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BY BONNIE KEELER

Policy makers, land managers, and other stakeholders confront a dizzying array of environmental decisions. How do we best manage our natural resources? Where should we invest in conservation? Do we need stricter regulation of development or industry?  

The Natural Capital Project, a core program of the Institute on the Environment, develops innovative tools and approaches to inform these important questions. Starting this year, the Minnesota team will add three full-time research positions -- a lead scientist, an ecologist and an economist. The growing NatCap presence at IonE will enhance the program's ability to meet increasing demand for data and tools that quantify the values of natural capital.
What is Natural Capital?

How we manage our environment can directly or indirectly affect our stock of natural capital, the ecosystems (e.g., forests, grasslands, wetlands) and natural processes that provide valuable goods and services to people. We know these ecosystem services -- things like clean air and water or an aesthetically pleasing landscape -- are valuable. But how valuable? And how can we capture the values of nature in decisions about resource management, conservation and environmental regulations?

One thing is clear: the conventional market-based tools we use to value goods like corn, timber and houses don't translate well to public goods like clean air, bird-watching or beautiful views. Special methods are needed that look beyond markets to estimate the true value of these goods and services to society, and new types of institutions are required to manage natural capital resources.

A Global Partnership 

The Natural Capital Project was formed, in part, to address these challenges. The founders of NatCap, including Regents Professor and IonE resident fellow Steve Polasky, recognized a growing demand for information on the value of nature's benefits to inform decisions. A partnership was formed among Stanford University, the University of Minnesota and two of the world's 
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largest conservation organizations, The Nature Conservancy and the World Wildlife Fund. The goal of the partnership was to bring together leading natural scientists and economists to develop user-friendly tools and approaches that could inform conservation and development decisions worldwide. Since its founding in 2006, NatCap has informed decisions in more than 20 global projects -- guiding investments in water security in Latin America, in coastal protection in the Gulf of Mexico, in food security and economic diversification in Belize, and in conservation and land-use planning in China. 

The Natural Capital Project has always had strong ties to the University of Minnesota. Polasky continues to co-direct the project. U of M researchers designed and coded many of the early ecosystem service models that now make-up the software suite called InVEST (Integrated Valuation of Environmental Services and Tradeoffs).Minnesota data have been used in statewide ecosystem services assessments (see Polasky et al. 2011, and Kovacs et al. 2013), including a study estimating the value of the state's public lands.

This diagram illustrates a typical workflow for a NatCap project using the biophysical and economic models in InVEST. 


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The scope of the analysis is driven by the needs of stakeholders.Potential actions or decisions related to changes in natural capital or land use are translated into scenarios.The scenarios are run through multiple InVEST models to produce estimates of ecosystem services.Outputs of the models can be presented either in biophysical terms (tons of carbon, sediment, or nitrogen) or in economic terms (social costs of carbon, avoided treatment costs, or lost recreation value).Models are run with frequent interaction between scientists and stakeholders to co-produce knowledge and build capacity for future work within our partners and clients.The InVEST software suite currently includes 16 models that can be used to quantify the ecosystem services provided by both terrestrial and marine systems.

The Minnesota-based NatCap team continues to build on its strengths in model development and testing, including new approaches for the economic valuation of ecosystem services, and exciting technological advancements such as agent-based simulation models and spatial optimization tools. We are applying these innovations to estimate the social costs of nitrogen pollution in Minnesota, quantify the value of forests in Tanzania, design payment for ecosystem services programs in China, and better target agricultural expansion and conservation in Latin America.
 
The challenges associated with making informed environmental decisions remain. However, the Natural Capital Project, guided by U of M researchers, is making a serious impact in this space, both in elevating the recognition of the values of nature, and providing resources and tools to capture those values in decisions. The long-term mission of NatCap is to integrate the values of nature into ALL major decisions affecting the environment to improve both the state of biodiversity and human well-being. 

For more information on the Natural Capital Project, visit our website or contact the IonE-based NatCap team:

Steve Polasky, polasky@umn.edu 
Bonnie Keeler, keeler@umn.edu
Peter Hawthorne, hawt0010@umn.edu 
Justin Johnson, joh07536@umn.edu 

Photos - Banner: Upper Yangtze River basin, China, by C.Tam; Woman at sunrise in the foothills of the Uluguru Mountains, Tanzania, by Taylor Ricketts


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  of the Institute on the Environment/University of Minnesota.

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