Tapping Into a $120 Trillion Natural Asset Market — One Token At a Time

According to the World Forum On Natural Capital, “Natural capital can be defined as the world’s stocks of natural assets which include geology, soil, air, water and all living things.”

Natural Assets form a part of our Natural Capital. According to the OECD glossary of statistical terms, Natural Assets are “assets of the natural environment. These consist of biological assets (produced or wild), land and water areas with their ecosystems, subsoil assets and air.” The glossary also deals with the Valuation of Natural Assets and how such values are derived. Natural Asset Valuations are useful for working out what the cost of mitigating a behavior that has an environmental impact is.

Natural Assets Market Scope

A team of university researchers from around the globe produced a paper that valued the global ecosystem services, also referred to as natural assets and natural capital at $124 Trillion per annum based on data available in 2011. The BBC also engaged with researchers Juniper/WCMC-UNEP who come up with equivalent valuations.

Natural capital consists of ecosystems. A freshwater river with stocks of fish is part of an ecosystem. Although such an ecosystem is considered priceless, a ‘priceless’ valuation is not useful for modeling economic activity. It should be noted that natural capital is not something that should be thought of in exactly the same way as natural resources that are directly convertible to raw materials used in production. Instead, we are looking for figures that are meaningful for planning economic activity. It is thus useful to discuss the fact that each year roughly $20 trillion worth of ecosystem services are lost each year to deforestation, the disappearance of wetlands and coral reef losses.

What are Natural Asset Providers?

Consider a forest. The trees in the forest act as a natural ‘carbon sink,’ meaning they remove carbon dioxide from the atmosphere and trap it within their structure. A forest could then be thought of as a Natural Asset, and it’s carbon capture and storage — also known as sequestering — can be measured. This measurement is useful for establishing a valuation. Being able to evaluate a natural asset means that we can now input the data into an economic model. This, in turn, is useful for determining the value of an offset to a particular action. Establishing this metric gives rise to the natural asset having a market value. An investor could use this figure when deciding on investing in a reforestation project which, when delivered, has a tradable market value. This investor can be considered a natural asset provider.

The Struggle for Accreditation

A natural asset provider needs to be certified by an accredited agency in order to attract funding. Without accreditation, there is virtually no avenue for the provider’s efforts to be recognized and funded.

There are environmentally accredited agencies that quantify and certify natural asset providers, such as Gold Standard, Voluntary Carbon Standard (VCS), Plan Vivo, and others. These agencies work with producers and providers of natural assets to check their scientific methodology and audit the projects on an ongoing basis to ensure the outcomes stated in their original methodology are being met. On this basis producers of natural assets are able to convert their activity into instruments that be traded on the open market.

There are steep barriers to accreditation. Accreditation is vital for a natural asset provider but is by no means a transparent process. Natural asset providers often have to deal with a stream of middlemen. The process is rather centralized and as natural asset providers compete to for attention, the possibility for corruption of the process rises steeply.

Without a blockchain enabled digital exchange, market complexities for trading natural assets include jurisdictional and foreign exchange challenges, high costs of entry where only organizations of a certain scale can participate, lengthy transaction settlement times, the need for escrow support services and general high fees.

Blockchain Democratizes the Route to Market

The blockchain based Natural Asset Exchange will be a trading place for people and businesses to trade natural assets with natural asset providers. As described above, such trades are currently occurring in markets which are far from optimal.

A Natural Asset Exchange blockchain platform would eliminate market inefficiencies and complexity. It allows all stakeholders in the climate value chain to participate, with the blockchain democratizing and distributing trust centers, creating a more level playing field.

The Natural Asset Exchange blockchain platform and Earth Token will:

Provide a free, open, transparent and universally accessible platform connecting producers of Natural Assets with buyers

Eliminate fraud and double counting of Natural Assets

Provide sellers with flexible pricing mechanisms

Reduce complexity related to fiat currency exchange rates

Eliminate registration fees for both buyers and sellers

Eliminate the need for, and costs associated with, external 3rd party registries for both buyers and sellers

Eliminate the requirement for buyers to fund escrow accounts

Eliminate minimum transaction volumes

Result in reduced transaction fees

Simultaneous fulfillment and settlement reducing current lead-times

Enable embedding of Natural Assets directly into products and/or services

Enable universal access to Natural Asset project investments, creating sustainable, risk-adjusted, long-term returns for all participants.

Now, anyone can make a positive impact. Get Earth Token.