I spent this weekend at the Bioneers conference and something shifted inside me. I understood at a deep level that the destruction of the natural ecosystems on which our survival depends, is rooted in the loss of our understanding of Nature as sacred. As Sufi scholar Llewellyn Vaughan-Lee mentioned during the panel on Spiritual Ecology: A Spiritual Response to the Ecological Crisis, indigenous cultures have retained the understanding of Nature as sacred while Western culture lost it at around 400AD, when monotheistic religions suppressed pagan earth-based religions, hence banishing the sacred from the Earth and relegating it to the heavens.
Nevertheless, many in our Western culture still seek connection with Nature as a way to nourish and uplift the spirit. Many intuitively understand that a walk through these woods can reinvigorate the body, mind and spirit.
Yet, when conventional finance looks at this picture, it only sees the commodity value of lumber. When nature is viewed through the lens of investing it is treated as a resource to be extracted. The drive to generate investment returns therefore transforms a place that looks like the picture above to one that looks like this.
Notice that if investors bought the forest in the first picture for $10M and got $12M for the lumber, they would have gotten a 20% return if they completed the operation in a year, a 40% return (annualized) if they completed it in six months and a whopping 80% return if they did it in three months. You can see certain haste in the operation of deforestation pictured above. A society that holds Nature as sacred would not have allowed such destruction.
The investment returns we count upon for our retirement do not tell the story of how they were generated, but a recent report by the UN-sponsored The Economics of Ecosystems and Biodiversity (TEEB) is shedding some light on the matter.
Earth living biosphere, the result of 3.8 billions years of evolution, gifted us with an amazing endowment of natural resources and services essential for our survival – oxygen production, soil fertility, water purification, nutrient recycling, climate regulation, crop pollination, disease control. But, since Nature does not charge us for the ecosystem services it provides nor for its natural resources, we have been treating Nature as a business in liquidation. The study Natural Capital at Risk by TEEB published in April of 2013 quantifies the dollar value of un-priced natural resources and ecosystem services our world economy uses without paying for. What they found is that in 2009, the most recent year for which complete data was available, the 20 largest region-sectors in the world used $3.2 trillions of un-priced natural capital to generate $2.4 trillions of revenues. In other words we are liquidating the natural capital on which our survival depends to generate economic activity and financial returns.
The investments of today are shaping the world in which we will be living a few years from now. It is time we wake up to the role our own investments play in financing the destruction of the very natural ecosystems on which our survival depends. We need to pierce through the many layers of financial intermediation and stop financing (with our investments) the extractive economy which is dismantling the conditions conducive to life. We need to redirect our investments toward the regenerative economy and align them with our desire for a just and sustainable world. To learn more, you can attend one of my upcoming talks on the financial system and local investing.