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Business and ecosystem services

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This article originally appeared in The Circle 02.15.

The current trends in the status of biodiversity, ecosystems and related ecosystem services present both challenges and opportunities for the business sector. Therefore understanding the importance of ecosystem services and natural capital in the context of business decision-making is becoming increasingly important, according to Marianne Kettunen.

The links between business, biodiversity, ecosystem services and natural capital are manifold. On one hand, land and resource use by business sectors is known to contribute to the degradation of ecosystems and biodiversity loss. On the other hand, business sectors also depend on well-functioning ecosystems and the availability of ecosystem services, even to the extent that biodiversity and ecosystem services can create the basis for new innovative business opportunities. Consequently, while several business sectors are known to contribute to the degradation of ecosystems and biodiversity loss, these sectors can also play a proactive role in addressing the problem.

Taking responsibility to prevent negative impacts

In the Arctic region, many current and emerging business opportunities, such as commercial fishing, tourism, and mineral and gas extraction, are known to have possible negative impacts on biodiversity and the ability of ecosystems to maintain different services. These impacts include, for example, pollution and spills, habitat loss and fragmentation, introduction of invasive species, and increases in disturbance to wildlife and people dependent on Arctic nature.

With the growing interest in mining, oil and gas development and shipping, the risks posed by business sectors to Arctic biodiversity and ecosystem services are likely to increase. Consequently, the sectors need to recognise and appropriately manage their ecosystem service impacts, including taking into consideration the benefits to and values identified by local and Indigenous communities (e.g. provision of livelihood and spiritual importance of ecosystem services). If the importance of nature to various stakeholders is better understood, this supports more informed decision-making that builds on the understanding of alternative outcomes and implications and adequately takes into account trade-offs and synergies between various services and related benefits. For example, consideration of ecosystem services can help to assess possible negative impacts occurring offsite, such as impacts of oil, gas and mining operations on fisheries and water purification.

Identifying interdependencies and opportunities

On the other hand, a range of Arctic businesses and companies are directly dependent on the supply of natural resources (fish, timber, genetic material etc.). Similarly, businesses related to recreation and tourism rely on their access to nature. Furthermore several industry sectors, such as mining, oil and gas, depend on ecosystems’ ability to maintain water supply and mitigate flooding, erosion, and natural hazards at the locations of their operations. Understanding of ecosystem services helps to highlight the often overlooked dependencies that business sectors have on the environment, therefore helping to prevent the degradation of natural foundations that businesses depend upon.

Increased understanding of ecosystem services can also create opportunities for the development of sustainable businesses. For example, nature’s role in water retention and purification can be ‘harnessed’ by businesses that adopt nature-based solutions for their water management. For example, conservation and restoration of wetlands have been shown to be a potentially cost-effective option for managing water resources around the world. Furthermore, Arctic nature provides a range of opportunities for the development of novel value-added products. Organisms in the Arctic regions have evolved under extreme conditions, developing a variety of unique physiological and biochemical characteristics. These characteristics already provide a basis for a range of biotechnological innovations and related businesses with several companies estimated to be involved in research, development and/or sale of products derived from or based on the genetic resources of the Arctic.

Towards business ecosystem assessments

Responsibilities, risks and opportunities associated with biodiversity and ecosystem services are still often overlooked and underestimated by businesses, and are not fully accounted for along the entire value chain. To address this, the World Business Council of Sustainable Development (WBCSD) has developed guidelines for Corporate Ecosystem Review (CER) and Corporate Ecosystem Valuation (CEV) that help to improve corporate decision-making through assessing and valuing ecosystem services. The aim of these guides is to help managers proactively develop strategies to manage business risks and opportunities arising from their company’s dependence and impact on ecosystems.

Ecosystem service assessments can strengthen business performance in several ways. For example, they can help sustain revenues and reduce costs, determine levels of liability and compensation, and provide social benefits. In general, systematic integration of ecosystem service considerations into business decision-making supports the objectives for the long-term environmental and socio-economic sustainability of the Arctic region, bringing benefits to both biodiversity conservation and people.

Marianne Kettunen is Principal Policy Analyst in the Biodiversity and nature Conservation programme with the Institute for European Environmental Policy.

« Five years after Gulf spill, drilling in far more dangerous waters | Norway on track to capture benefits and values of ecosystem services »

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