Is the US Department of Defense a better analog for financing nature than a market-based asset?

We are willing to pay to not have to worry about an attacker invading our home or our country, why protecting and restoring nature should follow the same logic.

A couple of nights ago after giving Ronen a bottle at 3am, I found myself reading The Power Broker to try to fall asleep. It’s a biography about Robert Moses’ life and career building parks and road infrastructure across the state of New York. The chapter I was reading focused on his use of Public Authority institutions to raise private capital to build bridges and roads that get paid back from toll revenue.

And I found myself pondering whether the Public Authority approach could be a tool for nature as infrastructure. But the fundamental challenge with nature is that it’s not something new. It’s not a new bridge, or a new road, or a new tunnel that makes life better for someone.

Nature is something that we have gotten for free. It’s hard to get people to pay for it, because it’s not about getting something new, it’s about not losing something that we have been conditioned to receive for free.

Now this thought is not revolutionary. But I do think it sits at the core of why it has been so hard unlock nature finance. Why it is so difficult to produce new revenue streams for nature, particularly at the amount needed to unlock private finance. Because writ large, the value of nature is not getting something new that makes our life better, it’s about losing something that we depend on.

It’s about risk of loss.

But why has it been so hard to get people and institutions to invest in not losing it?

We invest in things all the time to reduce the risk of something bad happening to us. We pay for medicine that reduces the risk of getting sick. We buy SUVs that reduce the risk of harm to the passengers in a car accident (even if that increases the risk of harm to someone else). We purchase security systems to protect our houses from intruders.

Companies invest in supply chains and diversify those supply chains to reduce the risk of not meeting purchase orders. They pay for PR firms to reduce the risk of stories that can hurt the brand. They invest in cybersecurity to mitigate the risk of an attack on their software that interrupts their operations.

Governments fund health agencies to reduce the risk of disease outbreaks, levees to reduce the risk of flooding from extreme weather events and national defense budgets to reduce the chances that another country can take its resources or hurt its people.

Why is nature risk different from the risks we pay to mitigate today?

The key is that the above risks feel acute. And in addition to feeling acute, we fully understand those risks and how they can negatively affect us.

But it isn’t the risk itself that drives individuals, corporations or governments to take action, it is the opportunity to remove the fear of that bad thing happening entirely from our daily mental load. Acute understanding of a risk and the potential harms that creates fear does drive action, but it is the opportunity to remove that fear entirely that I believe gets people to pay.

And if there isn’t an action that can be taken easily to remove that fear, then the natural human inclination is to ignore that fear. If there’s nothing I can realistically do about it, then I will pretend it doesn’t exist to protect my own sanity. Yes, there are bad actors that have fomented false science about climate change and nature loss to reduce fear itself, but I think much of climate change denialism is driven by the fact that people simply don’t see a way to removing the fear and therefore ignore the problem itself.

One reason why we’ve struggled to drive action on both climate and nature loss in the last few decades is that people and institutions haven’t felt the risk acutely enough, they haven’t understood how that risk will translate to impacts on their lives, bottom lines and economies and they haven’t had solutions to remove the risk.

But I would argue that for both climate and nature, that is changing.

The risks are becoming acute. From heat waves in Europe, to droughts in the Amazon and Western US, to the worst El Nino season potentially ever causing mass flooding and extreme wildfires hand in hand.

We understand the impacts. Advances in technology enables us to know be able to more precisely quantify the negative impacts of events and conditions caused by ecosystem degradation and climate change.

We have solutions to reduce and in some cases even remove the fear itself. On the climate side, we largely have the technology to reduce emissions across the board, we just need to deploy them. And on nature loss, we know where the critical areas are to protect and restore to ensure water goes where and when we need it, we can increase protection against extreme weather events and we can reduce the risk of wildfire, among many other benefits.

Fear motivates, but what people really want is to not have to worry at all.

There’s this thing called insurance.

Insurance recognizes that people valued the removal of fear higher than they value the costs of the fear becoming reality itself.

That is why the insurance industry is profitable.

As a collective, we would rather pay more to reduce the fear itself than the costs from the damage of the bad thing happening.

And that is what is so valuable to us. The removal of fear.

For so long, the climate movement, and often the nature movement, have focused on stoking the fear of something bad happening. And recently, we’ve focused more on showing people that we can take action to reduce the risk of bad, but reducing fear is much different than removing fear.

I think that for the climate and nature movements to land this plane, we need to genuinely give people pathways to remove their fears entirely. Especially as the fears become more acute, how can we show that, for example, you can protect this forest and remove the fear that you’ll run out of water?

Or at least that there are entities within the government, like the CDC, that can and will take full responsibility for a fear that you have and address that fear so that you don’t have to constantly worry about it.

People are afraid and they are becoming more afraid.

Now is the time to give people, companies, investors and governments solutions and structures that absolve that fear.

And for people, companies and governments, it’s time to recognize that nature isn’t a commodity, it is critical infrastructure, providing critical services that underpin and protect the economy. Critical infrastructure that reduces the risk of something bad happening where you live, where you call home.

In the US context, nature is the HHS, the DoD, the CIA, the DHS, the DoE, the SEC. We, the public, fund those agencies because they allow us to live in less fear. These institutions with their large staffs exist to protect us so that we don’t have to each, individually, spend our energies protecting ourselves.

We (as members of each nation) have collectively committed to a social contract with each of our governments to fund government agencies that take responsibility for certain risks so that we as individuals don’t need to pay to mitigate those risks ourselves. Because it is much more cost effective for us each to pay a small amount to have one larger entity protect us all rather than have to pay to mitigate the risk individually, or worse, live in fear of that risk with no way to mitigate it.

So this is where I begin to wonder if the US Department of Defense is a better analog for financing nature than trying to turn nature into a market-based asset.

I wonder if it’s time we put nature as critical infrastructure into that cadre and the national, state and local government levels. And climate as a mediator of the ecological infrastructure that we depend on.

Do we need a DoD or a CDC for nature? Or for climate?

In the US, maybe the EPA and the Department of the Interior, or a new agency altogether, should get the budget of those other agencies. Because from the perspective of most American citizens, they don’t exist to protect the environment or manage nature resources, they exist to make sure that I don’t have to worry that one day I won’t have water to drink, or food to eat, or extreme weather events that threaten my life.

And I think this is how we must frame nature and climate action to the American public and people around the globe. The risks are growing, but we have solutions to remove those risks.

We have the opportunity to create or invest in existing institutions that can take action and responsibility to remove the fear so that you don’t have to be afraid.

We, the people, need to empower those institutions to invest in those solutions and take that responsibility so that we don’t have to be afraid.

And then those government institutions need to deliver (I have another piece that touches on this key component coming soon).

We, the climate and nature movements, need to show the people that we have solutions, both in technologies and in institutions to remove the risks, to reduce the fear and to own the fear itself.

You put your faith in government and government will take the collective action so that you don’t have to worry, so that you don’t have to take on the burden individually. Because collectively it will be far cheaper, removing both the burden of cost and the burden of fear.

Of course, that all rests on people giving those institutions the mandate and the resources to take responsibility for that fear. And that depends on a belief that climate change and nature loss are major risks to their wellbeing to begin with. And that people believe that government institutions can take responsibility and remove our fear.

So this requires two things.

First, until the impacts get bad enough that the vast majority of the population does start to believe, and starts to demand action. And, for worse and for better, I think that point is not that far into the future. It might even be here today.

Second, when trust, the social contract, weakens between the general public and these institutions, we stop wanting to put our resources and faith into them to deliver and build bunkers in our backyards. For risks at this scale, individual action will never provide solutions, larger scale institutional action is, I believe, the only path to effectively removing the risk.

We need to show that governments can deliver and restore trust and faith in government.

And that path might very well, and I think should, start with more grassroots movements to build that motivation, that collective belief that government can deliver and re-weave the connections between Americans, and citizens in each respective country, and ideally across countries, that we want what is best for each other and we want to work together to achieve it.

TLDR

1. The value of nature is not getting a new benefit, it’s about losing something we’ve always gotten for free. Which is why risk is the key leverage point and it’s hard if not impossible to create new services/products and sell them without structurally linking them to risk.

2. Risk is fear and humans hate worrying, I hate worrying. We are often willing to pay more to not have to worry than the costs of those fears being realized.

3. For major societal fears, like disease and other humans threatening our lives, we have institutions like the Centers for Disease Control and Prevention (CDC) and Department of Defense (DoD) that take responsibility for those threats so that we don’t have to worry.

4. If we want to make progress on nature and climate, we need institutions that can assume responsibility for collective risk and act on it. People are willing to pay to not have to fear - this is where I think there is the greatest untapped opportunity to catalyze resources to address nature loss and restoration at scale, and more importantly, stabilize the systems, the ecological systems, that underpin pretty much everything else we depend on for our health and wellbeing.

5. Maybe nations should consider creating CDC or DoD style institutions, or empower existing institutions like the Environmental Protection Agency, that take responsibility for the risks associated nature and even climate and affectively deliver for their people to reduce the risks and remove the fear. Even state or local governments could create or empower existing institutions. Especially for nature, with a far smaller collective action challenge than climate, local and state governments may be the perfect place to start.