What is the financialisation of nature?

We live in a time of finance capitalism, where trading money, risk and associated products is more profitable and outpaces trading goods and services for capital accumulation. This requires the constant development of new asset classes, one of which is nature itself and its associated services, such as climate regulation, water purification or pollonisation. This is what we describe as the financialisation of nature. This has huge implications for the future well-being of the planet and livelihoods on which communities depend upon, since it exposes nature’s protection to the whims of the capital markets.

How can nature become a financial asset?

New financial assets are today being created from existing commodities – such as food and minerals – and where markets do not yet exist, natural resources will have to be traded so that new commodities and markets can emerge. Such is the case of carbon markets, where the new commodity “carbon” is a derivative in itself – a prediction of emissions being avoided in a certain period against a baseline.

For nature itself to become an asset class, an enormous amount of work is being done by consultancies, banks and governments to define what nature’s services are and how they can be commoditised. This was made evident at the Rio+20 Summit on Sustainable Development in June 2012, where new initiatives were launched to give a monetary value to services provided by nature’s different services. The next step for banks and governments is to facilitate the trade in these services, as has already been done with carbon. These plans are being promoted by new forums, such as the World Forum on Natural Capital, backed by major global banks. Experts say that we are talking of a 33 trillion dollar market every year!

How is civil society responding?

In October 2011 different civil society constituencies from the Global North and the Global South, met in Paris to discuss this new trend of financialisation and its implications on local communities and the public interest management of the commons. That conference decided to establish an informal international network – the Financialisation of Nature Network – that opposes further commodification of the commons.

Main objectives of the network are:

to deepen the understanding of the financialisation of natural resources – in particular Food, Biomass, Oil, Water, Mining, Minerals and natural services such as Carbon, Forests, Biodiversity – and analyse the impact on the welfare of people and the environment

to build links between groups and constituencies working to resist the commodification of the commons and the related financialisation of nature – within Europe and Europe/Global South

to promote sustainable proposals and practices – both new and existing – for the management of the commons in the public interest that do not rely on a market-logic.

Since October 2011 major network activities focused at European level regarding the proposed rescue of European carbon markets and at international level around the Rio+20 summit and the promotion of the so-called (financialised) green economy.