Commonland and partners are developing a method to value holistic large-scale landscape restoration. The method will demonstrate the monetary value of the multiple returns for different stakeholders investing into transforming degraded landscapes. Thus mobilising much needed funding for large-scale landscape and ecosystem restoration.
There is an estimated two billion hectares of land waiting to be restored around the world. Transforming this area into healthy landscapes will restore ecological cycles, improve hydrology, and protect and provide essential biodiversity habitat. In turn that supports food production for growing populations while promoting resilient societies and inspiring a generation of people. When investments are made into building healthy landscapes, local stakeholders benefit from increased hope and inspiration, as well as social, natural and financial capital. This is what we call the 4 Returns Framework.
Such a feat is possible. And the benefits will be felt by local to global communities. Yet the monumental task of restoring degraded landscapes requires funding and investment from government bodies and private investors. And that involves presenting clear insights of the expected returns when investments are made into holistic landscape restoration.
Building bridges to overcome investment obstacles
There remains a significant funding gap in ecosystem and landscape restoration; a 2014 report estimates that there is a shortfall of $300billion/year. This is largely due to the barriers that exist between private investors with capital and communities involved in ecological initiatives and how the costs of restoration are easier to measure than the benefits. Addressing this funding gap would allow landscape restoration initiatives to scale and tackle the monumental task of restoring degraded land around the world. Yet it requires building bridges between economy and ecology and engaging the private sector by demonstrating the monetary value of landscape restoration.
The 4 Returns Valuation Method
Commonland and its partners are currently developing a method to calculate the integrated (social, natural and financial) value of the multiple returns of landscape restoration. The 4 Returns Framework already creates clarity and a common language for the complex issue of holistic landscape restoration for different stakeholders in a landscape. Yet quantifying the returns in financial terms is one important step towards further demonstrating the monetary value of restoring landscapes.
The method will allow each stakeholder to understand the benefits and risks of investing in landscape restoration – farmers and private investors can see improved returns from regenerative agriculture and related business activities while governments can expect additional economic growth, jobs and taxes – therefore providing a means to make well-informed investment decisions. This is essential for enabling mobilisation of the funding required to scale landscape restoration initiatives.
Testing the method in Spain
To test their valuation method, Commonland and its partners calculated the value of restoring the Altiplano Estepario landscape in Southern Spain – a landscape with a total area of 1,000,000 ha. Led by AlVelAl, more than 100 farmers are working to restore natural areas, transition to regenerative agriculture and grow sustainable businesses. Using the experience gained over the last seven years, a preliminary landscape restoration valuation method was developed in partnership with KPMG.
Data from the Altiplano was used to calculate projected cashflows for a period of 20 years and this is set off against the necessary funding required to carry out work for large-scale landscape restoration. The cash flows are based on the difference between business-as-usual and a landscape restoration scenario. The net value of interventions is calculated based on the difference between expected positive (generated income) and negative (investments and expenses) cash flows. The value today of these future cash flows is calculated using a formula known as net-present value (NPV).
The preliminary method found that investments made now would lead to a regenerative, abundant and resilient landscape for the people living in the Altiplano as a result of which key stakeholders – farmers, private investors and government – all earn direct financial returns in excess of the funding required.
Beyond monetisable returns
The preliminary valuation method developed and launched in 2020 was another milestone in making the case for investment into landscape restoration. Yet the method focused solely on monetisable cash flows found through the 4 Returns. However, in some cases, the ecological, social and inspirational returns from landscape restoration are not montisable: they do not generate cash flows for stakeholders. The potential inability to monetise returns does not make these contributions any less valuable for society. In fact, often the most valuable benefits of holistic landscape restoration come from inspiration and the returns of natural and social capital which often can not be translated into a cash flows.
Landscape restoration initiatives inspire people and create hope for a better and more sustainable future. Regreening once degraded areas causes a powerful chain of new, often locally based sustainable businesses. These activities create jobs, lead to sustainable economic growth, improve educational opportunities and restore local food security. Thus, significantly enhancing the prospects of a rural community and reducing migration to cities.
Replacing fertilisers and pesticides found in conventional agriculture with nature-based farming solutions, like regenerative agriculture and agroforestry, improves the quality of soil and enhances the health of local rivers and oceans. When a farming transition is done holistically and combined with the protection and enhancement of nature, communities flourish alongside more resilient and sustainable food production systems.
Done on a large-scale, landscape restoration strengthens natural infrastructure and helps restore short-water cycles. This contributes to society’s resilience and ability to adapt to and mitigate climate change-related events such as droughts, flooding and bush fires. Thus, increasing safety for local communities.
Commonland and its partners are currently extending the valuation method beyond monetisable returns towards a method that estimates the total integrated value of ecological, social and financial returns from holistic landscape restoration quantified in monetary terms. This year, the method will be further fine-tuned and tested with forward-thinking NGOs, governments, universities, private investors and landscape practitioners and a simple online valuation tool will be developed. Both the method and the online tool will be provided by Commonland and its partners as open-source tools for landscape practitioners and stakeholders around the world and jointly further developed with these parties in the coming years.
Investing into the 21st century
Now more than ever, we need solutions based on science, entrepreneurship and local knowledge that rise to the challenges of the 21st century. Mobilising funding from private investors and governments, would give the means to restoration initiatives and tackle one of the greatest threats to human society today. After seven years of implementing the 4 Returns Framework on the ground, Commonland believes that combined with the related valuation tooling, holistic landscape restoration can be one such solution.
This article was written in collaboration with Jasper Bertels, Landscape Finance Expert at Commonland.
(Feature photo: Three zones mapping in the Altiplano landscape)