Putting a dollar amount on a single species, let alone entire ecosystems, is a controversial idea, but creating a tradable asset class based on that monetary value is even more problematic, experts say.

In 2023, the New York Stock Exchange (NYSE) applied to the U.S. Securities and Exchange Commission (SEC) to establish a list of Natural Asset Companies (NACs) that would hold the rights to ecosystem services, which they valued at $5,000 trillion, essentially creating a new nature-based asset class. The SEC withdrew the application earlier this year following intense opposition from 25 Republican attorneys general.

On this episode of the Mongabay Newscast, Indigenous economist Rebecca Adamson argues this financialization of nature comes with perverse incentives and fails to recognize the intrinsic value contained in biodiversity and all the benefits it provides for humans. Instead, she suggests basing economies on principles contained in Indigenous economics.

While the natural asset class’s withdrawal was for “all the wrong reasons,” says Adamson, it was nonetheless a “relief.” She tells podcast co-host Rachel Donald why she thinks the financialization of nature is the wrong approach to protecting and sustainably using nature in the global economy, and why Indigenous economic principles offer a better path forward.

“If you look at the way an Indigenous economy is designed, it’s designed to meet the most needs for the most people” via sophisticated redistribution of wealth principles, says Adamson, who is a director emerita of Calvert Impact Capital and founder of both First Nations Development Institute and First Peoples Worldwide, an Indigenous-led organization making grants to Indigenous communities in more than 60 countries. “Throughout the society, there’s customs and cultures and rituals about sharing [and] redistribution of wealth. And we’ve mapped this,” she says.

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Banner image: Tropical forest in Panama. Photo by Rhett A. Butler.

Rachel Donald is a climate corruption reporter and the creator of Planet: Critical, the podcast and newsletter for a world in crisis. Her latest thoughts can be found at 𝕏 via @CrisisReports and at Bluesky via @racheldonald.bsky.social.

Mike DiGirolamo is a host & associate producer for Mongabay based in Sydney. He co-hosts and edits the Mongabay Newscast. Find him on LinkedIn, Bluesky and Instagram.

Citation:

Kemp-Benedict, E., & Kartha, S. (2019). Environmental financialization: What could go wrong? Real-World Economics Review, 87, 69-89. Retrieved from http://www.paecon.net/PAEReview/issue87/whole87.pdf#page=69