Recognizing and capturing the value of natural capital:

1. Recognizing and capturing the value of natural capital: • Lessons learned from the Ankeniheny-Zahamena Forestry Corridor (CAZ), Madagascar case study • Rosimeiry Portela, Ph.D. Approaches to Enhance Social and Gender Equity and Value Indigenous Knowldedge through Integrated Ecosystem-based Side Event IUCN 2012 WCC, Jeju, Korea

2. Natural Capital: Definition • The extension of the economic notion of capital to environmental goods and services • Renewable: forests, mangroves and coral reefs • Non-renewable: energy and mineral resources • A critical pillar for a healthy sustainable economy – along with built, human, and social capital

3. Accounting for Natural Capital: Objectives NCA: Public policies Business and Finance • Monitoring of resource quantity or quality over time • Specific policy or process needs (CBA, CGE, etc) • Education and awareness purposes • Stocks in physical units and changes in stocks, • Stocks in monetary units • Flows to and from the economy in physical and non-monetary units • Flows in monetary terms • Opportunities: New technologies and products, new markets and companies • Risks: Operational, regulatory, reputational, market and financial *Wang et al, draft

4. Accounting for Natural Capital: Major initiatives • UN System of Environmental-Economic Accounting (SEEA) Central Framework • WAVES: The Wealth Accounting and Valuation of Ecosystem Services _ a World Bank-led global partnership • Madagascar: Piloting NCA through WAVES – focus on water, eco-tourism and fisheries accounts, piloting ecosystem accounts • The Ankeniheny-Zahamena Forestry Corridor (CAZ): A WAVES demonstration case study

5. The CAZ Demonstration Case Study: Scope • CAZ: largest remaining contiguous patch of humid forest in eastern Madagascar • A biophysical, economic and policy analysis of the contribution of key ecosystem services • Focused on three ecosystem services: • carbon storage and sequestration, • water supply • sediment retention

6. The CAZ Demonstration Case Study: Results • Water supply: Current water demand is met in CAZ but near limit at non-CAZ area. Higher water efficiency use on agriculture and tourism, high marginal economic value in the mining and hydroelectricity sectors. • Sediment regulation: Sediment load is estimated to be six times better in CAZ than in a non-conservation area. • Climate regulation: High carbon sequestration values, though potential for high releases of carbon if the area is managed unsustainably

7. The CAZ Demonstration Case Study: Policy Implications Water supply and sediments regulation Climate regulation Carbon market, sustainable financing of the national protected area network, and design of an improved forest sector policy Regional and national integrated water resources management planning and policy

8. The CAZ Demonstration Case Study: Key Dimensions of Ecosystem Services Input productivity Economic value Sustainability of supply Quality of supply

9. Key Messages Sustainable development a must be based on paradigm that accounts for value of natural capital and limits its transformation. NCA as a means to understand trade-offs of exploitation and benefits of a more sustainable use The ability to quantify the contribution of natural capital to economy is a first step towards its incorporation into a national accounting framework

10. Thanks! 10