To Heal the Earth, We Must Heal the Economy. Could the Blockchain Help Us Get There?
The Rainforest Flying Squad — the grassroots leadership team that has spent two years blockading logging roads to preserve the last intact old-growth watershed on Vancouver Island, Fairy Creek — summarizes the reason they’re taking direct action in three words: Worth More Standing.
As in: intact forest ecosystems are worth much more than their value in timber. Beyond the cultural value of the trees to Indigenous peoples and the intrinsic value of life, intact ecosystems can capture several layers of economic value, from carbon and biodiversity credits, to ecotourism, to the fact that keeping important carbon sinks like forests and wetlands intact can mitigate some of the worst economic impacts of catastrophic weather events like wildfire, flooding, and storms. (It’s been estimated that 3.7 degrees of warming would produce $551 trillion in damages — total worldwide wealth today is about $280 trillion.)
Governments and corporations know all of this — and have for quite some time. So why aren’t they acting?
Because governments, investors, and corporations aren’t incentivized to keep trees standing. Telling extractive resource companies that if they sacrifice profits now they’ll save governments and taxpayers billions of dollars in the future isn’t a very compelling argument. These corporations exist to turn a profit, and right now, the profit is to be had in cutting down the trees. In fact, the entire global economy, which is based on the hegemony of the US dollar backed by oil, incentivizes excessively extractive behaviour. And the more efficient we become at extracting a resource, the more the demand for that resource increases; this, in turn, increases our efficiency, and you’re left with dystopian system collapses like the Amazon rainforest nearing the tipping point of releasing more carbon than it absorbs.
We will always have to extract raw material from the earth — we are a consumptive species. But the rate at which we are extracting is unnecessarily excessive, designed to reap windfall profits for a very select few.
Something needs to change. And while campaigning, political lobbying, and non-violent direct action constitute crucial counterbalances to the runaway corporate greed tilting our planet past a tipping point, they aren’t enough. We must also think of technological and economic solutions.
To incentivize investors, corporations, and governments (and all of us collectively, really) to keep ecosystems intact, we have to somehow be able to account for their value right here, right now. And there are promising signs that web3 technologies enable us to unlock a new regenerative economy that can do precisely this.
Impact reward feedback loops
We can divide this new economy into a three-part feedback loop composed of funding, accounting, and rewarding. Let’s look at each of these in turn.
Funding
Let’s say a community (this can be a start-up, or a DAO, or a First Nation, or pretty much anyone) identifies an ecosystem (either fully degraded or on its way there) that they want to preserve, and they need capital to purchase the land. They could go the traditional route and apply for government grants, or partner with land trusts, but there’s also another option: web3 funding.
This could mean anything from NFT sales, to Gitcoin Grants, to the community issuing a new currency and using the proceeds from the coin launch to purchase the land. Real-life example: Neal Spackman, founder and CEO of Regenerative Resources Co, sold 3600 NFTs in under 10 seconds to fund his mission of “greening” degraded landscapes into productive ecologies; he also raised money through the quadratic funding provided by Gitcoin grants round 13 (where, because of matching protocols, many supporters contributing just $1 can get the job done relatively quickly).
Accounting
Once the land has been purchased, its value is unlocked. Let’s go back to the example of Neal Spackman, whose seawater aquifers regenerate arid landscapes, which unlocks value in the form of high-quality food, carbon and biodiversity credits, local employment, and increased biodiversity. (Biodiversity is valuable not just because of the inherent value of life on earth, but also because of digital sequence information, or DSI, which involves mapping the genetic data of plants, animals, and other organisms in digital form; DSI has led to new HIV therapies and genetically modified crops, among other biotechnology revolutions.)
These are valuable, real-world changes that web3 can account for in the form of on-chain carbon and biodiversity credits or NFTs that represent sections of the regenerated farmland that people could purchase and sponsor, with the view that the NFT would increase in value over time. As virtual reality improves and the metaverse is collectively built, we could create entire digital “twins” of intact ecosystems; for example, we could create a digital forest that represents a real one, and have actions taken in this digital forest feed back into the real world. This leads us to the third part of the regenerative web3 economy:
Rewarding
Let’s say you adopt a virtual tree by buying an NFT. Your purchase of said NFT would funnel money into conserving the real tree, which would feed back into the blockchain by providing the NFT holder with rewards for conserving that tree, such as carbon/biodiversity credits, or tokens. Or someone could put up a bounty on the blockchain, i.e. “if the carbon storage or biodiversity of this forest is improved then these tokens will be issued as a reward.” If someone submits evidence of that happening in the real world (as verifiable claims) then they can unlock that reward. This reward loop represents an incentive mechanism to get people to fund the conservation of trees!
Creating circular economies with web3
This economic model represents a way to reap economic returns while cooperating with the earth and working within planetary boundaries. It also represents a way to quantify the holistic value of a forest instead of its monodimensional timber value. Yes, there are some sticky ethics problems when it comes to quantifying and trading nature in this way; day-trading carbon credits on the blockchain can sound dystopic. But our world, currently, is structured economically. We simply need economic mechanisms to make preservation as viable as extraction — yes, there will be scams, yes, people will try to get rich, but the model just needs to be good enough — a framework that incentivizes protection and regeneration can be gamed, but at least it’s incentivizing protection and regeneration.
In contrast to the current take-make-waste model, the web3 regenerative economy (also called regenerative finance, or ReFi) is restorative by design and aims to decouple growth from finite resource consumption. In a recent global newsletter, the grassroots civil disobedience group Extinction Rebellion (self-described as the “DAOs that aren’t on chain”) announced they were partnering with Gitcoin to fund their global actions with quadratic matching. Just like non-profits perpetuate themselves and reward their members for participating in achieving a sustainable, shared goal, ReFi communities could do the same.
Are you a token engineer, creative, or just a curious person wanting to get involved in the creation of the new ReFi economy? Join Longtail Financial’s ReFi Bootcamp to learn how token technology can fuel regenerative solutions.
Longtail Financial is a collective of token engineers and creators accelerating the transition to the decentralized web. If you’d like to get involved, be sure to hop into Longtail Financial’s Discord, check us out on LinkedIn, like us on Facebook, or follow us on Twitter!
