hydrop power across many countries of southern Africa. So around um two to three gigawatts for the Congo basin, about five gigawatts um for um the Zambesi, but a potential of well over a 100 gawatts of electricity production.

[01:14:54]So there's a massive massive value um of the Congo rainforest.

[01:15:02]But then there's actually an even bigger global value. So we've shown that you know actually globally and I'll show you the statistics in a minute we get trillions of value from these rainforests. But even if you look say at just supply chains so DRC holds seven around up to 70% of global cobalt reserves. So in terms of critical minerals again this rainforest the power generated by this rainforest those wider EOS ecosystem services are absolutely enormous and macritical globally to our future economy.

[01:15:38]So how do we begin to capture this wider value of again another sort of link to this we then looked at what is the global value of just literally again the rainfall. So doesn't take into account these wider benefits.

[01:15:51]These numbers are very very small but this uh so I'll read out a few of them but this shows this figure here looks at what is the percentage of national GDP which is dependent on forest green water again using the d same data set that the world bank used in their recent study and what we can see uh for example in the region here Indonesia about 5% of GDP is dependent on this green quarter.

[01:16:22]So over 60 billion a year. Vietnam around 25 billion a year. For many African economies, greater than a 20% dependency on green water. But this isn't just an issue for um these countries. For China, we found that about 1 trillion of GDP is dependent on green water from its own domestic forests. And then if you look at global global forest about an additional one trillion in terms of supply chain dependencies for China for the US as well one trillion in dependency both from domestically but also from supply chains. So these are an absolutely enormous value and again this is conservative because we're only taking into account the rainfall enormous values from nature. So, how do we bring in this enormous value into how ministries of finance are thinking about this? How do we turn it from being a nature from being a nice to have and something that's good for tourism and wood into seeing this as this essential foundation to our economy. So, I'm really hoping that we can get into that today and really looking forward to to hearing about it. Just a couple of examples now. So um in the UK coming back to my own country we looked um at this and we did one of the first um nature risk assessments for the UK's economy.

[01:17:49]So the first thing we had to do was look at how do we translate value into risk.

[01:17:56]So one of the first things we looked at was bring together scientists, financial specialists, government officials to look at what does a risk inventory look like for the UK. So in the UK we have a risk register a national risk register.

[01:18:09]I'm sure many countries have the same.

[01:18:12]And we looked at in using that same framework what are the key risks. So you can see here 29 key risks that we came up with amongst the scientific community.

[01:18:25]So some of the risks that are most likely and highest impact are things like the link to zunotic diseases.

[01:18:32]Um the issues around soil health decline and how that impacts on our agricultural system but also issues here around global food supply chain. So the UK is very dependent on global food supply chain.

[01:18:46]So very vulnerable to things happening in the rest of the world.

[01:18:50]issues around um critical minerals again that I've mentioned, issues around ocean acidification all create these critical risks to the UK's economy which are currently not on our national risk register.

[01:19:06]So we then looked at how do we model this? How do we build this into our macroeconomic models that are used in the UK? So to do that we developed a set of scenarios.

[01:19:18]So we looked at three scenarios. This is just one of them. So we looked at a domestic environmental degragation scenario. Um a health related scenario that picked up the issues around zunotic diseases. Um and we looked at a supply chain scenario. So this is the supply chain scenario. So for this scenario we looked at how issues around soil health, water quality, exploitation of fisheries, um bofuels impacts um impact on our global supply chains and how they impact on the UK. And again, we did this by bringing together scientists, financial specialists. We actually worked closely with the Bank of England and something called the Climate Financial Risk Forum, which is where the Bank of England has a peer learning network with um financial institutions in the UK and started to put numbers on this and looked at what's what are the most likely scenarios.

[01:20:10]And what we found was some pretty big numbers that hadn't really been considered before. So we found for example uh for the international scenario that I just mentioned potentially a 6% reduction in GDP from a big nature related shock to the UK's economy. Actually the biggest shocks were the health related ones. So for this we found more than a 12% potential reduction in GDP. And for the UK these shocks are bigger than the global financial crisis um and and bigger than the the COVID shock. And I think what's important here from the perspective of what we're talking here around measurement is on the right hand side it shows the different financial risk channels that we me that we modeled um and things here the types of feedbacks that we're including. So obviously price effects we're looking at but also looking at the public finance aspects. So how does for example constraints on water supplies lead to increases in um uh public expenditure then in the UK we actually provide water will tank water to people that have water supply issues. So that's a big cost to the public balance sheet um issues around um heat related effects that are amplified by the removal of nature from our cities um air pollution effects. So we capture all of this and all of these different transmission channels um in this analysis.

[01:21:38]So this is sort of one example and one of a growing number of examples around the world. Um so I won't read out all of these but we're seeing this huge momentum now all of this new analysis and you know much of that coming from the global program on sustainability and their fantastic work. I've particularly picked out here some analysis that have been led by central banks around the world. Um so for example the the ECB has found that 75% of EU bank lending is highly dependent on at least one ecosystem service. Um the Deutsche Bank so this is the central bank of Germany um has found that 1.7 trillion in corporate lending um is highly dependent on waterbased services. There was a fantastic analysis by Bon de France that came out just a couple of weeks ago that really picked up um both the domestic but also the international aspects of this and actually picked up this issue around critical natural systems. So it particularly talked about the importance of productive land in France and how that's a critical natural system for the French economy and its agricultural sector.

[01:22:47]Um we've done some analysis recently looking at sovereign debt and sovereign borrowing costs. So my one of my team Alex Woollenweber led this study um looking that found that around 20 25 to 70 basis point um increase in in costs related to environmental degragation particularly for low lower income countries. So this macrocriticality is becoming really clear now in the numbers just to give a couple more examples. So at the moment one of our big engagements is in Uganda.

[01:23:24]Uh so we've been working in Uganda to look at what we call a KPI linked approach. So we identify particular KPIs um with the government and this is in partnership with systemic and nature finance um and look at what is the the fiscal benefits of those KPIs and for Uganda is a country that um has very rich um biodiversity and is very exposed to droughts and to flooding. So we particularly focus on that and the link between nature and flood risk and drought risk.

[01:24:04]I won't go into the modeling that we do but we model a number of different transmission channels through from drought and flood risk up to the macroeconomy level particularly looking at issues around revenue. So export revenue related to coffee and bananas are particularly important in Uganda. Um we look at the links to investment to balance of payments. Um this is very much ongoing work. So the numbers that you'll see at the moment is only capturing a part of this um but still showing some very significant results.

[01:24:34]So I won't go through all of the results but one of them that we've particularly looked at is around agriculture and how investment in agroforestry can improve um uh fiscal space revenues um growth around the agricultural sector and particularly reduce its vulnerability to droughts. Because what happens in big droughts is that it impacts on the agricultural sector and you see revenues drop to government um from that um uh revenue stream. So we found that a big drought can lead to around a a about a three billion impact on the economy and we can save just from looking at agroforestry we think up to around 16% of that um with agroforestry investments and this isn't a hypothetical scenario.

[01:25:22]This is a this is an an actual commitment that the government has already made um to agroforestry.

[01:25:30]Just briefly looking at flood. So we also looked at for example how wetland recovery um and how um uh investments in rural road resilience can improve flood uh resilience in the country. And what we find here is um climate change could lead to a significant increase in flood risk in the country. But with these investments we can almost um reduce that or we can reduce that substantially and certainly for a big event have very very significant protective effects. So very very significant impacts at the fiscal level um just from looking at issues around sort of wetland recovery um from this. So we can show the macrocriticality of these KPIs which hopefully can lead to uh innovation in looking at sovereign investment.

[01:26:18]closer to home now. A couple of years ago, we worked with a central bank in Thailand um who were interested again in looking at flood protection um and also storm protection. And here we showed working very closely with the central bank again how climate change could increase the risk but how that could be reduced substantially through investment in um again wetland restoration in um uh hard infrastructure investments etc. And then just finally we work very much with the private sector as well. So we we work in partnership with investors to show them how this is macrocritical to them. So for example we have a collaboration with Norggas Bank investment management which is one of the biggest sovereign wealth funds in the world. And what we're trying to show here again is how do we bring this measurement into their decision- making on a day-to-day basis. And importantly, not just showing them the risk, but how if they invest more in natural capital, they can reduce that risk and reduce risk to their own balance sheets importantly. So, showing the win-win through investment.

[01:27:24]So, I just want to just finish off with some statements around the investment pathway. I'm going to skip over a few things because we have sort of running out of time, but we've analyzed investment flows related to nature around the world. We'll have some work um published on this in the next month or so builds on a paper that we published in 2023 analyzing more than 60 nature investment funds around the world. And what you can see is that while this is still a relatively nent area, it's growing very very significantly with particularly significant investment going into sustainable forestries, fisheries, agriculture, and increasingly into green infrastructure.

[01:28:08]And one of the things I wanted to leave you with um is this concept of nature as critical infrastructure. And this is something that we're thinking about at the moment and looking at how could that through structuring help to mobilize more investment. There was a great study by the the AIB and the EBRD a couple of years ago on this concept. And the key thing that question that we've been asking ourselves and this is actually lock May which was the lock that I mentioned earlier with the agricultural well sorry the algo blooms why do we treat that differently than we treat a port now reducing nature to a port is kind of undervaluing nature but why do we not treat as governments as the financial sector investment in nature as in the same way that we think about other types of critical infrastructure. in our economies and what can we learn from how we make these investments which are similarly public goods investments. What can we learn from that? So I think that's something I would love to talk about over the next couple of days.

[01:29:13]We've been looking at how could you structure risk pools for example to do this. Um actually so I used to work for the World Bank and used to work in the team that was uh working on risk pools and we see huge potential through pooling the benefits and costs of nature into these structures as a way to mobilize more investment into this because one of the key issues on nature as you'll know is that many people are benefiting but only a few people hold the costs. So how do we pull those benefits to bring more investment into this area?

[01:29:47]So just to wrap up um oh I've gone past what are the three points that I've talked about now one is around risk.

[01:29:56]So how can we speak the language of risk that ministries of finance, central banks, the financial sector are used to speaking?

[01:30:04]How do we bring this fantastic work on measurement into these existing systems that guide capital allocation at scale?

[01:30:12]And what can we do more to capture this full range of benefits from nature? And I'm very much looking forward to talking to you more about this over the next few days. Thank you very much.

[01:30:39]Great. Thank you so much, Nicola. That was really inspiring. I I thought I really got a lot out of that because I thought it was really interesting how you kind of uh how you framed it. I mean uh you know from measurement to investment. I mean this is you know kind of emblematic of our our own theme here about insight to impact. I mean and and and all the steps kind of in between kind of reminded me a lot of the things of the different interventions that we do in GPS and in the bank in general, right? And I think that that's what's really kind of interesting and over the next two days, what we'll be able to see is different uh entry points, if you will, of all the different things that take us from uh some of the the measurement issues and the data quality and things like that all through the different instruments and so on and so forth and ending up with investments. I think that that's actually really uh kind of interesting. there's this continuum and I think it's really emblematic of what's happening in the forum but in GPS and also how how we engage in the World Bank and uh I think it's also interesting you mentioned green water because I think that that's also something that we're actually really interested in looking at as well and so um look forward to kind of talking a little bit more about that.

[01:31:41]Um, so we can actually take a break now.

[01:31:44]Uh, it's a coffee break and we'll be out for about 30 minutes and uh, so um, we'll be reconvening at around about 10:30. So, thank you very much.

[01:33:39]Today, Heat. Heat.

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