Market-based approaches should not be promoted as a solution to preserving biodiversity. This is the conclusion drawn by the Green Finance Observatory organisation on Thursday 23 May in a report that has just been published.
The report responds, among others, to the European Commission's agenda on sustainable finance (see EUROPE 11977/2), which could open the door to the inclusion of biodiversity offsetting, water quality trading markets and markets on carbon capture and storage in the green bonds framework and the future ecolabel on financial products.
This new approach is based on the idea that markets would succeed where traditional environmental policies have failed, the report explains. Nature is re-conceptualized as “natural capital” and ecosystems are reframed as “human services”, explains the Green Finance Observatory.
The Green Finance Observatory’s director, Frédéric Hache stated: “while putting a price on nature to save it is a catchy formula, it would therefore seem that regulating nature’s destruction would be a far superior alternative”.
In fact, according to the organisation, market-based approaches have their limits and are not suitable approaches to the issue of biodiversity. The choice to value only some ecosystem services while ignoring others also means that the values obtained cannot claim to represent biodiversity, the report emphasises. Biodiversity, as a new asset class, could also create significant moral hazard and risks of financial crisis, he warns.
Thus, according to the Green Finance Observatory, traditional environmental regulation would be far “more effective, simpler and cheaper” to address the critical loss of natural resources.
In any case, the organisation believes that a public debate is needed, not only on the level of ambition of European environmental policies, but also on the “how”, namely the political instruments used to achieve these objectives. See the report: https://bit.ly/2X546cw. (Original version in French by Marion Fontana)