Trees Worth a Million Dollars

Photo by shayd johnson on Unsplash

What if I told you that some trees are more important than others to the tune of a million dollars? That would seem a bit much, unless the tree produced gold or efficiently mined Bitcoin without electricity. However, the concept of a high valuation for a tree is not far off.

In this article I discuss the root of natural capital and the valuation of ecosystem services and natural products. An understanding of the basics of natural capital will illuminate the real value of the forest network and the super nodes in that network.

Natural Capital

“Natural capital refers to the natural resources that a company utilizes or owns — from renewable resources like water or trees to non-renewable resources like fossil fuels and minerals.” These resources have a value based on their utility to society. However, there is an additional value that is known as ecosystem services. Ecosystem services are the benefits to people that are derived from the ecosystem, including “provisioning services such as food and water; regulating services such as flood and disease control; cultural services such as spiritual, recreational, and cultural benefits; and supporting services such as nutrient cycling that maintain the conditions for life on Earth.

In a capitalist society, the language of valuation is in dollars. This financial capital is a magnificent engine that can quickly direct resources to one venture or another. This capitalism engine is also a force of destruction when pointed towards a goal without regard to the externalities, impacts outside of the given market and valuation, that harm ecosystems. When ecosystem services and natural resource externalities are valued in the same language as financial capital, translation of these impacts to the major actors, the capitalists, is easier and more readily received.

Markets are based on information

By translating the value of ecosystems into financial terms, the availability of market information that capitalist can digest increases. Currently, the data on ecosystem services is spotty at best. Companies like AQUAOSO technologies, WestWater Research, and Ceres are working on ways to gather and translate climate data, like water resources and water risk, for use by the financial sector. Efforts in climate data translation will provide the information necessary to value natural resources and ecosystem services like forests.

Fungi networks

The more we know about our environment, the better we are at assigning a value to it and the services it provides. Knowing more about how a forest communicates provides a better way to understand the value of each tree and the trees collectively.

Trees are fascinating. Recent research discovered that trees communicate through fungal networks. Emitting chemical signals from tree to tree through the fungi network allows trees to warn each other of danger and event allocate resources to a struggling tree. Dr. Suzanne Simard is leading this research in North America and advocates for the use of this new understanding of trees in modifying current forestry practices.

Super Nodes

Some trees are super nodes and are critical to the entire tree network. Knowing that some trees are more valuable to the network, means that the tree should be worth much more than others and very expensive to remove or harm. For example, an ancient conifer may have a well established network with many valuable, older trees, in its proximity. If one of the older trees is cut down, the network is largely preserved and resilient. However, if that ancient tree, a super node, is cut down, the connected trees will all suffer, potentially getting diseases and losing their value to the ecosystem and to human uses.

The broader network, or the forest

Stepping back from the tree and a tree’s network, entire forest ecosystems provide needed precipitation for crucial headwaters in places like Northern California, where wildfires are frequent in the climate change era.

When forests are cut down or burned down, there is a reduction in the ecosystem service provided to humans. Ecosystem service reductions are like reducing the supply of something in the market, such as housing.

However, unlike housing construction, it takes a long time to replenish the forests and corresponding ecosystem services. Because of the time to replenish the supply, the market must account for that in valuing both the forest as a supply of wood, but also the ecosystem services it provides, including replenishing headwaters of major rivers. In California, the Central Valley is one the most profitable agricultural regions in the world, an estimated value of $17 billion per year. It is heavily reliant on water that originates in forests and mountains. The better managed the forests, the better protected those headwaters. From a natural capital perspective, those forests are invaluable to the economy of California and to food production worldwide. Maybe those super node trees really are worth a million dollars a piece.

Accounting for Natural Capital

While some may argue that a value cannot be places on Mother Nature, it is important to do so in a capitalistic society. It is key method of measuring the value of something and thus prioritizing effort in preserving its wellbeing. With more information about ecosystems and how they operation, we can make better decisions that are also profitable. Finding a path forward will require the private sector and the public to appropriately value ecosystem services and price them accordingly. Natural resources are not unlimited and we need to treat them as the scarce and valuable resource they are.

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Blake Atkerson

Blake Atkerson

Exploring the power of confidence, fiction, business, climate, tech and everything in between.

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