SUBJECT: What exactly is the market for biodiversity?
AUTHOR: Tim Kitchin, Glasshouse Partnership

SUMMARY: If biodiversity is to be successfully protected within a market-led global economy, its custodians must apply the disciplines of marketing - beginning by understanding the market demand for biodiversity.

KEYWORDS: Biodiversity, economy, biodiversity outcomes.

History
Economic Capitalism and Biodiversity are the two critical systems which govern the pace and limits of human progress. However the two frameworks are currently disassociated. There is minimal dialogue between them, and only fragmentary mutual understanding.

This has two causes:
- Biodiversity events have never been clearly translated into financial terms - preventing effective financial accountability.
- Financial decisions have never been clearly translated into biodiversity impacts - denying true environmental accountability.

Historic attempts to connect the two systems have been sporadic and generic, and have often been driven by regulation and compliance (see note a. below). Such approaches are doomed to failure within a growth-driven, free-market system where transactional accountability is a pre-requisite.

The Present Challenge
Unless these two mega-systems can work effectively together, with mutual accountability, progress within one paradigm will almost inevitably come at the expense of progress in terms of the other (see note b. below).

The 21st century imperative is therefore to make biodiversity decisions amenable to the mechanisms of the economic market, enabling the marketplace to effectively value long-term outcomes. An effective, biodiversity-literate marketplace would empower both governmental, corporate and consumer decision-makers to respond to a growing body of biodiversity insight, as it emerges over the coming decades.

From a human perspective, we can think of biodiversity as “the system of systems which sustain life”. As such it should never be in conflict with capitalism, but should embrace capitalism as an efficient means of valuing future outcomes in the here and now.

Future
If an effective market for biodiversity is to come into being, market participants (see note c. below) must be able discriminate between constructive and destructive decision-outcomes.

All markets rely upon the exercise of discrimination between available options. They must therefore be able to allocate values against these outcomes – transparently.

If biodiversity is to operate as a discriminator within a free market, the market must therefore offer:
- Information: the facts about the intrinsic and extrinsic biodiversity impacts of a product or service offer.
- Context: a robust framework for comparison between options, including values-based terms of reference.
- Accountability: the ability to withstand scrutiny from all legitimate stakeholders.

Research Priorities
The author believes that urgent and concerted research is required to understand the factors which will shape the present and future market for biodiversity outcomes.

There are two core needs:
1. To understand the unique characteristics of a market for biodiversity outcomes.
2. To understand the processes required to grow and sustain such a market.

In the first instance, the academic and commercial research should focus first and foremost on item 1. above – i.e. on understanding the unique nature of the demand-chain for biodiversity.

How is the demand for biodiversity currently expressed?
Who experiences this demand?
Which factors will most influence this demand (and its visibility)?
Who can increase and decrease the appetite for biodiversity?
In marketing terms, how well does the existing offering of brand ‘Biodiversity’ meet this demand?

Notes:
a) It can be argued that there has been minimal progress in answering point 1 above (Translating Biodiversity => Economics), with only limited victories achieved in the form of carbon emissions trading, and through current efforts to quantify environmental risk as part of corporate risk management strategies.

Meanwhile, we have witnessed a tidal wave of parallel reporting standards (AA1001, ISO14001, GRI…) that have created a meta-language somewhere between the two systems, but do not actually connect them. The potential of these reporting languages to motivate corporate biodiversity-behaviour needs deeper investigation.

Point 2, (Translating Economics => Biodiversity) has been almost entirely neglected. Activist-driven efforts have resulted in the creation of numerous production standards (MSC, FSC, Organic, Red Tractor etc), and these have gradually been embraced by retailers, making a real difference to market behaviour. However, the extent and nature of their actual environmental impact remains unknown. The true meaning and administration of the standards remains opaque to many of their stakeholders.

b) In the most pessimistic scenarios, either capitalism will consume biodiversity and precipitate global anarchy, or the rapid loss of biodiversity will precipitate a pre-emptive return to totalitarianism as a means of direct resource control.

c) Participants include consumers, governments, and businesses. However the driving force of global commerce is consumer demand. It is at the consumer level that research-insight is likely to yield most benefit, in contrast to today’s focus on corporate-level accountability.