How elephants, whales and financial markets can help fight climate change

What if it was possible to fight against climate change, protect biodiversity and finance conservation at the same time? That’s the question Duke Economist Connel Fullenkamp and a global team of researchers seek to answer.

“The big picture right now is that we have two big issues facing us,” Fullenkamp said. “Globally we have climate change and biodiversity is under threat, and the problem is that protecting these habitats requires a lot of funding.”

The aim is to reduce carbon emissions, which contribute significantly to climate change. But how?

Fullenkamp looks to the animal kingdom for answers, focusing on how whales, elephants and other species help ecosystems remove carbon dioxide from the atmosphere.

Forest elephants in Africa play a crucial role in how carbon is captured by trees, Fullenkamp wrote in a recent paper in the Proceedings of the US National Academy of Sciences. As they move through the forest, elephants decrease the density of plants and smaller trees, which in turn helps to increase the number of larger trees. These tall trees favored by elephant activity are also able to capture more carbon because they are more carbon dense than the average tree.

However, the species is endangered due to poaching. With the reduction in elephant numbers, elephant services such as seed and nutrient dispersal that help the forest store more carbon and maintain biodiversity are also lost.

Whales play a similar role in ocean ecosystems, Fullenkamp and his co-authors found in a 2019 report published by the International Monetary Fund. Whales naturally accumulate an immense amount of carbon in their bodies: by the time they die, the whales have absorbed 33 tonnes of CO2 average out of the atmosphere. By comparison, a typical passenger vehicle emits about 4.6 metric tons of carbon dioxide per year. Yet the whale population has also drastically declined due to industrial whaling practices.

“We know that species die and habitats are destroyed, and we also find that natural processes can sequester a lot of carbon,” Fullenkamp said.

With climate science in clearer view, Fullenkamp and his co-authors turned to the economic problem. In the June 2022 issue of Nature Climate Change, they argue that financial markets can help fund actions to tackle climate change. Engaging investors in the fight to conserve and restore these species will in turn help reduce carbon emissions and preserve the environment, Fullenkamp said.

To stimulate this involvement, the research team wants to convince financial institutions, governments and conservation groups to allow the sale of carbon sequestration services provided by wild animals, which is the process of capturing and storing atmospheric carbon dioxide. Sequestration keeps carbon in a form that prevents it from being released into the atmosphere, leading to adverse effects on climate change. In Fullenkamp’s approach, carbon is sequestered by plant and animal life, including mammals.

Everyone benefits from creating a conduit for financial markets and conservation restoration programs to improve natural resources like endangered whales and elephants, they say. Protecting these animals helps fight climate change and promotes biodiversity.

According to Fullenkamp, ​​selling carbon sequestration has been abstract until recently. Researchers hope to change this by creating markets for the carbon services produced by nature.

“We need to prove that these natural systems are actually sequestering the carbon that we project to sequester,” he said. “The interest of the research has been to show that there is a reasonable real-world assessment of what these animals are doing.”

Here’s how it would work: First, economists estimate a price for the carbon sequestration services produced by the natural asset (elephants or whales). This number includes both the carbon currently sequestered as well as the potential gains from conserving and restoring the species. For example, the team discovered that the services of a single large whale are worth $2 million.

Valuation is what attracts financial investors. The owner of the natural assets (such as a government) would work with an intermediary to issue certificates entitling them to carbon sequestration services. When investors purchase these certificates, the money goes into a separate fund that funds the conservation program that takes care of the natural asset and compensates the government that owns the natural assets, the local communities that implement the conservation programs and the private agents who organize and manage the financing process.

“Not only would our plan protect and restore a country’s natural resources, but it would also bring funds to communities,” Fullenkamp added. “Governments get money to protect their environment that they don’t have to spend on their budgets, and we get money that goes to local communities that gives jobs to people, especially in indigenous communities, who have always been exploited.

Carbon markets have been proposed in the past, but Fullenkamp says his team is approaching the problem from a different angle. Instead of relying on philanthropy, their research aims to get financial markets to fund conservation and restoration programs.

Fullenkamp also says their solution is unique because it is completely “end-to-end” and connects markets and nature conservation.

“We designed this with the long-term resources in mind and also focusing on compensating local and indigenous communities for the important work they will do to preserve their natural resources, which has never been done,” he said. he declared.

The researchers hope to be able to connect the pieces in a way that benefits everyone, but recognize that implementation presents enormous challenges. Fullenkamp notes that they are aware of the skepticism that stems from working with various governments.

“There has to be enough money to protect the resources, and our goal is to make sure there is enough money to create a fund that will actually protect them in perpetuity,” he said.

Despite these hurdles, Fullenkamp believes his team can sell their solution as a win-win situation.

“This would restore natural resources, protect biodiversity and bring funds to communities. The thing that we do that no one else takes seriously is bring the markets in there. »