The interdependence between nature and economy
Over the past two decades, India has experienced rapid changes in weather patterns across its length and breadth, and the subsequent impact on life and economy is clearly visible. The Global Climate Risk Index 2020 ranks India as the 5th worst affected country in the world due to the climate crisis, amid growing dependence of people on natural capital for their livelihoods. While around 70% of India depends on agriculture for its livelihoods, it is now bearing the brunt of rainfall and unseasonal weather patterns that oscillate between extreme drought and extreme flooding, leading to severe degradation of land, loss of income, migration and poor quality of life.
At the COP26 conference, India pledged to become a net zero carbon emitter by 2070, with enhanced targets for renewable energy deployment and emissions. In 2020, sustainable funds outperformed their traditional peers, with the Nifty ESG index offering a five-year return of 10.80% compared to 8.99% for the Nifty 50. As part of the Paris agreement, the India has pledged to restore 13 million hectares of degraded and deforested land. land by 2020. Yet despite this commitment, data from Global Forest Watch suggests an overall decline in forest cover.
Ecologically positive adaptation
Globally, bold climate action towards a net zero future is a $26 trillion opportunity for a sustainable and equitable future for people & biodiversity by 2030. Among these are 15 key transitions to a positive future for nature, through land & ocean use, infrastructure and energy will deliver $10.1 trillion in business opportunities and create 395 million jobs by 2030. Businesses and countries around the world are now realizing the need to shift to an economic paradigm that incorporates full-cost natural capital accounting into their financial systems. Developing countries most at risk from climate change, such as Bangladesh, are pushing for new economic models that actively preserve and restore ecosystems, to grow their economies in a climate-resilient way.
This movement reflects the growing international interest in Naturenomics: nature and the economy are not separate or independent, they are interdependent. Without nature, there is no economy.
Naturenomics proposes a new paradigm based on the valuation of our natural assets (earth, energy, waste, water, air, carbon, biodiversity, food, living matter). Historically, we have had a linear extractive relationship with these natural assets, but Naturenomics is about investing in the restoration and regeneration of these natural assets while sustainably leveraging their natural capital value. India’s 2022 budget with a renewed emphasis on agroforestry, with special support to encourage traditional agroforestry systems, is a step in the right direction. The country’s forests also present an opportunity to transition to a Naturenomics paradigm. With more than 250 million people fully or partially dependent on forests, a large-scale forest restoration plan across the country could easily create rural job opportunities.
Paving the way to Naturenomics
For climate-vulnerable regions like the North East, even a 1.5°C rise will transform its climate, affecting everything from its water sources to the crops that can be grown there, its biodiversity and life and the livelihoods of the 46 million people who live there. But the region is rich in natural capital and tapping into its natural wealth is a huge opportunity for the region: 2.3 million hectares of land that can be reforested and an additional 1.8 million hectares of agricultural land that can be converted into more sustainable means of production. such as agroforestry. Such a large-scale natural capital investment plan would create jobs for over 2 million households. Natural capital revenues through agroforestry products, sustainable bamboo and timber and conscious natural tourism will generate revenues of up to INR 450,544 crore over a 30-year period, against an investment of INR 22,339 crore.
Emerging global interest after COP 26, with many pledges to invest in forests and nature-based solutions as a way to tackle climate change, means re-imagining our forests as an investment opportunity. Carbon market prices are at an all-time high, but India still lacks a formalized policy to take advantage of growing market interest in REDD projects and an underdeveloped market for carbon-based solutions. on nature. But investments in payment for ecosystem services through carbon markets will create new income opportunities for communities living near forests. Building this market will require comprehensive protocols to nest targets, to link private investments to national targets and to minimize double counting of credits. A policy that focuses on directing benefits and flows to communities will not only manage these issues, but also revitalize rural economies with strong long-term revenue streams that they can invest in their communities.
Encouraging businesses to create positive and adaptive environmental models that actively create future resilience through regulatory frameworks incentivizing this through smoother customs clearances and tax benefits is a key step in achieving this. Government programs and grants encouraging MSMEs involved in forest restoration or restoring degraded land, or building sustainable supply chains in the agricultural industry are another avenue. Greater awareness and sensitization of investors to calculate the risks versus opportunities of sustainable land use versus business as usual scenarios using full cost accounting based on natural capital is another avenue to achieve this.
India’s rich biodiversity is a natural buffer against the threats of climate instability. Investing in a Naturenomics transition is not a luxury: it is the future.
The opinions expressed above are those of the author.
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