What keeps most companies and agencies from realizing similar benefits? It’s not lack of opportunity; most organizations have assets that could be developed in a sustainable fashion. The gap is in their imagination. Thinking of environmental assets as cost centers, or as something separate from their core business, organization leaders simply do not envision the ways in which paying attention to their land, water, waste stream, pollution-management knowledge, and environmental enterprise can all lead to long-term income and wealth.
Wetlands and Wealth
When most chief executives contemplate environmental management — if they think about it at all — they see it as a bottom-line expense. They may be aware of the liabilities associated with natural resources — the costs of maintaining the land, water, and air related to their property and satisfying federal, state, and local pollution or emissions regulations. They have staff who focus on regulatory compliance, seeking to minimize missteps and avoid risks that might drain finances and jeopardize the organization’s reputation.
But this narrow focus fails to recognize the full value inherent in a company’s environmental assets. These assets include not only air, land, and water rights, but also the actions an organization takes to sustain, restore, and modernize its resources. For example, pollution prevention is a quantifiable investment that does more than simply reduce the cost of environmental compliance. It can enhance an organization’s ability to expand operations, and, in some instances, it can provide a credit in market-based regulatory regimes, such as the trading market for sulphur dioxide (SO2) established by the 1990 U.S. Clean Air Act, or the comprehensive market in pollution credits created in the 2005 European Union Greenhouse Gas Emission Trading Scheme. Worldwide, the number of environmental markets for credits is growing in such areas as wetlands preservation, reductions in greenhouse gas emissions, and conservation banks for endangered species. The Kyoto Protocol of 2004, for example, may ultimately be remembered less for the controversy it engendered, and more for the multibillion-dollar market that it is creating in greenhouse gas emission credits. According to the information service Ecosystem Marketplace, some experts predict that carbon credits will be worth nearly $40 billion by 2010 and eventually as much as $200 billion. By allowing organizations to sell or lease their pollution rights, these schemes are credited with providing businesses an incentive to reduce emissions, and thus turning the capability of pollution reduction into a marketable asset.
Even without market regimes, wetlands and other ecologically sensitive habitats are increasingly recognized as assets. Restoration of a lake- or marsh-based ecosystem can potentially provide an airport, military base, mining operation, or large industrial plant with a buffer against encroachment or an alternative to building a wastewater treatment plant. A successful restoration can also help a business support its case for expanding activities elsewhere, both by “trading off” the wetlands site against other sites, and by demonstrating a level of trustworthiness and competence in environmental management. Finally, an emerging body of accounting standards now defines how organizations can recognize and claim environmental assets on their balance sheets.
The key to recognizing the value of these assets is not simply a change in perspective or terminology, but a deliberate process that might be called an environmental asset assessment (EAA). This process identifies environmental assets and the value derived from or created by managing those assets. The U.S. Air Force has created one such rigorous EAA process, which it calls the natural infrastructure management (NIM) framework. NIM has been a powerful force for change because it goes beyond merely gathering an Air Force installation’s environmental experts to figure out better ways to use resources. It is designed to help decision makers move beyond a focus on compliance with regulations. The framework itself introduces creative problem solving and meaningful analysis about such issues as the value of wetlands for water filtration, flood control, and recreation in the region around each base.