No economy without ecologynature
Nature is crucial for meeting various urgent challenges, such as climate change, climate adaptation and the biodiversity crisis. Still, investors tend to see nature as a burden, or a charitable cause. Jan Smelik, of the dedicated Flora & Fauna team within Rebel, wants to put nature where it belongs: at the heart of our economy.
Hello Jan, a year and a half ago, Rebel Flora & Fauna was started. How did it originate?
Jan Smelik: ‘It started with the realization that we are in the middle of a biodiversity crisis and that we need to do something about it. At the time, there was no team dedicated to nature. Considering the scope of this problem, it made sense to do something about that.
‘People are slowly starting to realize we are close to meeting the limits of our planet, and there is a sense of urgency about this issue. According to the planetary boundaries framework, we’re in the yellow zone in terms of climate change. But when it comes to the decline of biodiversity we are in deep red, beyond the zone of uncertainty. This means we’re at the point that ecosystems all over the world are at the brink of collapse.’
Rebel is a financial and strategic consulting company. How are the economic and the ecological connected?
‘The problem goes beyond the need to preserve nature for the sake of it. Nature is essential to our existence. It purifies water and contributes to a stable climate by absorbing CO₂. It decreases air pollution and grows fiber-rich material like trees and reed. All of our food production is directly dependent on nature, via pollination or plague protection. If ecosystems were to collapse, nature would no longer be able to offer these valuable services.
‘That would have a huge impact on our economy. According to research by the European Central Bank, 72 percent of European companies are dependent on at least one of nature’s services. Three quarters of bank credits depend on our ecosystems. Any further destruction of nature would inevitably cause economic crises.’
How does Rebel contribute to the solution?
‘Our team tries to give nature its rightful place in our economic system. The fact businesses are dependent on nature, means that it has economic value. We try to show that it’s worth investing in, so that nature is no longer seen as a cost, but as a benefit.
‘Unfortunately, the mechanisms resulting in nature’s destruction are deeply rooted in our economic system. One of the issues is what economists call the ‘tragedy of the commons’: individuals thrive by exploiting nature’s resources, until the point those resources are depleted. Think of the world’s oceans, being emptied for fish.’
How do you resolve these issues?
‘There is not one solution, but it starts with showing the benefits of nature to potential investors. I’ve gained experience in calculating the value of nature’s benefits, such as health benefits, water retention and property value increase. In some cases, merely making the value of nature insightful, is enough for investors to chip in. With the development of logistics centers, for example, we’ve seen how nature can be a license to operate.
‘In other cases, the financial instruments need to be developed. The benefits of urban parks, for example, are usually much higher than the cost. However, the interest on the investment is scattered over various parties. People living around the parks see their property values rising, retailers increase their sales and citizens experience positive health effects. In such cases, it is important to bring different parties together, so they can invest collectively. This way, we repair the economic thinking so nature is less impacted or even restored.’
What type of clients does Flora & Fauna work for?
‘We work for public parties. We help them to show the societal value of nature-inclusive projects, so more nature is realised in public spaces and nature positive policies thrive. For private parties, we help to find business models that stimulate biodiversity while generating profits.’
What are some of the challenges and opportunities in this field right now?
‘One big challenge right now is the fragmentation of returns. The benefits of nature end up with different parties. The recreational and esthetic value of nature mostly end up at people living close, but when nature absorbs CO2, it benefits the whole planet.
‘This fragmentation makes it harder to persuade parties to invest. We have to be creative and find a way to bundle this fragmented value, in order to finance nature.’
What motivates you, personally, in your work?
‘I am a big lover of nature. I grew up in a small village surrounded by a forest. I’ve lived in Rotterdam for the past seven years, and I really miss being in nature, I miss the calm that it brings. I would like for everyone to have what I had growing up.
‘At the same time, I’m a realist. Nature is important, but there are other challenges we’re facing. In short term, we have to decide how to use the scarce space, time and money there is. Rebel offers that pragmatic way of thinking.’