Environmental issues have been in the spotlight, but biodiversity and, particularly, calculating the financial value of biodiversity in specific locations, are still quite unchartered waters.
But trailblazers ready to fill the unique niche are emerging – Tallinn-based Endangered Wildlife OÜ, a sophisticated tech-for-good fintech company, calculating the financial value of biodiversity in various locations, is certainly one of them.
“The company is truly a pioneer in this field, as it is something very new but critically needed. We are seeing a robust interest in our activities and that is very heart-warming and encouraging,” says Shana Vida Gavron, the CEO of the company.
Despite the nice buzz the company has already stirred up, she admits the start-up still has to move mountains in explaining understandably the gist of how it operates.
Speaking simply, it all boils down to putting a price tag on the hare, deer, moose, etc. that hops marvelling you, ensconced in the armchair on your terrace in your countryside cottage, on the lawn adjacent to the forest.
Believe it or not, the start-up is also ready to assess the financial value of a creepy crawler you’d probably spring back from upon having spotted while walking your dog in the park.
Among many others things, of course!
“Financial valuation of biodiversity is a new thing,” says Hanno Zingel, a nature conservation advisor at the Estonian Ministry of the Environment. “There are first attempts of interest of the kind in the field.”
He says the Ministry aims to promote the understanding of the importance of biodiversity and to show different ways to protect it, but admits that the ministry does not observe so far local companies’ increased attention to biodiversity and, especially, its financial valuation.
It takes time, doesn’t it?
Currently, Endangered Wildlife OÜ offers valuation services on a consulting basis, but looks forward to launching the software as a SaaS product that people can use to value their impact.
“Initially we are focused on offering the service to companies – with growth in ESG; this gives companies the opportunity to report on their environmental impact and to take sustainability reporting to a new level. Likewise, it can be used as a tool for investors to assess the actual impact of ROI on their investments because it allows them to calculate financial impact, rather than to rely solely on performance scoring,” Shana, the CEO, says.
Johanna Kuld, Advocacy expert at the Estonian Green Movement, believes that Estonia, like the rest of the nature-conscious world, is slowly getting a grasp of financial valuation of local biodiversity.
“As in most of Europe, the trend is moving towards that here too. Financial valuation of biodiversity has been incorporated into governmental nature protection development plans and financial analyses,” she says.
However, Kuld cautions that commodification of nature, which includes market-based instruments from carbon offsetting to ecosystem services, puts, in her words, “the incomprehensible value of biodiversity” on the same token as a potential profit from the destruction of biodiversity.
“Calculating an arbitrary financial value for biodiversity is extremely complex and is not able to capture the value of what biodiversity provides for us, not to mention disregarding its value outside of human needs…We should be very careful with it and how we influence it,” Johanna Kuld says.
And she has some reprimands for the Estonian government too.
“If the government had included biodiversity in their Recovery and Resilience plan, it would have helped bring these issues more strongly into focus on the local level with more money to tackle biodiversity issues and enhance expertise and capacity of local governments,” she says.
She regrets that, unfortunately, the status of biodiversity conservation in Estonia has deteriorated over the past five years.
“Mostly due to the weakening of logging regulations in protected areas and the general increased demand for forest biomass. Current legislation is ineffective overall in protecting conservation areas and could contribute to degrading the most biodiverse places in Estonia,” Johanna Kuld underscored.
She says more investments from public funds are needed to support biodiversity, as it is impossible to achieve the ambitious goals of EU Biodiversity Strategy 2030 with the current investment levels.
“Biodiversity cannot be supported solely through businesses and market-based solutions. We need to protect biodiversity and nature, and we need to protect it now. Market-based solutions may help up to a certain extent, but are complementary measures only,” the conversationalist believes.
But Endangered Wildlife OÜ might be a mile ahead of what will be a dime a dozen soon in calculating financial value of biodiversity.
The Estonian start-up bases biodiversity valuation on a combination of academically approved methodologies that have been brought together using an internally developed AI algorithm. The value includes carbon value, aesthetic value, economic value and hedge value. Together, they form the Species Existence Value.
“We then calculate the Impact Value, which is based on a 30-year simulation taking into account an active management strategy and how the Target-species interacts with other species and exogenous variables within the ecosystem. The Species Existence Value plus the Impact Value together form the Total Conservation Value,” explains Shana Vida Gavron.
Notably, Endangered Wildlife is part of the ClimAccelerator, a global programme giving start-ups access to innovate, catalyse, and scale the potential of their climate solutions.
Although there are some other Baltic start-ups working on biodiversity related issues, Endangered Wildlife is still the only one fully focused on the valuation of biodiversity.
Meanwhile, Ann Runnel, founder and CEO of Reverse Resources, an online marketplace for industrial upcycling of textile leftovers, says biodiversity’s financial assessment in her daily operations is “sometimes less about actual measurements” and more about the principles of biodiversity.
But the price-tags by Endangered Wildlife would attract her eyes, too.
“We just need metrics every now and then to verify if the principles hold,” Ann Runnel says.
Approached for the article, Adele Baneliene, environmental specialist at Lithuanian Fund for Nature, says that there is a “young trend” of valuing nature not only by terms of timber from forests or peat from wetlands, but by the value that nature offers itself or value expressed by ecosystem services, like carbon sequestration, for example.
“But this process is slow, most importantly because of the big impact of major industries,” Baneliene said.
But, notably, in 2020, an analysis was made of how much financial value Natura 2000 network creates in Lithuania annually.
“The answer was stunning: 193.7 million euros,” she underscores.
The shift has definitely already shaped up and cannot be overlooked anymore – assessment of impact on local biodiversity and calculating its financial value is something both a nature-friendly individual builder or a major developer has started looking for.
“For us, biodiversity is a “priority”, hence the need to understand it and give it the respect it deserves and assess it from all possible aspects,” say Yvonne and Eli, owners of Wild’ness Retreat&Studio in the Latvian countryside.
Nodding approvingly, Shana Vida Gavron, the Endangered Wildlife CEO, says: “Biodiversity valuation in the future will become more important throughout Europe and potentially worldwide.”
Structures, such as the Taskforce on Nature-related Financial Disclosures, TNFD, are working towards a standardised reporting policy, she says.
TNFD is a new global initiative that aims to provide financial institutions and corporates with a complete picture of their environmental risks and opportunities.
United Nations Environment Programme Finance Initiative (UNEP FI), United Nations Development Programme (UNDP), the World Wildlife Fund (WWF) and Global Canopy are its founding partners.
Endangered Wildlife was recently officially invited to join the TNFD Forum, which the start-up accepted.
“We certainly see more regulatory reporting requirements emerging and the spotlight on biodiversity increases constantly grows,” Shana Vida Gavron concludes.
It means that Endangered Wildlife will be a very busy bee – soon and perhaps for years to come!
