Valuing Nature in Business-A Case Study of Chemical Manufacturing and Forest Products Industries
Abstract
Over the past several decades, there has been an increased realization of the extent
to which the means of production in human society depend on and impact increasingly
fragile natural systems. Working with our client, The Nature Conservancy, we researched
trends in ecosystem valuation within the chemical manufacturing and forest product
industries, discerning ways to identify and evaluate future ecosystem investment opportunities.
This research resulted in a framework that businesses could use to identify future
ecosystem service opportunities and then score the opportunities’ business values
using a multi-criteria analysis approach.
We identified potential ecosystem service opportunities by overlaying classifications
of business risk on major operational subsectors within the industries, populating
the resulting table with key ecosystem impacts and opportunities. Through the application
of this process, we identified three hypothetical ecosystem service projects applicable
to both the chemical manufacturing and forest product industries and used them to
test our scoring framework. The identified projects were constructed wetlands for
wastewater treatment, coastal habitat protection for storm surge protection, and forest
carbon sequestration. We ranked the business value of each project using five criteria
important to businesses: financial value, reputational benefits, environmental risk
reduction, political and regulatory enabling conditions, and level of knowledge and
activity in the field. According to our research, businesses emphasize financial benefits
most highly when evaluating potential investments, so we weighted financial values
most heavily in our ranking scheme. Our analysis indicated that a forest carbon sequestration
project had the highest potential business value relative to the other project types
due to its higher expected financial benefits. The constructed wetland project, which
also had a relatively high expected financial benefit, followed second. Finally, the
coastal habitat protection project had the lowest relative business value due to high
costs, a low level of scientific knowledge, and weak regulatory support.
The identification and ranking methodologies are designed to be flexible, allowing
adaptation for use given varying business objectives. The weights on the five valuation
criteria can be adjusted to reflect a business’s concerns. This scoring methodology
is useful for businesses because few tools exist to enable comparative analysis of
business ecosystem service investments. We believe this tool provides a useful approach
to determining the value that nature and ecosystem services provide to a wide range
of businesses, and we recommend its application outside the chemical manufacturing
and forest products industry for further refinement.
Type
Master's projectSubject
Green infrastructureMulti-criteria analysis
Business ecosystem service valuation
Chemical manufacturing industry
Forest product industry
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https://hdl.handle.net/10161/8513Citation
Browning, Peter; Gong, Mimi; Hu, Tianyang; Marx, Charles; & Natake, Taichi (2014). Valuing Nature in Business-A Case Study of Chemical Manufacturing and Forest Products
Industries. Master's project, Duke University. Retrieved from https://hdl.handle.net/10161/8513.Collections
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