• The AES Corporation, a global power company, announced in April 2006 that it would invest $1 billion over the next three years to expand its alternative energy business and develop projects to reduce or offset greenhouse gas emissions. The Washington Post reported that as part of this effort, AES will spend $250 million to generate greenhouse emissions credits under the Kyoto Protocol and the European Union’s trading system. The company is already working on a reforestation project in Brazil that will cover 25,000 acres and produce credits for 100,000 to 150,000 tons of carbon emissions per year. The value of those credits, currently more than $20 per ton, will likely rise over the years.
• Eglin Air Force Base and the state of Florida recently collaborated on the state’s $15 million purchase of 7,587 acres adjoining the base. Eglin received a needed noise buffer for its jets, while the state protected important black bear migration corridors in the northwest panhandle. Similar cooperative purchases are expected to follow.
• Sustaining ecosystem services has become central to the operation of the Panama Canal in Central America. The Panama Canal provides a well-known trade route for many of the goods that are distributed throughout North America. But the viability of this route has been threatened over the decades by rapid deforestation, which reduces the amount of water available within the canal while increasing harmful sedimentation and nitrification. The dangers have been generally recognized, but there has been no consensus about how to pay for reforestation. One innovative approach being discussed would establish a forestry insurance company that would use financial markets to allow companies dependent on the canal to pay for reforestation activities. These payments would be considered an investment in the natural infrastructure — similar to investments in the physical infrastructure that supports this important transportation route.
In all of these cases, the environmental asset assessment is a powerful approach for managing environmental assets. But an EAA goes further; it can and should be an integral input into general strategic planning, risk management, and investment decisions.
And that is the third trend: The growing recognition of the innate value of the operational and ecological awareness that stems from better environmental management. We know this firsthand from our work at Booz Allen Hamilton, which has helped the U.S. military conduct natural infrastructure asset assessments at nearly 30 sites. Around the world, similar approaches have greatly benefited large organizations such as airport and port authorities, multinational corporations, and any institution that puts demands on air, land, or water resources. As the EAA approach gains wider acceptance, organizations will abandon the old mind-set that views environmental management as an unavoidable cost. Instead, they will manage environmental resources as a group of strategic assets, crucial to the organization’s goals, important to ecosystem health, and beneficial to the surrounding communities. Where decision makers once saw liabilities and constraints, they will now see opportunities.
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Molly Finn ([email protected]) is a vice president at Booz Allen Hamilton. She leads Booz Allen’s environmental business and is based in the firm’s headquarters in McLean, Va.
Gary M. Rahl ([email protected]) is a principal with Booz Allen Hamilton based in McLean, Va., who is leading sustainability initiatives in both the public and private sectors.
William Rowe Jr. ([email protected]) is a principal with Booz Allen Hamilton based in McLean, Va. He works closely with both leadership and field activities of the U.S. Department of Defense on natural infrastructure and sustainability initiatives.
Also contributing to this article was Booz Allen Hamilton Senior Associate Lisa McDonald.