Natural resource valuation system seen aiding investment decisions

A SYSTEM of accounting to determine the value of natural resources helps countries arrive at sound investment decisions and aids in determining liability in the event of environmental damage, a natural resource economics professor said at an Asian Development Bank forum.

“The measurement of ecosystem services values will support investment decisions, improve decision-making, and enhance wellbeing,” Vic Adamowicz, Vice-Dean of Agricultural, Life and Environmental Science at the University of Alberta, told the forum.

Natural capital accounting refers to a system of measuring the stocks and flows of environmental assets and natural resources.

Mr. Adamowicz noted that people often make labor decisions based on health or air quality conditions. “In a lot of cases, it informs regulatory analysis. If we have a particular regulation that we’re trying to put in place for pollution control or for some other transportation decision, maybe the environment needs to play a role.”

He also said that natural capital accounting could serve as a basis for penalizing individuals or groups liable for environmental damage.

“It’s actually a signal to entities of various kinds that if you do harm to the environment, there could be a penalty… fines and penalties can be determined through environmental valuation if there’s damage to the environment,” he said.

Philippine Statistics Authority (PSA) Chief Statistical Specialist Virginia M. Bathan cited the need to pass a law that would establish a natural capital accounting framework.

The proposed Philippine Ecosystem and Natural Capital Accounting System Act is currently awaiting President Ferdinand R. Marcos, Jr.’s signature.

Rory Jay S. Dacumos, assistant director of the National Economic and Development Authority’s agriculture, natural resources, and environment division, said the Philippines has “undervalued ecosystem services and natural capital.”

“A case in point is in the way we compute for the economic cost-benefit analysis of big-ticket projects like infrastructure projects. Typically, the environment aspect is treated just as an externality,” he told the forum.

He cited last year’s oil spill in Oriental Mindoro, where the company responsible only paid for the cleanup and livelihood assistance, but not for the damage done to the ecosystem.

Natural capital accounting could also help vulnerable countries like the Philippines in the adaption and mitigation of climate shocks, Mr. Adamowicz said on the sidelines of the forum.

“Some of that will be designing new projects that protect from storms, coastal tidal impacts… natural capital accounting can help there.” —