THE FINANCIAL VALUE OF MONTANA'S NATURAL BEAUTY: How Should We Measure Our Natural Capital?

• Author: Mohr, Jakki
• Position: MONTANA ECONOMIC REPORT

Montana is known for its natural abundance. Our state is home to incredible wildlife, our hills contain rich mineral deposits and our waters flow all the way to the Atlantic and Pacific Oceans. This natural abundance also upholds Montanas vibrant business economy--timber and ore provide the raw materials for lumber and mining, fish and wildlife sustain our sport economy, healthy soil and ample precipitation make farming and ranching possible, and our rivers, parks and forests bring as many as 12.6 million tourists to our state. One might go so far as to say that Montanas economy hinges upon nature.

But Montana's natural bounty--and business economy --is not immune to the global threats of climate change, biodiversity loss, land degradation, pollution and invasive species. As the World Economic Forum stated in its 2020 report, "Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy," more than half of global GDP, or roughly $44 trillion, is moderately or highly dependent on nature and its services, and therefore exposed to risks from nature loss.

In Montana, these risks include wildfire, drought, hot weather and species loss. In 2021, nearly 1 million acres of land burned due to rampant wildfire, affecting air quality, tourism, health and wildlife. By midsummer, more than 90% of the state was already experiencing abnormally dry to extreme drought conditions with a prediction for the situation to worsen through August--again affecting agricultural producers and others reliant on water.

As a result of these dependencies on nature, forward-looking business and government leaders across the globe are increasingly calibrating their companies' and agencies' environmental dependencies in the same monetary metrics as other economic decisions. Called "natural capital accounting," this movement seeks to address the growing environmental challenges businesses face by identifying, assessing, and disclosing the financial materiality of nature-related risks to business, financial institutions, asset owners, regulators and governments.

In describing the concept, Capitals Coalition CEO Mark Gough said, "Whether were talking about intellectual capital, manufactured capital, and the natural... social, human, all of these have the same fundamental basis. You look at them as a resource that if you invest in, you get a return. You don't invest in them, you lose the capital, and it stops providing you the benefits that it was...