Carbon and nature markets not perfect, but shouldn't be dismissed: WEF panel

Efforts to price carbon and nature to tackle global climate and biodiversity crises may not be perfect solutions, but these mechanisms should be strengthened and improved on, instead of being dismissed altogether.

- Audrey Tan

Nature and carbon markets could potentially bring in new sources of financing, mainly from the private sector, to tackle severely underfunded natural and climate crises.

This key message emerged from a panel discussion on nature markets, held on Jan 21 at the World Economic Forum (WEF) in Davos, Switzerland, during which panelists discussed the benefits and shortcomings of commodifying natural assets like water and biodiversity.

Organised by the WEF and developed in collaboration with The Straits Times, the discussion by the four-person panel, which included Singapore President Tharman Shanmugaratnam, was moderated by ST editor Jaime Ho.

Panellist Sherry Madera said companies could better identify financial risks and opportunities if the impact of climate and nature crises on them was quantified.

Climate change-fuelled extreme weather events, for example, could pose a risk to a company's physical assets, such as factories, while the loss of nature could compromise the natural services provided by healthy ecosystems, such as water purification and pollination.

The bottom line is that companies cannot manage what they cannot measure.

The language of ethics and environmentalism is important in getting people to understand what change is needed, said Ms Madera, the chief executive of CDP, a firm that manages an environmental disclosure system for companies, cities, states and regions.

"But (solving these issues) is an economic question. And if we can place it in the world of economics, that's where we can see some possible future."