The tremendous power of thriving trees and flourishing natural habitats to combat global warming is not a new revelation. However, the ability to measure and monetize the return on investment (ROI) and social return on investment (SROI) of ecosystem restoration is a new concept taking root.
In this unsettling era of climate change, ‘business as usual’ is no more. Operational concerns tied to global warming are driving some forward-thinking organizations to look to landscape-scale restoration (restoration at a 10,000- to 100,000-acre scale) as a cost-effective long-term climate solution that can deliver on aggressive and sustainable carbon commitments, with co-benefits that create value for the company, its stakeholders and society at large.
We spoke with PJ Marshall, co-founder and executive director of Restore the Earth Foundation, a 501(c)(3) non-profit. Restore the Earth’s mission is to reestablish the earth’s essential forest and wetland ecosystems, by delivering outstanding environmental, social, and economic returns. The organization is restoring one million acres in the Mississippi River Basin and has dubbed this initiative the North America’s Amazon Project. Marshall talks to us about how quantified indicators and monetized metrics are changing the sustainability game. She tells us how visionary leaders such as CITGO, Entergy and VMWare are leveraging investments in landscape-scale restoration to do good and do well.
Christopher P. Skroupa: What is the economic significance of the Mississippi River and why are national and global companies investing in its restoration?
PJ Marshall: The Mississippi River is an economic engine, contributing more than $400 billion to the U.S. economy each year and supporting 1.3 million jobs. This mighty river also influences a global system of clean air, clean water, and a stable climate. North America’s Amazon spans 1.2 million square miles and encompasses 40 percent of the contiguous United States. Nearly all U.S. companies rely on the Mississippi to do business. Alarmingly, this region is also one of the most ecologically degraded areas in North America. Originally there were 24 million acres of forest in the lower Mississippi Valley, and today, only 5 million acres of forest remain.
Restoring one million acres in this area will offset the climate footprint of the entire United States by 2% and start to reverse the impact to the dead zone in the Gulf of Mexico. By investing in this landscape- scale restoration project, corporate funders are reducing business risk, making communities more resilient to storms and flooding and generating an unparalleled $12 billion in economic value.
Skroupa: Why are new models for sustainability measurement and ROI so important?
Marshall: Major investments are needed to fund projects as vast and complex as North America’s Amazon to have true impact. To make this work for funders, we needed to unlock the business case for natural capital and green infrastructure investments. That’s why we developed a first-of-its-kind methodology called EcoMetrics™. Using the most innovative, rigorous international methodologies and protocols, we can monitor, track and account for the full value of environmental, social and economic impacts of restoration in monetary terms. All quantified market and non-market values are fully documented and third-party verified in a report ready for audit.
This approach enables an investor to account for these values on their balance sheet and effectively communicate the returns to stakeholders.
We believe that this approach sets a new standard in sustainability measurement and will extend well beyond landscape-scale restoration to include other sustainability initiatives. In fact, we are currently adapting this model into a digital platform for assessing natural capital and green infrastructure beyond landscape restoration to projects of various kinds.
Skroupa: What are the direct and indirect benefits of investing in landscape-scale restoration?
Marshall: The direct business benefits of restoring degraded lands to healthy ecosystems include charitable tax deductions and cost-effective reductions of a company’s climate footprint via carbon, nitrogen and phosphorous offsets. Indirect benefits include risk management, operational efficiency, imposition of supply chain conditions, enhanced reputation and social license to operate.
Using EcoMetrics, we also assess the benefits and social value for community stakeholders including cleaner air and water, job creation, enhanced recreational opportunities, soil stabilization, storm protection, flood control, sustainable livelihood, identity and culture toward generational equity.
Skroupa: How do green investments, like landscape-scale restoration, compare to gray infrastructure investments?
Marshall: Green investment is a cost-effective approach to quality outcomes over a long time horizon. Ecosystems are very complex. It would require building several types of gray infrastructure features and facilities to get the same suite of services derived from investments in Mother Nature’s solutions.
Benefit for benefit, dollar for dollar, green infrastructure investments are almost always a better investment for companies. Most green assets appreciate over time. Conversely, you can count on gray infrastructures to depreciate. Green investments can save costs today and safeguard corporate profits tomorrow.
Skroupa: Can you provide an example of corporate value derived by a funder of The North America’s Project?
Marshall: In 2005, Entergy Corporation, a leader in electric power production and retail distribution operation, invested $1.55 million in a reforestation project in the Tensas National Wildlife Refuge. As a result, communities and multiple stakeholders are benefiting from over $120 million worth of environmental, social and economic value creation. This is a healthy 36:1 return on investment.
The largest beneficiary of this investment is community stakeholders such as the customers and employees on whom the financial health of business depends. Of the $36 return per $1 invested, $33 of non-market social value is returned to the community. Another $3 in direct market value is created by the carbon, nitrogen and phosphorus offsets and social license to operate. Both values can be accounted for on Entergy’s integrated reporting balance sheet.
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