The economics of conservation debt: a natural capital approach to revealed valuation of ecological dynamics

Some species are valued for their direct usefulness to society, through immediate financial returns from market activities such as harvesting or ecotourism. But many are valued for their passive usefulness, i. e. , their mere existence contributes to supporting, regulating or cultural environmental services that support human well-being. Hence, there is inherent social value to conserving such species as natural assets. However, such species are seldom priced as natural assets, and thus not accounted for in sustainability wealth measures because deriving non-market prices is challenging. We overcome this limitation by presenting a new approach for natural asset pricing of species with passive value that can be incorporated into national sustainability wealth accounting. We explicitly consider the relationship between prevailing institutions, species interactions, and ecosystem dynamics. Our approach is illustrated with the case of threatened woodland caribou in the Alberta Oil Sands. We show that conservation can be considered an investment while destructive activities can lead to a loss or conservation debt; and forgoing destructive activities can be considered a capital gain, increasing future wealth. Our approach reveals that caribou conservation in Alberta is leading to a conservation debt on the order of CA800 million.