A value chain is what turns a plant into your latte. Value chains represent the transformation of raw materials into final products available on your grocery store shelves, and detail the value added at each stage in the production process.
Visualize the journey of traditional ‘farm-to-fork’ agricultural items; for example, taking an Indian-grown mango and turning it into packaged dried fruit on a supermarket shelf in London. There are different actors involved in the overall process. This also occurs when a tree is transformed into a desk—timber companies, carpenters, logistics firms, home furnishing shops all have a role in the calculation of the market price of the desk.
But less tangible are natural processes you cannot see or hold.
Forests are ecosystems which help us to breathe and grow food. Forests provide protection from from wind, flooding, and high temperatures. These vital landscapes are also essential in purifying air and water. Yet we destroy an area of forest the size of England each year for more ‘profitable’ activities such as logging, ranching, and producing palm oil and paper products.
So perhaps there is a large-scale miscalculation. How these natural processes benefit humans is often overlooked in calculating best land use. So is it possible to recalculate the commodification of natural products by assigning monetary value to ecosystem services we get for free?
I spoke to environmental engineer Frank Hajek, founder of Nature Services Peru, on the opportunity to value forests’ services— not just their products.
“In Peru we are looking at rainforests as a whole: including air, water and carbon credits,” said Hajek. “It is interesting to think about how society does not recognise value – of care in families for example. Money is a tool. We are saying let’s see if we can use transactions to assign value to nature. Otherwise it’s a fundamental building block in land use that remains silent.”
At Nature Services Peru, Frank says, “we are trying to address how we distribute benefits provided by nature… it is not fair that a coffee farmer earns 1% of the market price for example.”
For thousands of years standard market calculations have dictated the prices of forest products, from papaya to brazil nuts to wood. Each individual that helps gets that product to market receives a portion of the final market price. “But we haven’t yet adequately looked at how we value services from nature. The difference and the difficulty being that nature is doing the distribution, “says Hajek.
Environmentalists, economists, and businesses have long been uncomfortable incorporating nature into language or systems used for selling products.
Frank Hajek believes that monetising ecosystem services can benefit forests and their indigenous communities—if done carefully. If not, valuing ecosystem services could incentivise exploitation of land ownership, and motivate land grabbing. If you successfully start to re-distribute ‘wealth’ towards forest owners, do you risk wealthier companies moving in to profit?
“Yes you do have to be careful, especially in countries with high levels of corruption. One of the fundamental prerequisites for ecosystem service systems to work is clarity of and communal tenure [who has the right to own what].”
There are logistical and ethical red flags flying over the process. Good governance, positive incentives and formally recognized land practices for communal ownership and use must be in place. But in today’s global context, if you can only value a forest by the price of its wood, what’s there to lose?
