Understanding and managing the business risks and ... · ecosystems. Businesses with well developed...

Understanding and managing the business risks and opportunitiesrelating to ecosystems and natural capital

Business Risk:Layout 1 14/06/2011 15:48

About the Cambridge Natural CapitalProgramme

Executive summary

Acknowledgments

It is increasingly accepted that we need astep change in the level of practical actionsand policy that can deal with long-term risksto business, customers and wider societyfrom the destruction of the natural resourcebase. This major new business-ledprogramme brings together a cross-sectoralgroup of leading companies to explore howto bring about these transformationalchanges.

Phase 1 of the programme, betweenSeptember 2010 and June 2011, exploredfour areas that programme membersidentified as critical for delivering progressthrough collaboration and system-wideactions. These were:

• Developing a boardroom narrative• Examining long-term business risks and

opportunities

• Mainstreaming natural capital investment• Building resilient value chains.

Phase 2 of the programme is acting on keyrecommendations from this first phase,including a number of recommendationsoutlined in this report. For more details ofthe second phase of work visithttp://www.cpsl.cam.ac.uk

The programme has been developed by theUniversity of Cambridge Programme forSustainability Leadership and is a business-run initiative.

This report was written by Richard Fairburn,CPSL Adviser and Martin Roberts, Director ofthe Cambridge Natural Capital Programme,CPSL, with contributions from Tom Burke,CPSL Senior Associate, and Kayla Freidman,CPSL Senior Researcher.

We would like to thank all the collaboratorymembers for providing the insights,observations and resources that made thiswork possible.

Business Risks and OpportunitiesCollaboratory Members

The growing pressures on ecosystemservices and natural capital are expected togenerate a range of future risks andopportunities for businesses. Although notcurrently well understood by mostcompanies, the ability to understand,anticipate and respond to these challengeswill undoubtedly improve competitivepositioning and return additionalshareholder value in future.

Risks and opportunities The degradation of ecosystems, and the freeservices they provide, can create significantsupply chain risks for businesses. Scarcity ofcertain raw materials and inputs such aswater could adversely affect volumes, costsand margins. Governments may restrictaccess to land and/or charge for ecosystemservices, further increasing the risk tobusiness performance. Companies impactingand dependent on fragile ecosystems couldsuffer reputational damage and lose marketshare due to the changing demands ofcustomers, consumers and civil society.

Governments and NGOs now recognise theneed for action to limit loss and degradationof natural capital. This is already leading tothe introduction of policies, regulation andmandatory standards and these will increase.Companies must carefully consider thepotential negative or positive influence ofthese key stakeholders when developingstrategies for the management of ecosystemrisks and opportunities. They should payequal attention to the opportunitiesassociated with the successful managementof ecosystem services. Reputational benefitsfor a company and its brands, innovation andnew product development, market sharegrowth, new business ventures andconsultancy can all deliver significantcompetitive advantage.

The need for collaborationThe challenges of ecosystem degradationcall for collaboration both within and acrosssectors and with other stakeholders.Businesses must share information, learnfrom each others’ experiences and jointlyinfluence governments and otherstakeholders.

Companies are encouraged to use the CPSLrisk inventory and scenario planning tools.Together with insights from theCollaboratory work, these will help to clearlyidentify their impact and dependency on theecosystems services which benefit theirbusinesses. Is the long term provision ofthese ecosystem services threatened and ifso, how can an individual business respond?Each company needs to decide who tocollaborate with, who to influence and howto develop a business case for intervention.

Businesses with well developed strategiesand capabilities in relation to ecosystems andnatural capital have a critical role to play inshowing leadership and influencing theirpeer group and supply chains. For these leadcompanies, benefits will definitely accrue inthe form of public acknowledgement,reputation building and enhanced brandvalue.

2 - Understanding and Managing the Business Risks and Opportunities 3

Business Risk:Layout 1 14/06/2011 15:48

2 - Understanding and Managing the Business Risks and Opportunities

1. The Challenge

The fast changing landscape The growing pressures on ecosystemservices and natural capital1, and efforts bygovernments to manage them, will generatea range of risks and opportunities forbusiness at local, national, regional andglobal levels. A combination of publicexpectation that such risks will be wellmanaged, and changes to policy andregulation, will also increase the potentialexposure of companies.

The changes to this environmentalinfrastructure that will occur in the comingdecades will accelerate, partly due toincreasing population, but also due to rapidlyincreasing affluence and consumption inemerging economies. This fast changinglandscape of risk and opportunity is notcurrently well understood by mostbusinesses. In future, companies which areable to understand, anticipate and respondto these changes will undoubtedly improvetheir competitive positioning and ability toreturn value to shareholders.

Exploring risks and opportunitiesThe Millennium Ecosystem Assessment wasthe first comprehensive effort to audit thescale of current and future impacts of humanactivities on the productivity of theenvironmental infrastructure of the economy.In 2010 the World Economic Forum, togetherwith PricewaterhouseCoopers, set out a riskmatrix that attempts to relate the variouscategories of ecosystem services risk to themain business sectors. It identified 96possible risks and 44 sectoral exposures.

Some of these risks are substantive, that is, aconsequence of adverse changes toecosystem services and natural capital.Others are a consequence of the success orfailure of governments in adopting effectivepolicy measures to prevent or reducepressure on ecological systems. Both kinds ofrisk can have a direct or indirect impactacross business operations, affecting costs,revenues and value.

The intent of the Business Risks andOpportunities Collaboratory was to explorethe landscape of risk and opportunity forbusiness generated by the intensifyingpressures on ecosystem services and naturalcapital. It sought to:• understand the evolving dynamics of

ecosystem services risk and opportunity forbusiness and to develop a more completerisk inventory

• determine possible and likely policyresponses by government and civil societyto these risks

• examine the capacity of businesses tounderstand and manage these risks

• identify the key elements of a corebusiness case for enhancing corporatecapability to address natural capital issues

• examine the balance betweencollaborative and cooperative responses

1Natural Capital: the sum total of nature’s resources and services, underpinning human survival and economic activity (e.g.agricultural crops, vegetation, wild life, fossil fuels, mineral deposits). Ecosystems: A dynamic complex of plant, animal, fungal,and micro-organism communities and their associated non-living environment interacting as a unit. Ecosystem services are thebenefits that we gain from the many resources and processes supplied by ecosystems e.g. clean drinking water and processessuch as decomposition of wastes.

2 - Building Resilient Supply Chains 5

EXECUTIVE SUMMARY

1. THE CHALLENGE

2. THE COLLABORATORY PROCESS TO DATE

3. A TOOLKIT TO BETTER UNDERSTAND BUSINESS RISKS & OPPORTUNITIES

4. NEXT STEPS

APPENDIX 1: BUSINESS RISKS MATRIX 2010

APPENDIX 2: BUSINESS RISKS AND OPPORTUNITY SCENARIOS

APPENDIX 3: SCENARIO QUICK GUIDE

Contents

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2. The Collaboratory Process

Ecosystem risks and company strategyTo date, the private sector has been focusingheavily on climate risk. Increasingly, risksassociated with the loss of biodiversity andecosystem services will need to beconsidered, particularly as impacts onecosystems and natural capital will occurearly in the climate change timeline.

Businesses face three key pressures inrelation to ecosystems and natural capital:

Operational pressures (e.g. supply chains),which have a knock‐on effect on costsMarket pressures affecting volumes andrevenues Reputational pressures which affectbusiness value.

Tensions also exist between collaborativeand competitive pressures, which can bespecific to individual sectors and companiesor apply to business in general.

Sectoral perspectives on the challenge differ.For example, audit firms and service relatedcompanies may focus on the impacts of theirclients’ businesses as much, if not more, thantheir own. For extractives and agribusiness,the focus is likely to be their direct impact onindividual ecosystems.

Sharing the visionCompanies need to develop beyondtraditional Corporate Social Responsibility(CSR). A business needs a big‐picture ‘vision’which sets out what it wants to be in theworld, even though, in the short term, such avision may not always appear beneficial tothe company. Ecosystem damage and loss ofbiodiversity is a moral as well as a businessissue. Businesses cannot abdicateresponsibility for their actions by claimingthat they do not access, or make use of allecosystems.

Businesses with well developed strategies inrelation to ecosystems and natural capital

have a critical role to play in showingleadership and influencing their peer groupand supply chains. For these lead companies,benefits will definitely accrue in the shape ofpublic acknowledgement, reputationbuilding and enhancing brand value. Challenges of ecosystem degradation shouldnot be viewed from an individual companyperspective. Collaboration will be requiredboth within and across sectors and withother stakeholders. In future, supply chainpartners will need to be carefully selected toensure that they share the vision of naturalcapital conservation. A supplier’ssustainability credentials may become asimportant as the price of its product andleading companies will need to educate andshare learning with their supply base.

Speaking the right languageLanguage is vital in articulating the‘ecosystems challenge’. The narrative needsto be fully understood within individualbusinesses and easily communicated toexternal stakeholders. It is unrealistic toexpect companies and stakeholders to fullyunderstand all the complexities around thevalue of ecosystems, which are often ratiosrather than absolutes. Ecosystem risks andopportunities have to be expressed in thelanguage of business, using traditional termssuch as return on investment, profit and loss,a set of quantifiable metrics and a reportingprocess.

The Role of Government in managingthe risk of declining ecosystem services2

Governments are keen to help businessdevelop secure supply chains and play animportant role in influencing markets. Thenatural resources agenda providesopportunities to develop new markets andnew technologies and to increase dialoguebetween the public, private and NGOsectors. Links between biodiversity and socialcapital need strengthening, since they aredependent on each other. The link between

biodiversity and climate change has also notbeen fully explored and documented.

Governments now realise that a strongeconomic case exists for action to limit lossand degradation of natural capital. Thechallenge is to refine the case so as toencourage specific actions from differentbusiness sectors. Governments must alsoaddress increasing demand andconsumption, since humankind will need toproduce more while consuming the same (orless) to enable a global population of around9 billion by 2050 to have a quality life.

Policy has a clear role to play, especially inrelation to standards, market instrumentsand mitigation projects. The public sectorneeds to communicate clearly why businessshould pay for the protection of naturalcapital as the services that these publicgoods provide are currently ‘offered’ for free.

Governments expect major companies todemonstrate leadership both in the way thatthey assess and analyse their impact and inhow they decide to improve their processes.They must act as role models for SMEs intackling these issues. The public sector alsoneeds to learn from business aboutanticipating and responding to futureconsumer needs.

How are civil society organisationsresponding to the problem?3

Ecosystem value and wider habitatpreservation is a comparatively modernfocus for this sector. The sector is nowmoving to tackle the bigger root causes,primarily :

• Limits – and society’s failure to recognisewhat they are.

• Justice – the inequitable balance of globalpower, with the powerful dominating theless powerful.

• Economics – why the current globalsystem does not address the very apparentmarket failures.

In future it is likely that business and societywill be angry with organisations that haveheld back, for instance with the emissionstrading systems.

Setting standardsNGOs are heavily focused on standards andwhether certification is the answer ‐ if so,certification by whom and for whom? Does itencourage the required sector shifts? Theworld in general is moving towards moremandatory standards which hopefully willrelieve the frustration experienced bybusiness over the bureaucracy of voluntaryprocesses. If they see a business opportunity,companies can then go beyond the setminimum standards. Since certifying all rawmaterials in all countries is an impossibletask, a next step might be voluntaryverification to a company’s own standards.However, such verification could be viewedas biased, so an independent body wouldneed to validate and endorse this type ofcertification.

2Summary from a presentation given to Collaboratory members on 14th Oct 2010 by AlexandraVakru, Chief Economist,Instruments & Impact Assessment, European Commission, DG‐Environment3Summary from a presentation given to Collaboratory members on 14th Oct 2010 by Craig Bennett, Director of Policy &Campaigns Friends of the Earth UK

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Civil society is expected to focus increasinglyon international trade policy and changingthe global economy. Where does the powerlie? How do we involve local communities?How do you translate the big challenges atan individual level? There are also CSR issues -for example, people being driven off land tomake it available for biofuel plants.

Due to the difficulty in valuing ecosystembenefits in any investment decision, abiodiversity ‘credit’ system could beestablished, possibly through regulatoryincentives. These incentives could, forexample, be extended to farmers who giveareas of their land to forest. Ecosystems useand value to business concerns much morethan just forests, although forests arecurrently best understood. It also covers, forexample, marine environments.

It is clear that companies must carefullyconsider the potential influence of NGOs(negative or positive) when developingstrategies for the management of ecosystemrisks and opportunities.

Companies need to consideropportunities as well as risksThe Collaboratory process focused on therisks associated with ecosystem services andnatural capital and how to identify andunderstand the type and level of risk. Itexplored how companies could developstrategies to mitigate or avoid such risks.

This is only one side of the story. In future,Collaboratory members need to pay equalattention to the opportunities associatedwith ecosystem services. Opportunities arenot just restricted to reputational benefits fora company or its brands. Innovation and newproduct development, trading of ecosystemservices credits, operational efficiency,market share, new business ventures andconsultancy services can all deliversignificant and distinct competitiveadvantage.

The importance of cross sectorcollaborationAlthough each company within theCollaboratory is at a different stage in itsresponse to the challenges of ecosystemdegradation and loss, members identified anumber of key areas for potentialcollaboration:

• Learning from each others’ experiencesand sharing information from the differentsectors in a pre-competitive approach

• Framing the narrative for use with seniormanagement

• The identification of specific values andmetrics

• Influencing governments and otherstakeholders

• Development of generic toolkits for usewithin individual companies/industries

• Harnessing CPSL’s academic andprofessional expertise

Collaboratory members also agreed theimportance of:

• Understanding the extended impacts of abusiness (i.e. up and down its supply chain)

• Mapping of the different risks – movingbeyond reputational risk, to risks relating tosupply chains and licence to operate.

• Effective scanning of the business horizonto fully understand the stresses on thesystem, and the likely increase in pressuresover the coming years. To achieve this,system stresses will need to be consideredindividually, sectorally and more widely.



3. A toolkit to better understand businessrisks and opportunities

Preparing a risk and opportunityinventory Collaboratory members, representing abroad range of business sectors, decided toindividually complete a risk and opportunitymatrix based on the various ‘categories of risk’for their company or sector. Somecompanies needed to consider risks relatingto more than one sector. For example, oilproducers increasingly relying on biofuels,needed to consider agriculture as well as oiland gas in their risk analysis.

Completing the risk and opportunity matrixinvolved a number of important steps:

1. Agree the boundary of the business2. Decide whether to use a complete value

chain or life cycle approach3. List inputs to the business where no price

is paid

4. Identify which resources are scarce ordepleted or likely to become so

5. Identify the company’s impacts anddependencies on ecosystem services

6. Identify potential risks and opportunities tothe business

7. Discuss with internal management

A generic example of a completed risk matrixfor global agribusiness can be found in(Appendix 1)

The following table summarises the businessrisk matrices completed by Collaboratorymembers. It identifies the business risksassociated with ecosystem degradationacross a number of different industries. Someinteresting trends can be observed.

Company type

Global Food FMCG

Agribusiness Supply Chain

Professional Services

Mining Company

Oil & Gas

East African Tea Producer

Kenyan Horticulture

UK Fresh Produce Retailer

Construction

X

X

x

x

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

x

X

X

x

X

X

X

X

X

X

X

x

X

x

x

X

x

x

X

x

x

X

x

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

x

x

x

x

x

x

x

x

Raw MaterialAvailability

BusinessVolume

MarginPressure

WaterScarcity

LandAvailability

LandDegradation

Gonvern.Policy

ConsumerPressure

CustomerPressure

Reputation

Summary• The highest number of risks were identified

by companies operating inside a particularecosystem or heavily dependent onecosystems for raw materials.

• Scarcity of raw materials and inputs such aswater create risks to business volumes andcosts.

• Access to land and land degradation risksaffect agribusiness and extractiveindustries

• Stakeholder risks (Government, customers,consumers) are common to mostindustries.

• Reputational risk is common to all sectors.• Distance from the actual ecosystem risk

increases the options a company has toavoid such risk. (e.g. a retailer or FMCGcompany may be able to change itssources of supply)

• In the case of professional servicescompanies, risks are often associated withthe behaviour of customers and suppliersrather than in-house operations.

The completion of a risk matrix shouldencourage other companies to think moredeeply about their impact and dependencyon ecosystem services. Which ecosystemsare their company or industry impacting?What are the adverse impacts of theircompany or industry? What are the true risksand opportunities associated with ecosystemdegradation? What can they do about it?What do they want to do about it? Whoshould they collaborate with? (Industry peergroup, other industries, NGOs, Government,etc). Who might they influence and how?What will it cost and what are the likelybenefits?

Limitations and challenges Although the use of individual risk matriceswas certainly beneficial, the exercisehighlighted a number of limitations andchallenges of using such a tool.

• Materiality of risk: The completed riskmatrices did not identify many short termmaterial risks. Is this because mostecosystems are not at the point of totalcollapse and therefore these risks are notregistering yet even though they may do inthe future?

• Cumulative Risks: What is the cumulativerisk for a company whose operationsimpact and depend on a range of differentecosystems? What is the cumulative effectof competitors and other industries on asingle ecosystem?

• Timeframe: Policy can have a dramaticeffect in bringing the timeframe of a risksuddenly much closer e.g. the Water Act inAustralia (see generic risk matrix) where aproblem is recognised and newGovernment policy rapidly implemented.In these cases risks become materialovernight. Organisations have the optionof waiting for a risk response to become arequirement, by which time the effects willbe much greater, or by recognising therisks early they can respond ahead ofcompetitors.

The use of exploratory scenarios Increasingly, ecosystem business risks areregarded as important. But there can oftenbe a real gap between those who fullyunderstand the risk and Senior Managementand other members of the company whohave less understanding. This gap must bebridged by illustrating the dynamiclandscape of risk, its materiality, and thepotential threat to monetary and shareholdervalue. Communicating a qualitative as well asa quantitative story can make it much moretangible for business leaders.

Collaboratory members suggested that ageneric tool could be used to examine thedetailed risks and opportunities for particularsectors, markets and companies. Anexploratory scenario tool was developed to

X = major or direct risk x = minor or indirect risk

Finance Stability

BUSINESS RISK

11



interrogate the landscape of risk and toinvestigate the interconnections betweenaspects of current and future practice,technology and policy. The tool wasdesigned to incorporate the effects of policyand timescale and their absence, and todevelop a picture of current material risksand how these might change in the future.The aim was to strengthen business analysisand decision making. The scenariosincorporate the diversity of business sectorsand geographical location.

The central question the scenarios weredesigned to answer is:

The health and productivity of ourecosystems and natural capital underpinsthe global economy. What will the impacton business look like in 2030 from thechanges in ecosystems and naturalcapital and our measures to maintaintheir productivity?

It was agreed to collate the wide range ofbusiness perspectives on the impact ofdegraded ecosystems and natural capital on

individual businesses during CambridgeNatural Capital roundtables of the 22nd ofApril and 2nd of June 2010.

This material, together with informationgathered from Business Risks andOpportunities matrices completed fromdifferent sector viewpoints, combined withthe latest scientific data, were used to buildthe scenarios to image a future in 2030. Thescenarios also include ecosystems andnatural capital work focused on locations,sectors, timescales or aspects such as health.

The new scenarios build on the work alreadycarried out for the Millennium EcosystemAssessment (MEA), Ecosystems and HumanWellbeing scenarios in 2005. The fourscenarios are based on the following twoaxes of uncertainty:

• Globalised vs. regionalised activity andresponses

• Reactive vs. proactive attitudes, behavioursand actions

Collaboratory members decided to use thefour MEA scenarios titles as starting points todevelop new scenario narratives thatvisualised a possible future end state in 2030and these are summarised below.

Global Orchestration*:Globalised, with emphasis oneconomic growth and publicgoods

Order from Strength*:Regionalized, with emphasison national security andeconomic growth

Adapting Mosaic*:Regionalized, with emphasison local adaptation andflexible governance

Techno Garden*: Globalised,with emphasis on greentechnology

‘Global Orchestration’ SummaryScenario Narrative

The past 20 years have shown that someecosystem services can be maintained orimproved by appropriate macro scalepolicies. Notable successes occurred inreducing or controlling many globalpollutants and in slowing, or in some casesreversing, loss of marine fish stocks. In somesituations, it turned out that ecosystemservices improved as economies developed.On the other hand, it appears that globalaction focused primarily on the economicaspects of environmental problems is notenough. In some regions and nations,ecosystem services have deteriorated despiteeconomic advancement. Also, it wassometimes difficult to adjust large-scale

environmental policies for local and regionalissues. Despite some significantenvironmental disasters, this lesson has notyet been learned. As we look to 2050 andbeyond, multi-scale management ofecosystem services is a top challenge forenvironmental policy.

‘Order from Strength’ Summary ScenarioNarrative

Since 2000, the availability of ecosystemservices has fallen below minimal needs forhuman well-being in some regions of theworld while being maintained or evenimproved in other regions. Widespread loss offaith in global institutions and fear ofterrorism led rich countries to favour policiesthat ensured security and erected boundariesagainst outsiders. In better-off areas, therehave been some breakdowns of ecosystemservices. It turned out that climate changewas often more rapid than response capacity,leading to local degradation of ecosystemservices in some places, even in rich nations.Overall, the current global condition ofecosystem services is highly variable and, onaverage, declining. Even the places in the bestcondition are at risk, although citizens ofwealthy nations enjoy a tolerable level ofecosystem services and human well-being. Aswe look to 2050 and beyond, Earth’secosystem services seem fragmented andimperilled. Problems exist at all scales, fromglobal fisheries collapses to regions of theworld where ecosystem services are sorely inneed of restoration and other regions whereecosystem services are currently healthy butunder threat. We have learned that it isimpossible to build walls that are highenough to keep out all the world’s ills, butalso that it is sometimes a reasonable policyto focus minimal resources on carefullyprotecting a few areas rather than onlypartially protecting everywhere.

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*From Ecosystems and Human Well-Being: Scenarios by the Millennium Ecosystem Assessment.Copyright © 2005 Millennium Ecosystem Assessment. Reproduced by permission of Island Press, Washington D.C.



‘Adapting Mosaic’ Summary ScenarioNarrative

The past 20 years have brought a mix ofsuccesses and failures in managingecosystem services. Approaches tomanagement have been heterogeneous.Some regions strengthened the centralizedenvironmental agencies that emerged late inthe twentieth century, while others embarkedon novel institutional arrangements. Someapproaches turned out to be disastrous, butothers proved able to maintain or improveecosystem services. Some nations are startingto try to emulate the successes of othernations. As a result, the world in 2030 is adiverse mosaic with respect to ecosystemservices and human well-being. Aconsiderable variety of approaches exists.Regrettably some regions still cannot provideadequate ecosystem services for their people.Other regions are doing well, and remarkablesuccesses have occurred on every continent.With respect to global-scale environmentalproblems, progress has been slow. As we lookto 2050 and beyond, policy and ecologicalscience face a twin challenge: to rebuildecosystem services in the regions where theyhave collapsed and to increase and transferthe lessons of regional success to problems ofthe global commons.

‘Techno Garden’ Summary ScenarioNarrative

Significant investments in environmentaltechnology seem to be paying off. At thebeginning of the century, doomsayers feltthat Earth’s ecosystem services were breaking

down. As we look back over the past 20 years,however, we see many successes inmanaging ecosystem services throughcontinually improving technology.Investment in technology was accompaniedby significant economic development andeducation, improving people’s lives andhelping them understand the ecosystemsthat make their lives possible. On the otherhand, not every problem has succumbed totechnological innovation. In some cases, weseem to be barely ahead of the next threat toglobal life support. Even worse, newenvironmental problems often seem toemerge from the most recent technologicalsolution, and the costs of managing theenvironment are continually rising. Manywonder if we are, in fact, on a downwardspiral, where new problems arise before thelast one is really solved. As we look to 2050and beyond, we need to cope with a situationin which problems are multiplying faster thansolutions. The science and policy challengefor the next 20 years is to learn how toorganize socio-ecological systems so thatecosystem services are maintained withouttaxing society’s ability to invent and pay forsolutions to novel, emergent problems.

‘Learning from the Scenarios’The four narratives give examples of possiblefuture end-states based on the key driver axespreviously discussed. The full narratives are inAppendix 2 together with advice on howcompanies can apply the scenarios to aspecific industry or organisation and thevarious methods a stakeholder can use toengage with the scenarios and learn fromthem.

4. Next steps

Using the risk inventory and scenarioplanning toolsCompanies are encouraged to use the riskinventory and scenario planning toolstogether with insights from the Collaboratorywork to deepen their understanding of thebusiness risks and opportunities associatedwith ecosystem services and natural capital.Corporate capability should be enhanced inorder to address natural capital issues andfuture strategy should encompass acompany’s response to likely risks andopportunities.

Identifying impact and dependency onecosystems servicesMore specifically, companies should moreclearly identify their impact and dependencyon the ecosystems services which benefittheir businesses. Is the long term provision ofthese ecosystem services threatened and ifso, how can an individual business respond?The company needs to decide who tocollaborate with, who needs to be influencedand how to develop a business case forintervention.

Exchanging information and sharedlearningCollaboratory members should continue toexchange information and share learning,

particularly in the use of the risk inventoryand scenario planning tools. They may alsolike to explore ways of integrating ecosystemservices and natural capital into currentenvironmental management systems such asISO 14001. An annual horizon scan ofecosystem issues is also recommended.

Ongoing Support from CPSLCPSL will offer ongoing support in the formof workshop facilitation for companies andbusiness sector groups wishing to use theCollaboratory Scenarios and also provideresearch into the likely policy instrumentsand other government options that couldemerge in each of the four scenarios.In addition CPSL will promote learning fromcompanies/sectors using the scoping andscenario tools and feed these into the workof the new Natural Capital Leaders Platform.The Platform will seek to influence keyinternational policy making and to build onthe content and practice of membersthrough collaborative working between July2011 and June 2012.

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Appendix 1: Cambridge Natural CapitalProgramme - Business Risks Matrix 2010

Adapted from Biodiversity and business risk: A Global Risks Network briefing, WorldEconomic Forum, January 2010

Phys

ical

Ris

kRe

gula

tory

and

lega

l ris

k

Category

Mar

ket r

isk

Oth

er ri

sks

Risk

Changing consumer preferencesAs consumers become increasingly aware of theenvironmental credentials of companies and their productsthere is evidence that buying habits are already changing. Ifthis trend continues, sustainably extracted natural materialswill eventually be a core requirement for market access inthe sectors affected.

Purchaser requirementsA number of major purchasers are introducing orenhancing sustainable procurement guidelines whichpresent significant risks for suppliers that will struggle tocomply.

Reputational riskAssociation with adverse impacts on biodiversity andecosystems can result in severe damage to a company’sbrand and restrict its ‘social license to operate’.

Financing riskRisks outlined above may have an adverse impact on acompany’s cash flows reducing its credit quality andconsequently increasing the cost of accessing new finance.Major lenders are also tightening environmentalrequirements for access to corporate loans, particularlysignatories to the Equator Principles, and insurers areincreasingly sensitive to risks associated with biodiversityloss and ecosystem degradation.

Supply chain riskRisks outlined above can have dramatic adverseconsequences for downstream operators threateningsecurity of supply chains or leading to increased costs.

Risks to stabilityThe possibility that failure to manage these risks couldmake a community or country too unstable to provideessential raw materials, serve as a market or act as a host foroperations.

Agricultural supply chains

Promotion of third party certification and links tothese by large multinational brands havingsignificant impact across supply chains. Increasescomplexity and cost for agricultural producersand processors.

Many companies (e.g. Nestlé, Unilever, Mars,Starbucks) now have supplier codes detailingcompliance and audit which places a burden onthe supply chain. Non compliance can lead toloss of market access. Full compliance canincrease costs.

Sustainability initiatives and communication vitalto companies – esp public companies Corporate reputation can be seriously damagedby association with damage to sensitiveecosystems.

Clear linkage of business practice to current andfuture opportunities for financing.Due diligence of companies has increased inorder to access (obtain working capital) basicfinancing and affordable financingIncreasing costs of commodities (cocoa/cottonetc.) therefore more procurement financerequired NGO campaigns targeting banks thatfinance certain commodity areas i.e. HSBC dueto palm and forest products

Downstream companies needing to know theirsuppliers and how they operate Growth in electronic traceability to exchangeinformation between supplier and customer.

Agriculture is often the single largest employerin developing countries. Any significant decreasein production levels, could lead to huge joblosses and a threat to stability.

Risk

Reduced productivityBiodiversity loss, ecosystem degradation and consequentloss of ecosystem services can adversely impactproductivity across a range of sectors.

Scarcity and increased cost of resourcesFor companies reliant on plant and animal commoditiesincluding genetic materials, scarcity and increasing costspose a significant threat to on-going viability.

Disruption of operationsYears of ecosystem degradation has left many areasvulnerable to what were once termed ‘natural disasters’.

Restricted access to land and resourcesMany business models rely on access to natural ecosystemsand areas of high biodiversity and in a number of regionsthis access is becoming more difficult to obtain.

LitigationCompanies are frequently subject to litigation as a result oftheir exploitation of biological resources or their adverseimpacts on ecosystems and the associated human healthconsequences.

Reduced quotasA number of sectors are subject to quotas governing theextraction of biological resources. These quotas restrictbusiness growth and when tightened they can have adramatic effect on company prospects in the short term.

Pricing and compensation regimesGovernments around the world are introducing newcompensation regimes and market based instruments tohelp address threats to ecosystems and biodiversity byputting a price on the environmental damage caused bycompanies. Such mechanisms will significantly increase.costs for sectors and operators affected.

Agricultural supply chains

Ecosystem services are vital to supportagricultural production and processing Adverseweather, i.e. rainfall reduction leads to productscarcity and price volatility.

Low volumes of water in rivers flowing throughEast African tea estates reduces the amount ofhydroelectricity generation = increasing costs.

Changing weather patterns – torrential rain,extended droughts and frost. Sedimentation oflakes, rivers and streams can disrupt operations,significantly reduce volumes and increase costs.

Land allocation for production is becomingincreasingly dependent on recognised bestpractices – i.e. timber concessions granted onlyon Forest Stewardship Council (FSC) complianceand palm oil on Roundtable for Sustainable PalmOil (RSPO) certification

The introduction of water quotas for agriculturalirrigation in Australia led to a reduction in cottonproduction (esp. 2005/ 08 during drought).Cotton declined from 3 million bales peak to 0.5million. Now back to 1.7 million – result wasclosures of cotton gins and unprofitablebusinesses

There is a start in timber / palm land concessionsthrough contract not allowing the carbon titlingto be allocated to the concession owner andremaining the property of the government toensure income possibilities Rising cost of waterin emerged economies Carbon capping

Category



Appendix 2: Cambridge Ecosystems andNatural Capital Programme - Business Risksand Opportunity Scenarios

Introduction

The central question that sets thecontext for these scenarios is:

What could be the impact on business in2030 from the changes in ecosystems andnatural capital and our measures tomaintain their productivity?

When considering the future, it is critical togain an understanding of the longer-termconsequences of current decision making. Inthe longer-term the world in general andnatural systems, in particular, could be verydifferent to anything that might be expectedfrom looking at and projecting the futuretoday. There is often a preoccupation withinbusiness with ‘picking winners’, rather thanidentifying flexible and adaptive responses tofuture challenges. This is the consequence ofa dominant corporate worldview that theobjective should be to identify the ‘rightanswer’ and then aim to get as close to it aspossible. In view of the possible variations ofthe environment and the public andgovernmental responses, the strategiesdeveloped by business need to be ‘futureproofed’. Responses based on short-termsignals or trends could result in over-investment in strategies or technologies thatmay become redundant or inappropriate inthe longer-term. Hence, we have embarkedon a process of scenario planning to frameour thinking.

Scenarios can be defined as the disciplinedprocess of thinking through alternative,plausible futures that are fundamentallydiverse and internally consistent. They reflectdifferent perspectives of the past, presentand future, and elaborate different strategicagendas in each one. As a concept, scenarioscan refer to both a description of possible

future states (end states) and a description ofthe developments that have led to such endstates (scenario paths, or storylines). As oneof the disciplines within futures (orprospective) studies, scenarios areexploratory and learning tools, not to beconfused with forecasts or predictions.

The strengths of this technique and itsadvantages are due to its ability to deal withsome key issues underlying the failing oftraditional methods for forecasting andpredictions:• Complexity – The exploring and learning

achieved through the scenario processenables decision-makers to gain a betterunderstanding of the increasingly complexenvironments in which they operate

• Uncertainty – Rather than ignoring orquantifying uncertainty by (arbitrarily)assigning probabilities, scenarios fullyaccept uncertainty, striving to understandand include it in the thinking and planningprocess through the development andexploration of multiple futures

• Change and Discontinuity – Thescenario development process goesbeyond traditional extrapolationtechniques and allows the considerationand exploration of alternative futuresdetermined by different developments (intechnology, society, politics etc.) whichoften representing significant ruptureswith the past.

It is important to note that the scenariosshould not be viewed as ‘good’ or ‘bad’ butrather ‘extreme-plausibility’. Each scenariowill have relative benefits and negativeconsequences as well as potential benefitsand potential risks. The goal is to considerthat if the determining factors were pushedto the extreme, this would be the outcome,without judgement. The purpose is not to

dwell on good or bad drivers, outcomes, or‘past decisions’ (in the narratives as ‘how didwe get here’) but rather to understand that ifthose drivers and past actions were in place,what factors or decisions would be requiredin order to adapt and be successful from thepoint of view of the stakeholder in thefuture?

Futures work can help policy makers andcorporate entities look at today’s challengesfrom different perspectives and allow themto test various responses to minimise cost ormaximise benefits. While no one can predictwhat will happen, future research can help toidentify potential risks and opportunities;thereby assisting policymakers andbusinesses in developing long-termstrategies with greater confidence.

The scenarios presented do not aim topredict the future or find the one bestanswer but rather provides a tool for helpingto take a long view under great uncertainty.They allow stakeholders to consider that anyscenario may happen and so through theprocess be better prepared for what theydon’t believe will happen. This sort ofexploration is intended to support strategicdecision making and allow government andindustry to prepare themselves moreeffectively for the future. It can also inspirestakeholders to play a more active role inshaping a better future- for themselves, fortheir company, and for their industry.

Living in the Scenario

Each scenario must be read by thestakeholder or stakeholder group. Oftenhowever, this may just seem like reading astory and the reader(s) may find it difficult toengage with the scenario. After reading eachscenario, the stakeholder(s) should considertheir life pattern; family make-up, workpattern, recreation activities, consumerhabits, etc. Imagine that it is 2030. Using thescenario narrative, try to envision answers tothe following questions based oninformation provided in the scenarionarrative:

• Where do you live? What is your home like?What is the community like in which your

home sits?• Where do you work? What is your job like?

What do you spend most of your timedoing?

• Where is your work in relation to whereyou live? How do you transition betweenthe two?

• What sorts of food do you eat? Where doesit come from?

• What is your biggest concern for yourhealth and well-being?

• What is your biggest concern for yourcommunity?

• Do you feel optimistic about your futureand prospects or pessimistic?

• It may be helpful to write down thoughtsin relation to these questions as a referencefor future investigations using thescenarios.

Strategies for Business

Once the stakeholder or group has a goodgrasp of each of the scenarios, they shouldconsider the following questions in relationto their specific business for EACH scenario.

• Within your industry, given the constraintsof this scenario who is ‘winning’ or doingbest? (What aspect/sector/feature of yourindustry is winning or doing best?)

• Within your industry, given the constraintsof this scenario who is ‘losing’ or doingworst? (What aspect/sector/feature of yourindustry is doing worst?)

• Where (geographically) do you want to be?What geographic factors or conditionsassist in success for your industry?(Consider answers from small/local levelsand conditions to regional/national/globallevels and conditions.)

• What are the significant opportunities inthis scenario for your industry? (Think ofnon-traditional business structures,innovations, investments, markets. Alsoidentify new knowledge areas or possibleemerging technologies.)

• What are the significant threats in thisscenario for your industry? (Consideranswers at all levels of operations andconsidering local to global issues.)




‘Global Orchestration’Scenario Narrative

Summary:The past 20 years have shown that someecosystem services can be maintained orimproved by appropriate macro scalepolicies. Notable successes occurred inreducing or controlling many globalpollutants and in slowing, or in some casesreversing, loss of marine fish stocks. In somesituations, it turned out that ecosystemservices improved as economies developed.On the other hand, it appears that globalaction focused primarily on the economicaspects of environmental problems is notenough. In some regions and nations,ecosystem services have deteriorated despiteeconomic advancement. Also, it wassometimes difficult to adjust large-scaleenvironmental policies for local and regionalissues. Despite some significantenvironmental disasters, this lesson has notyet been learned. As we look to 2050 andbeyond, multi-scale management ofecosystem services is a top challenge forenvironmental policy.

How did we get here?At the beginning of the twenty-first century,poverty and inequality, together withenvironmental degradation and climatechange, were pressing problems on theagendas of global and national decision-makers. Concerns about social tensionsarising from inequalities in and unevenaccess to global markets were growing, asthese tensions were often seen as theunderlying causes of uncontrolled migration,conflicts, and even terrorism. Leaders werealso concerned about inequalities amongpeople, including differential access totechnology and education and other driversof inequality. There were great debates aboutthe best approach to solving these problems.

Eventually, globally orchestrated policy

reforms took hold as the dominant strategy.Policy reforms were used to reshape theworld’s economic and governance systems.The emphasis of these reforms was oncreating markets that allowed equalparticipation and provided equal access togoods and services. The reforms alsotargeted the creation of more transparentgovernance systems worldwide as thenecessary foundation of economic growth.As the world became increasingly connectedfinancially, it was necessary to create globalpolicies to deal with problems arising fromthe connections. Thus, one result ofglobalized economic systems was astrengthening of global and regionalstandard setting bodies such as the WorldTrade Organization. The focus on policyreforms and faith in global institutions alsoled to strengthening of the United Nationsand some other multinational alliances.

Regulatory frameworks have helped todefine and determine global and nationalstakeholder roles, responsibilities, relations,and rewards improving the connectivitywithin sectors and industries. Due to theirrapidly developing and growing economies,these frameworks have tended to favourBRIC countries, to a perceived global benefit.

Political LandscapeGovernments found themselves makingdecisions about how to handle terrorism andconflicts among nations. Should richcountries focus on borders and protection orshould they assist with development inpoorer countries to spread goodwill?Generally, rich nations leaned toward helpingpoor nations meet their basic needs, as thiswas thought to be the better long-termsolution. Trade practices that had hinderedeconomic development in poor countrieswere discontinued. These reforms werefollowed by increased wealth in many poorcountries, which led to secondaryimprovements in governance and




democracy. In most regions of the world,governments invested more heavily in publicgoods, such as education and publictransportation.

Trade expanded globally, driven by removalof subsidies and increasing demand forgoods and services around the planet.Economies in China, India, Brazil, andSoutheast Asia began to grow rapidly againand were assisted by internationalframeworks with a bias towards thesedeveloping nations. A focus on educationand, in some cases, political reform helpedcivil society grow in poorer countries. Incountries that profited from increasedmarket access and production opportunities,a wealthier middle class began to developwhich in turn brought about further politicalreforms.

With an eye towards greater globalenvironmental health and well-being, mostnations have developed embeddedcentralized land-use planning authoritieswhich optimize and facilitate use ofindividual land areas for differentcommodities and services as well as allowinggreater flexibility and partnerships in andacross border areas.

Physical LandscapeDriven by policies aimed at increasing grossdomestic product and human well-being,agricultural areas expanded in poorcountries, leading to increased humanimpacts on terrestrial ecosystems.Agricultural specialization increased, drivenby the selection of high-yield andcommercially valuable crops and livestock.Local ecological knowledge was oftenreplaced by uniform industrial methods.

Consequently, by the 2020s, wild varieties ofagricultural species existed primarily in genebanks, and the number of domestic varietiesin use was greatly reduced. Diverse landraces

persisted mostly in marginal areas. By 2025,many small farms had consolidated intolarge agricultural operations assisted by theimplantation of centralized land-useplanning. All farms, small and large, hadbecome more highly mechanized andindustrial. In this decade it is expected thatthe rate of increase in agricultural will slowdown due to replacement of traditionalagriculture with more-efficient industrialsystems.

A concept of environmental balance grewout of the push for agricultural productivityand uniformity and the loss of localecological knowledge. Today in 2030 theprevailing policies for dealing withpreserving the natural genetic diversity andother natural assets like vegetation and soilsystems and their associated fauna is topreserve them in parks and museums. In thelate 2010’s a number of gene banks wereestablished to preserve the vast majority ofwild varieties of crops previously used byhumans. As the rate of agricultural expansionis beginning to slow, particularly in richcountries, and as people move from thecountryside into cities, there is starting to beinvestment in terrestrial ecosystems topromote recovery from intensive human use.Ecosystem restoration is driven by people’sinterest in increasing the supply of fuel-woodand other biomass products, in addition tothe expansion of intensively managed spacesfor recreation.

In contrast to the agricultural land recovery,coastal marine ecosystems and wetlandscontinue to decline significantly because theincreased urban growth has been mostlyconcentrated in a 100-kilometer band alongthe coastline. Water stress, an area ofcontinual growing demand is managedthrough transparent and workable individualand organizational water allowance schemes.


Social LandscapeBy the 2020s, a growing middle class wasdemanding cleaner cities, less pollution, anda more beautiful environment. This demandwas assisted by a change in consumptionbehaviour brought about by theimplementation of individual carbonallowances, individual ecosystems, andnatural capital allowances. Popular interestwas particularly focused on problems thatoccurred in and around urban settings andthose that directly affected human health.Problems of intensified agricultural systemsand the slow loss of wilderness have receivedonly limited attention. Environmentalproblems that are difficult to reverse, such asbiodiversity loss, have been more or lessignored by the general population becauseso many other things are going well.

Increases in wealth and in the availability oftechnology resulted in the continuingimprovement of health around the planet.Regional inequalities in health wereprevalent until the mid-2020s. Obesity-related diseases remain a threat, particularlyin rapidly developing areas, as new foodchoices become available and societies shifttheir eating habits to less healthy diets.Emerging infectious diseases are also a risk.The potential for the origination and spreadof novel pathogens is high in areas whereecosystem function was disregarded. Itturned out that disruption of ecosystemregulation processes increased the likelihoodof exposure to pathogens originating fromwild animals and plants, and the movementof exotic species around the world throughwidespread trade further facilitated thespread of pathogens. While these surprisesoccurred in rich and poor countries, thecapacity to respond was higher in richcountries, and hence the impact was muchhigher in poorer countries. However therehave also been positive surprises, such as thesuccess of genetically modified organisms inreducing the agricultural expansion.

Access to Environmental ResourcesThis process of greater global coordinationwas aided by the rapid adoption ofinternationally regulated set-aside zones inorder to protect and restore trans-nationalboundary ecosystems in crisis. Theinternational regulations developed affectedextraction licenses, land title, and land useagreements and operated by utilising amodest compensation scheme.

The value of healthy ecosystems and naturalsystems has been globally recognised whichhas driven a push for more efficient land use.Agricultural land is consolidated not only toproduce crops and livestock but to captureinvestment flows for managing keyecosystem services through use of expandedglobal incentives like REDD+ from the 2010’s.

Today in 2030, industrial water permits arerestricted to low-water-stress zones. They areclosely regulated and have incorporated amore complex water shed impactcomponent in addition to the basetraditional extraction volume. Theseregulations require companies to rigorouslydemonstrate their water shed mitigationmeasures or face severe financial penalties.

The Global Natural Raw Materials Inventorywas completed in 2025 and has beenupdated each year since. Sectors such asmining, agriculture and construction aresubject to national and international quotasgoverning the extraction of minerals andnatural resources at all stages of their supplychain.

Since the late 2010’s, there has been full TEEBimplementation with requirements forindividual company ecosystem impactdisclosure and a change towards true-costaccounting (and pricing) for all brands.Today in 2030, all medium to high impactproducts are gone from the shelves. Manyitems from further afield than a



neighbouring country become luxury items-like vegetables, bottled water or beer.

Since peak oil in 2005, the price of oil hasrisen exponentially leading to coordinatedglobal investment in renewable energysources. Even with strong internationalcooperation and agreement, it has been astruggle to produce enough energy in someareas due to rapid modernisation which haskept energy demand reduction high ongovernment, business, and social agendas.

Business ResponseSince the second global financial crisis in theearly 2020s the global economy has beenredesigned and now ‘Prosperity withoutGrowth’ is the new mantra. There are a rangeof economic incentives to reward companiesthat design their business models around aone planet approach to ecosystems andnatural resource and who offer value in termsof their contribution to individual andcollective prosperity.

For companies with global reach,environmental risk zoning is now common-especially in areas where the ecosystem isstill fragile. Global companies have adaptedby developing new models of long-termbusiness investment particularly where thereis a synergy between ecosystem investmentand national prosperity.

To address the risks associated withaccessing new land and natural resourcessuccessful companies have invested inunderstanding this new regulatoryframework landscape and work towardsanticipating ecosystem stresses, offering torehabilitate environmentally degraded landwith the associated increased costs.

High oil prices have forced many companiesto shift to alternative energy sources. Wherethis was not possible, companies tried to

pass the cost on to the consumer which hasmet with mixed response. There has beenincreasing demand and research investmentin alternatives to key products such asfertilizers and pesticides. Because supply hasnot been able to keep up with demand, oilcompany profits remain high.

In consumer based industry, a growingglobal wealth has meant a steady rise of newmarkets, but particularly for those thatmarket low impact goods and services inparticular to those rapidly modernising areasof the globe.

Consumer ResponseThere is a perceived partnership betweenprovider and consumer where sustainablelifestyle decisions are often made bycompanies on behalf of consumers.Companies - together with increasing‘natural’ disasters and public sectorinformation campaigns - have persuadedtheir customers in developing countries thatthey must consume less and have a strongindividual responsibility to live a sustainablelifestyle. For retailers choice editing is thenorm and individuals have accepted forsome time their individual carbon,ecosystem and natural resource allowances.Those that exceed this allowance areperceived as selfish and are offered lifestylementoring support to address this issue.Many in wealthier countries donate theirunderused allowance to poor countries.

There has been a growing market for lowimpact products and services fuelled by thecontinually expanding global middle class.Consumers are more globally aware andwish to prosper but without unduly drainingtheir individual natural capital allowances.This has led to many new markets, especiallyin developing countries as their middleclasses have rapidly grown.


Drivers towards 2050Despite economic policies designedultimately to lead to a better environment,the simplification of ecosystems haseventually led to a decrease ofenvironmental security as ecologicalsurprises became more common. Onesurprise of the past 20 years was the highimpact that widespread trade had onhastening the spread of invasive species. Itseems that reduced diversity limited the

options of ecosystems to respond to everincreasing ecological surprises, although it ishard to tell if the problem was this or simplyincreased population pressure. People inpoor countries are generally doing betterthan they were in 2000, but, looking to 2050,we wonder whether the early policies toincrease economic growth will provide thenecessary resilience to cope with futuresurprises.


18 - Understanding and Managing the Business Risks and Opportunities 1926 - Understanding and Managing the Business Risks and Opportunities 27

‘Order from Strength’Scenario Narrative

Summary: Since 2000, the availability of ecosystemservices has fallen below minimal needs forhuman well-being in some regions of theworld while being maintained or evenimproved in other regions. Widespread loss offaith in global institutions and fear ofterrorism led rich countries to favor policiesthat ensured security and erected boundariesagainst outsiders. Even in better-off areasthough, there have been some breakdownsof ecosystem services. It turned out thatclimate change was often more rapid thanresponse capacity, leading to localdegradation of ecosystem services in someplaces, even in rich nations. Overall, thecurrent global condition of ecosystemservices is highly variable and declining onaverage. Even the places in the best conditionare at risk, although citizens of wealthynations enjoy a tolerable level of ecosystemservices and human well-being. As we look to2050 and beyond, Earth’s ecosystem servicesseem fragmented and imperiled. Problemsexist at all scales, from global fisheriescollapses to regions of the world whereecosystem services are sorely in need ofrestoration and other regions whereecosystem services are currently fine butthreatened. We have learned that it isimpossible to build walls that are highenough to keep out all the world’s ills, butalso that it is sometimes a reasonable policyto focus minimal resources on carefullyprotecting a few areas rather than onlypartially protecting everywhere.

How did we get here?At the beginning of the twenty-first century,terrorism, war, and loss of trust in globalinstitutions led many people to believe that

there was a need for powerful nations tomaintain peace and achieve equity.Governments of the industrial worldreluctantly accepted that militarily andeconomically strong democratic nationscould maintain global order, protect lifestylesin the industrial world, and provide somebenefits for any developing countries thatelected to become allies. Countries wereoften unwilling to participate in internationaland global institutions as they concentratedon building strength as nations. As a result,global institutions began to stagnate aspeople lost confidence in them and theirpower eroded.

The EU and the United States turned inward,striving to preserve national security. Tradepolicies veered toward increasingprotectionism. Religious fundamentalismand nationalism were mutually reinforcing insome nations. In some cases, parts of civilsociety saw this inward focus as dangerousand tried to oppose it, but they were mostlysilenced by already strong nationalgovernments. Just as the focus of nationswas turned to protecting borders,environmental policies concentrated onsecuring resources for human consumption.

Building strong nations was a priority, asmany felt that environmental challengescould not be adequately addressed withoutfirst strengthening nations and economies.Conservation focused on parks andpreserves.

By sometime around 2018, this had increasedthe separation between the rich, powerfulcountries and the poverty stricken ones, withvery few countries left in between. Societieswere also stratified within nations: rich andpowerful people and poor people existedwithin both rich and poor nations. Withinnations, rich and powerful people



increasingly turned to gated communities asa way to protect themselves from outsiders.The most globally powerful have purchasedtheir land resources and use a significantportion of their wealth to protect theirresource from those who would challengetheir ownership. The equality gap continuesto widen.

Political LandscapeGovernments are preoccupied with the newworld order and fiercely protective of theirperceived land and rights. Initiatives andsubsidies to promote national independenceand security are common amongst wealthynations leading to strong partnershipsbetween national-based companies andgovernments. This has led to increasinglytighter connections between governmentsand business at all scales.

Rich nations use their wealth and power toexploit less powerful nations for their ownbenefit. For example, some wealthy nationsattempted to make their lands more livableby moving food production to poorcountries. The price of food rose as conflict inpoor areas affected their ability to producefood. In some cases, this led rich nations toattempt to stabilize poorer ones through acombination of military and economicintervention. In other cases, rich nationssimply produced more of their own food.

During times when powerful countries havebeen more assured of their security, theyhave turned somewhat to global issues,particularly those that would obviously affectthemselves. Sometimes funding was madeavailable to help poor countries withparticularly pressing problems. The focus forthis funding is often on conflicts or refugeeproblems (which were seen as havingsecondary impacts on rich countries).Generally, when funding is available forpoorer areas, the focus is on physical safetyrather than social welfare issues. Migration is

a major political issue with masses of peopletrying to reach wealthier areas and newlyprosperous areas which can lead todestabilization. It is closely controlled bothby legislative measures and increased bordersecurity.

Physical LandscapeIn the rich world, the drive for security andprotection, and the unwillingness to changeconsumption patterns, has led to theprivatization of access to many naturalresources, as businesses stepped in to helpgovernments assure consistent access toresources. In turn, governments protectedthe economic interests of these businesses.The inward focus of wealthier nations didlead to some benefits, including high levelsof protection, easy access to goods andservices inside the wealthy areas, andpockets of very well preserved wilderness inrich countries and in places that wealthypeople wanted to visit on holiday. The spreadof invasive species was also a lot lower thanresearchers had predicted in 2000, a surpriseattributed to the decrease in trade amongcountries. The rate of successful invasionswas higher than in 2000, since degradedecosystems were more susceptible tosuccessful invasion when exotic species werepresent.

The Amazonas Reserve, The LimpopoBiodiversity Reserve and the Sumatra GlobalValues Conservation Area are just threeexamples where multinational companieshave purchased title in poorer regions to landrich in biodiversity to manage for their ownuse in perpetuity for current and futuregenerations. These large areas across theglobe offer mega-corridors for wildlife and insitu conservation for some of the world mostimportant species. These areas represent wellmanaged areas of outstanding naturalbeauty and are visited by wealthy elitetourists every year- a lucrative side servicedeveloped to cater to the wealthy of

overcrowded prosperous nations looking toescape their walled-in enclaves.

There has been major global degradation ofmany large-scale environmental systems, forexample global fisheries collapse. This hasbeen due to the lack of partnership over eco-systems across borders. However, whereeco-systems fall completely within a nationalor regional border, they are often doing well.

As the attention of governments was oneconomic and military strength, there wasless focus on the environment. Global issues(such as climate change) and internationalissues (such as large river management) werealmost always impossible to address as atleast one key nation was unwilling tocooperate. Ironically, global climate changeincreased less than had been expected at theturn of the century, due to a larger thanexpected proportion of the world’spopulation being forced to live a simpler andless materialistic existence.

Social LandscapeThe world outside the rich people’s highrazor-wired walls experienced a lot of conflictduring this period. The disputes were largelyover access to natural resources like water, oil,and fuel wood. Many in poorer countries feltthat the way out was to immigrate to a richcountry or become part of the elite in theirown country, which historians believeentrenched the compartmentalization. Withmost poor people spending all their timeand energy trying to become one of theelites, there were few left to argue for otherpriorities. Some elites did demand bettertreatment of the poor and were sometimesable to effect change. Significant economicproblems persisted in the poor world due tocorruption, disease, and pollution. As poorcountries spent most of their time attendingto crises of disease and other problems,widespread improvements in economic well-being became rare. Although fertility had

been starting to drop in poor countries at thebeginning of the twenty-first century, thecollapse of nascent social safety nets resultedin increases in fertility; population growthrates reversed course and began to increase.

Powerful countries often coped with theirproblems by shifting the burdens to other,less powerful countries, increasing the gapbetween the rich and poor. In particular,resource intensive industries were moved topoorer countries or to poorer parts ofwealthy countries. This taxed poor people’senvironments further, leading to widespreadmigration from collapsed places to new partsof poorer countries as the wealthy closelycontrol and regulate their immigrationallowances. This migration created stressesthat sometimes led to environmentaldegradation in the new places. For example,refugees who left one place for anotherincreased the pressure on the new area’senvironment until it collapsed. Disease,particularly contagious diseases, becamerampant in poor areas.

Access to Environmental ResourcesSome global environmental issues thataffected rich countries have begun to beaddressed, through cautious agreementsamong rich nations, and this has led to someimprovements on global environmentalissues. However, progress has been slow onthose issues that are not of direct concern tothe powerful.

Unfortunately, unsustainable consumption ofthe increasing few continues to underminethe livelihoods of the majority. With limitedsupplies of water and other key resources,there always seems to be conflict, erodingthe social license to operate. Businesses findthe cost of litigation between companiescompeting for the same resources to bepreferable to social conflict, although this hashad a slowing effect on business growth.Stakeholder relationships within sectors and



industries is increasingly complex withfrequent potential for internal conflict anddivergence of opinion which can generatereputational risk.

Business ResponseSecurity of natural raw materials supply iscritical for business. There is close alignmentbetween business strategies to develop newmarkets and wider security and developmentaid agendas in developing countries andemerging economies.The companies that built close and mutuallybeneficial relationships with individual nationstates have flourished. In some casespreviously strong multinational corporationswith their roots in mercantilism havecontinued to thrive, building preferentialtrade agreements with particulargeographical regions and by giving moreindividual business authority to nationalbranches. They share the responsibility withgovernments to secure and protect theiraccess to affordable national resourcescreating a business model of strong self-sufficiency.

Many agro and extractive companies nowsecure tenure of the land which is vitalparticularly in turbulent parts of the world ifthey are to derive even short term benefitsfrom their investments. In consolidatingthese tenures in one location companieshave been able to reduce the costs ofprotecting these resources from those whomight challenge this ownership.

Consumer ResponseThe rigid separation between the ‘haves’ and‘have nots’ has resulted in two distinctlyseparate main markets for most globalbusiness; wealthy developed countrymarkets with high priced high valueproducts, and Base of the Pyramid marketswith self-contained production and supplychains within this market. The wealthy refuseto compromise on quality and availability.

The low-end markets are dominated bycheap local products or cheap productsproduced cheaply in non-wealthy countriesor areas.

Drivers towards 2050Now, in 2030, some poorer regions are finallybeginning to stabilize, and are consideringforming coalitions and trade agreements tobetter their situation. This is especially true fornations that have crossed the digital divide.Some Asian, South American, and Africannations which established digital networks,gave their people an advantage in terms ofaccess to global markets and information.These countries in particular have been morelikely to gain more stability. Unfortunately, assoon as things start getting better in aregion, many people want to immigrate tothese areas. Thus, countries often are forcedto create strong laws against immigration inorder to keep their society safe and orderly.The future of these regions is uncertain.

Today, it is apparent that there was not alinear trend toward higher and higher walls,even though it sometimes felt that way.Instead, we saw episodes of rapid changeand periods of relative stability. There weresome fluctuations of increasing anddecreasing compartmentalization as thepowerful countries periodically invested inkeeping conditions tolerable for the poor inorder to reduce illegal immigration and otherproblems. There were also activist groupsand intellectual dissidents in wealthy nationsthat tried to support the poor and poornations. Looking forward to 2050, theseactivist groups are one of the main sources ofhope in an otherwise bleak situation. Peopleand ecosystems are generally doing worsethan in 2000, but some hope can be found inthe activists working to support the poor andimprove management.


‘Adapting Mosaic’ ScenarioNarrative

Summary: The past 20 years have brought a mix ofsuccesses and failures in managingecosystem services. Approaches tomanagement have been heterogeneous.Some regions strengthened the centralizedenvironmental agencies that emerged late inthe twentieth century, while others embarkedon novel institutional arrangements. Someapproaches turned out to be disastrous, butothers proved able to maintain or improveecosystem services. Some nations are startingto try to emulate the successes of othernations.. As a result, the world in 2030 is adiverse mosaic with respect to ecosystemservices and human well-being. Aconsiderable variety of approaches exists,and regrettably some regions still cannotprovide adequate ecosystem services for theirpeople. Other regions are doing well, andremarkable successes have occurred on everycontinent. With respect to global-scaleenvironmental problems, progress has beenslow. As we look to 2050 and beyond, policyand ecological science face a twin challenge:to rebuild ecosystem services in the regionswhere they have collapsed and to increaseand transfer the lessons of regional success toproblems of the global commons.

How did we get here?Opportunities for, and interest in, learningabout socio-ecological systems were adefining feature of the early twenty-firstcentury. People had great optimism that theycould learn to manage socio-ecologicalsystems better, but they also retainedhumility about limits to human control andforesight and the prospects for surprise.Learning to improve socio-ecologicalsystems came at a great cost. There werefailures as well as successes, and learningdiverted some of society’s resources.

Economic growth is probably lower than itcould have been had decision-makers put allour investments toward manufacturedcapital, but the promise of benefits of bettersocio-ecological systems are consideredworth the trade.

At the turn of the century, some people inthe rich world held beliefs that promotedregionalization of trade, nationalism, andlocal or regional management of naturalresources. Global trade barriers for goods andproducts were increased, but trade barriersdecreased within regional blocs such asASEAN, NAFTA, and the EU. In contrast, globalbarriers for information flow nearlydisappeared due to improvingcommunication technologies and the rapidlydecreasing cost of information access.Political focus followed the economicemphasis on regional or national trade.

The regionalization of markets and politicswas associated with a decline in the relativepower of global international institutions. Thedecline was partly linked to loss ofconfidence in the effectiveness of globalgovernance and dissatisfaction withdistortions of global markets. But thestrengthening of interactions within nationsand within regional blocs was also animportant factor in the relative de-emphasisof global institutions. Dissatisfaction with theresults of global environmental summits andother global approaches led many people toperceive global institutions to be ineffectiveat environmental management. Climatechange negotiations had broken down by2010. International agreements failed toprevent the depletion of most marinefisheries, and regulation of trans-boundarypollutants proved ineffective.

Political LandscapeWithin some nations, power devolved tolocal authorities. There was variation amongnations and regions in styles of

management, including natural resourcemanagement. Some managed with rigidcentralized bureaucracies. Others focusedon market incentives or other economicmeasures. Still others attempted some formof adaptive management for the nation orregion as a whole. Some local areas exploredactively adaptive management, investigatingalternatives through experimentation. Somewere passively adaptive, investing in a certainamount of monitoring but dealing withchange in a reactive way. Still other localeslargely ignored the environment, dealingwith crises only as they arose.

The fragmented and inconsistent global andnational structures have led to very complexstakeholder relationships for governmentsand business. Local decision making drivesland use choices rather than marketmechanisms. There has been increasedlegislative conflict, especially as regions canchange policy quickly and sometimesunexpectedly leading to diminished citizenand consumer confidences in bothgovernments and industry.

Migration issues are a high political area ofconcern as people from degraded areas seekto move to more prosperous areas. This isparticularly problematic in areas that fall inthe boundary area of climatic zones whichhave had particular problems with crops andwater courses becoming non-viable due tothe steady progression of climate changeeffects. Some areas respond by using highlyregulated immigration quotas while otherareas are more restrictive with high bordersecurity.

Physical LandscapeThere is a great diversity in the outcome ofthese varied approaches to managing socio-ecological systems. Some notable disasterswere poorly handled. Sometimes, methodsthat succeeded in one region failed whenimported to another region because ofunforeseen differences in social practices,

politics, or ecosystems. Reactions to resourcebreakdowns have also been diverse.Perversely, failed practices were sometimessustained by subsidies from other regions orother sectors of the economy. In other cases,breakdowns were followed by innovationsthat seem to be turning situations around.This has resulted in periodic migration ‘crisis’which have led to a diversity of immigrationrestrictions and requirements.

Groups began to experiment with innovativelocal and regional management practicesthat put special emphasis on investmentsinto human and social capital, such aseducation and training. Information aboutsuccess stories was shared among locations.Information sharing was facilitated by cheapcommunication tools such as the Internet.The experiments varied in their success. Asmore and more experience and knowledgewere collected, the conditions for successwere better understood and experimentsbecame more successful on average. Foodproduction became more localized, feedinginto national or regional markets that valuedclean, green production processes.Environmental technologies were developedbased on local needs and conditions, leadingto a gradual improvement in management ofsocio-ecological systems and naturalresources.

Throughout this period, there has beenrelatively little focus on global commonsproblems such as climate change, marinefisheries, and trans-boundary pollution.Crucial ecological feedbacks were actingover spatial extents that were too large to benoticed by local institutions. As a result,large-scale environmental crises are morefrequent. Regional water shortages havebeen exacerbated as each area looks out forits own interest at the expense of itsneighbours and the water system as a whole.Technological disasters occurred in somenatural resource systems. Climate shifts led tomore storm surges in coastal areas. Top



predators vanished from most marineecosystems, leaving jellyfish as the apexpredator for vast areas of the world. Coastalpollution increased drastically, which led tofurther degradation of coastal fisheries andsevere health risks to humans from eatingshellfish, shrimp, and other filter feeders.There were also outbreaks of new diseases,such as rapidly evolving bacteria resistant toantibiotics. Luckily, climate change was notas bad as it could have been because peoplewere trying to curtail local pollutants likenitrogen oxides and sulphur dioxide, whichalso act as agents of climate change. Butsometimes the global phenomena affectedlocal socio-ecological systems in severe ways.

Social LandscapeBehaviours are very much driven by a socialdesire for localism. There have been somesuccesses and some failures with some verystrong new market bases in the BRICcountries. Cheap technology andinformation transfer is something thatconnects disparate communities anddemand for access to communication andknowledge is fairly widespread. Countriesthat have done well managing their localresources have re-invested in theirpopulations improving overall health andeducation but they are in danger ofmigratory pressures when located next toareas or regions that have not been assuccessful which threatens to destabilisetheir newfound prosperity.

By the 2020s, global tourism had begun toencourage development and application oflocal learning as a celebration of diversity inreaction against global homogenization andthe sameness of products. Travelling wasseen as a means to experienceheterogeneity, but, in the end, had negativefeedbacks due to increased transportationand human impact on poorer regions.

Access to Environmental ResourcesThe negative large-scale environmentalevents are largely seen as being caused byinadequate management of the globalenvironmental commons. There is a small butgrowing international framework of tradeand political institutions providing afoundation on which global environmentalmanagement institutions could be rebuiltbut it is still expected to take many yearswith the rebuilding being slow and tenuous,due to slowly changing institutions thatoften needed disaster as a goad to action.The emerging institutions for internationalenvironmental management are looking tobuild on local and regional experiences, boththe successes and failures. The emerginginstitutions are more focused on ecosystemunits; watersheds, air basins, and coastalregions, rather than states or nations, arestarting to become the basis formanagement.

There is a significant uneven distribution ofglobal freshwater which has beenexacerbated by a lack of joined up thinkingin respect to larger watershed areas.Regional water scarcity has increased and is asignificant problem. Companies seek tosecure local agreements with other resourceusers to ensure access although competitionis strong and financial impacts are significant.

Business ResponsePolitical influence on market has been byfocusing on developing local trade rules andland use arrangements with a great deal offlexibility for local interpretation. This has ledto important non-market rights. Thosecompanies that can negotiate localagreements with a wide range ofstakeholders benefit by securing access toraw materials but agreements are rarely longterm in nature leading to frequent risk ofsupply. Cost of raw materials is highlyvariable and a complex range of pricing andcompensation regimes often operates across

a single supply chain. Productivity is highlyvariable from one ecosystem to another. This diversity of markets and resourceavailability has had a mixed effect onbusiness and industry. Those businesseslocated in well performing regions andlocales have benefitted from goodmanagement of resources and a growing,more affluent, local population. Alternately,those businesses located in poorly managedregions have seen reduced productivity oreven collapsed further exacerbating localmarket conditions. To mitigate theseextremities, businesses are starting to bemore interested in finding new markets inother parts of the world and consumers aredemanding a greater diversity of choices. Therenaissance of global business is leading togreater internationalization of governanceand negotiation of new international tradeagreements with highly complex stakeholderand legislative relationships developing.There is pressure for some global barriers totrade to erode, to assist the economy tobecome more globalized.

Companies with investments in importantregional ecosystems for raw materials withclose proximities to thriving and successfulcommunities have benefitted from agrowing consumer market. Somecompanies have been particularly vulnerablefrom sourcing their raw materials fromparticular areas where ecosystems aredegraded or where conflict over naturalresources is common. To address this,companies have been forced to diversify anddevelop strategies for mitigating these risksby sourcing materials from multiple riskareas. Companies have become much moremobile in their business and supply chains.This has been more inefficient and costly buthas helped to maintain a supply of keycommodities and kept successful companiesfrom folding.

Consumer ResponseConsumer behaviour has echoed this pushfor localism and decisions are often madewith local conditions and resource availabilityin mind, there is a strong desire and demandfor ‘local’ products. However, local does notalways mean sustainable and ‘sustainablelifestyle’ decisions vary widely from onelocation to the other. In some cases suchbehaviour is influenced by individual choiceand social ethos and in others it is acceptablefor governments and others to make thosechoices for consumers. This is framed by thelocal context and in particular the linkbetween local consumption behaviour andthe health of local ecosystem and naturalcapital. Where there is a perception ofindividual or collective value derived fromecosystems then demand for higherenvironmental standards from companies isstandard.

Drivers towards 2050In the year 2030, Earth’s socio-ecologicalsystems seem poised at a branch point. Localecosystem management is varied in manyregions, but there is a growing force ofemerging institutions for globalenvironmental management. Whileproblems exist, the situation is better than in2000. On the other hand, globalenvironmental problems have become morepressing. It seems possible that newapproaches will emerge for addressing them,built in part on the varied experiments of therecent decades.



‘Techno Garden’ ScenarioNarrative

Summary: Significant investments in environmentaltechnology seem to be paying off. At thebeginning of the century, doomsayers feltthat Earth’s ecosystem services were breakingdown. As we look back over the past 20 years,however, we see many successes inmanaging ecosystem services throughcontinually improving technology.Investment in technology was accompaniedby significant economic development andeducation, improving people’s lives andhelping them understand the ecosystemsthat make their lives possible. On the otherhand, not every problem has succumbed totechnological innovation. In some cases, weseem to be barely ahead of the next threat toglobal life support. Even worse, newenvironmental problems often seem toemerge from the most recent technologicalsolution, and the costs of managing theenvironment are continually rising. Manywonder if we are in fact on a downwardspiral, where new problems arise before thelast one is really solved. As we look to 2050and beyond, we need to cope with a situationin which problems are multiplying faster thansolutions. The science and policy challengefor the next 20 years is to learn how toorganize socio-ecological systems so thatecosystem services are maintained withouttaxing society’s ability to invent and pay forsolutions to novel, emergent problems.

How did we get here?Early in the twenty-first century, increasedrecognition of the importance of ecosystemservices led to increasingly formalizedpatterns of human/ecological interactions.The trend to formalization led to definition ofa wide variety of ecological property rights,which were assigned to a variety of

communal groups, states, individuals, andcorporations. These rights often promptedecosystem engineering to maintain provisionof the desired ecosystem services.Investment in ecological understanding andnatural capital meant that environmentalproblems were often identified before theybecame severe.

Such property rights systems eased industrialcountries away from protective subsidies andimproved income opportunities fordeveloping countries. They also led toincreasing government control through‘‘green’’ taxes and subsidies of research anddevelopment. Policies emphasizing researchand development led to significant scientificefforts, particularly in the use oftechnological control to maintain consistentresource flows. There was also a strong beliefthat ‘‘natural capitalism’’—a focus on lookingfor profits in working with nature—could beprofitable for both individuals and society.Big business became interested in researchand development of new technologies toproduce or enhance production ofecosystem services. The impossibility ofmaintaining exclusive access to informationdrove ever more rapid innovation during theearly period. It was a time of rapid gain andspread of knowledge around the globe.Global communication, combined with opentrade policies, allowed the developing worldto apply some of the new technologies andstart developing their own.

Political LandscapeGovernments found themselves pre-occupied with the state of the planet. Inresponse to negative consequences ofintensive agriculture in the industrial world—including land degradation, eutrophicationof lakes and estuaries, and diseaseoutbreaks—demand for ecologicalagriculture began to increase. In the 1990s,governments in several European countries

34 - Building Resilient Supply Chains 37


had already begun to change or removeagricultural subsidies following a series ofagricultural crises in Europe (mad cowdisease, foot-and-mouth disease, swine flu,contamination of food with halogenatedorganic compounds).

Research in 2020 clearly identified the needfor organisations and institutions with thenecessary technical and financial resourcesto act as stewards of key global ecosystemservices. National and internationalgovernment admitted they lacked thecapacity to play this role for some time andincreasingly people expected business tooffer leadership in this area. Through globallease agreements, 20 of the largest globalcompanies, known as ECOCOs, nowindividually, and in some cases in partnershipwith other companies, manage andmaintaining global ecosystems and severallocal ecosystems. Their key role is tomaximize the provisioning, regulating,cultural and support benefits fromecosystem services. With a collective globalvalue of US$33 Trillion these ECOCOs havehuge assets and are able to attractconsiderable investment and raisesubstantial revenues from nation states andother companies deriving benefits fromhealthy ecosystems. There is significantinvestment in development of technologiesto increase efficiency of use of ecosystemservices and widespread use of ‘payments forecosystem services’ and well developedmarket mechanisms.

Ecological agriculture unfolded in twointertwined planes. Due to the increasingfocus on ecosystem services, people beganto realize that agricultural systems wereembedded within landscapes and thatagriculture could not just produce food orfibre at the expense of all other potentialservices. This led to policies that encouragedfarmers to create a landscape that produceda variety of ecosystem services rather thanfocusing on food as a single service. The goal

of multi-functionality moved governmentagricultural policy away from a focus on thevolume of agriculture production to a focuson agricultural profitability.

Physical LandscapeDespite initial concerns that multifunctionalagriculture would destroy farming as a wayof life and reduce yields, its profitability andlowered risk encouraged many farmers inEurope and North American to convert theiroperations. This trend began in the 1990s,and its expansion first in Europe and thenNorth America meant that by 2010 nearlyhalf of European and 10% of North Americanfarms were focusing on a multifunctionalexistence. By 2025, these numbers hadjumped to nearly 90% in Europe and 60% inNorth America. The diversification ofagricultural production and lower yieldsincreased the profitability of farming—particularly smaller-scale farming—andreduced the power of large-scaleagribusiness.

As population continued to grow anddemand for resources intensified, peopleincreasingly pushed ecosystems to theirlimits of production. This ecologicalengineering was done privately at local,small, or regional scales by a variety ofprivate, public, and community andindividual actors and was done withindifferent types of property rights schemes atdifferent locations. Some areas establishedproperty rights schemes based on commandand control, common property, or market-based schemes, while others remained openaccess.

Ecological agriculture and the end ofwidespread subsidies opened the rich worldto agricultural inputs from poor countries,and this spurred radical changes inagriculture in Eastern Europe and later inAfrica and Latin America. Increased ability ofdeveloping countries to export agriculturalproduction encouraged investment in

intensification. The demand of industrialcountries for at least nominally safe andecologically friendly production helpedstimulate intensification efforts to increaseproduction in environmentally friendly ways.Some of these developments came from theuse of genetically modified crops. Despiteinitial opposition in the EU, the absence of allbut a few minor ecological problems led totheir widespread use. As crop production forthe developing world remained somewhatless sensitive to ecological issues, some localecological degradation resulted from theagricultural intensification. Water pollution,eutrophication, deforestation, and erosionbecame significant problems in somelocations.

Regional differences within rich and poorworlds continued to exist due to culture,governance, environmental factors, and theway that property rights were organized.Prosperous regions benefit fromtechnologically managed ecosystem services‘owned’ by the private sector and results in ahigher quality of service for those able to pay.The world has seen short-term consumptionlevel reductions but the trend is returning toupwards. However, the trend is for“sustainable consumption” which is beingdriven by taxation of unsustainablebehaviours and population growth.

Not all local ecosystems are attractive toECOCOs or have been able to attractpayment for the ecosystem services theyprovide and as a result many becomedegraded beyond a point from which theycan recover. For example, development ofgreen agriculture spread most rapidly inNorth European countries. East Europeancountries were well positioned to exportagricultural products to the EU and were thefirst to intensify. In Africa the situation wasquite heterogeneous; some countries insouthern Africa intensified their agriculturalproduction rapidly, while other Africancountries were unable to respond to these

opportunities due to local problems ingovernance, lack of infrastructure, or watershortages and droughts which has led to aglobal increase in the equality gap betweenthose with access to technology and thosewithout.

Social LandscapeThe highly managed urban garden approachsometimes led to destruction of local, rural,and indigenous cultures. Since the dominantvalues tended to be functional, culture forculture’s sake was not highly valued. Forthose with technological skills, there is a newglobal market for ‘techno-immigrants’ andthose in poorer areas with access to traininghave moved en masse to Brazil, China, India,etc. bringing these regions to the forefront oftechnological innovation. The degree of thiscultural loss was variable across regions, butsome loss was inevitable everywhere. Thislowered the adaptive capacity of localecosystem management by diminishingsociety’s capability to detect subtle changesin local ecological processes, particularly interms of detecting gradual changes in slowprocesses. On the other hand, sensitive andcheap ecological monitoring did allow forthe rapid accumulation of short-termecological knowledge.

In areas dominated by the ECOCOs there hasbeen widespread investment in health andeducation with a strong emphasis on birthcontrol and technology skills. This hasslowed population growth in many areas;more than what was thought possible in theearly part of the century. Populations inareas outside of the interest of the ECOCOshave suffered from a widening equality gaplacking in education and access to the new‘global skills network’. Without the right skills,it is very difficult for these people to move tomore prosperous regions. In these areaspopulations continue to grow and healthissues and infectious diseases are rampant.



Access to Environmental ResourcesThe engineering approach took hold inurban and suburban areas. The best urbanmanagement focused on creating low orpositive impact on ecosystems using greenarchitecture and on diverse transportationstrategies and urban parks as functionalecosystems. In rich countries, new housingdevelopments begin to include rain gardensand wetland areas to clarify runoff andprovide wildlife habitat. The specific activitiesthat people engaged in varied by location,based on the ecosystem services theydesired and the difficulty of providing thoseservices. In general, rich countries focused onproviding water regulation services andcultural services, while developing countriesfocused more on the production andregulation of water and the production ofprovisioning services. In general, low wateruse technological innovation, particularly inagriculture, has removed much of the globalwater shortage threat, although this hasresulted in a higher price for food in order toincorporate payment for these technologies,again widening the equality gap.

Highly engineered systems turned out to bevery vulnerable to disruptions, however. Evensuccessful management was at risk from lossof process diversity, loss of local knowledge,and people’s dependence on stable,consistent supplies of ecosystem services.Ecosystems tended to be simplified becausethe more obscure and apparentlyunimportant processes were not supportedor maintained. At the same time, increasingsocial reliance on the provision of ecosystemservices led to declines in alternativemechanisms of supplying them. Thesefactors combined to greatly increase the riskof a major breakdown in provision ofecosystem services. The problems wereespecially severe at the boundaries betweenecosystems and across scales, where localeffects of management interacted withlarge-scale fluctuations in ecosystem

conditions and function.

While there has been what is now viewed asshort term consumption level reductions, thecurrent trend is upward. The technologicallymanaged ecosystem products like water, rawmaterials, oil and gas, are owned andmanaged by the ECOCOs or their subsidiariesand has resulted in a mostly stable andhigher quality of service, but only for thoseable to pay.

Business ResponseThe engineering ‘norm’ that has developedover the past 20 years is far moresophisticated, subtle, and adaptive thanmany traditional attempts at ecologicalengineering. The new ecological engineerswere schooled in the engineering approachof ‘‘fast, cheap, and out of control’’ and usedadvances in computer, communication, andmaterials sciences to permit humaninfrastructure to be increasingly flexible,dynamic, and adaptive, like wild ecosystems.Innovations such as pop-up infrastructureallowed people to intervene in ecologicaldynamics rapidly and flexibly. Industry thathas stayed on top of and has funded andpromoted these emerging technologies hasgone from strength to strength whilebusinesses that have not adopted thistechnological mind-set have mostly fadedaway. Occasionally a business has sufferedfrom a bad technology but with the fieldchanging so rapidly, it is rare for a business toonly be investing in one direction.

Many in the business community areoptimistic that technology will offer majorsolutions to environmental problems andwith considerable investment believe thereshould even be some significant rewards.However, there is an underlying risk thatthese technologies merely promote mono-culture agricultural strategies, leading toparticular vulnerabilities to the impacts ofclimate change.

New markets have developed in landinvestment. The role of farmers hasbroadened to cover provision of ecosystemservices, beyond simply providing food.Land that can provide ecosystem regulatingservices can attract higher investmentreturns than if it were used for foodproduction alone.

Consumer ResponseIn general there has been wide scale publicbuy-in for more sustainable lifestyles. Thisinitially resulted in consumption reductionthroughout the 2020’s. However, as theglobal market appears more stable, thecurrent consumption trend is upwards.Consumer behaviour is seen to be veryresponsive to global marketing initiatives andthere have been extensive advertisingcampaigns by the ECOCOs to promote moresustainable lifestyles and encourage greenerchoices. Many basic goods, and food inparticular, are expensive due to anincorporated tax used to pay for ecosystemservices but this is now accepted as normal.

Consumers share the belief in the power ofhigh-tech gadgetry to improve their lifestylechoices and there has been a surge ofconsumer oriented technical products tofacilitate ‘green living’. Consumers use theirpersonal communication and informationunits to instantly scan products to get fulldetails about them in order to make moreinformed decisions. They instantly haveaccess to product green credentials, naturalresource use data, carbon costs, companyprofiles and consumer reviews which theyactively use and engage with.

Drivers towards 2050Looking back from the year 2030, it seemsthat we did a pretty good job managing andunderstanding a rapidly changing world.There are some persistent or growing socialand ecological problems, like the loss of localknowledge about ecosystem services andeutrophication of fresh waters and coastaloceans or the growing disenfranchisedpopulations in ecologically poor areas. But ingeneral people around the world have betteraccess to resources and we seem to bethinking more about multi-functionality andsystems approaches rather than single goals.Looking forward to 2050, there is great hopefor continuing improvement in ecosystemmanagement. We will need to cope with asituation in which problems (caused by newtechnologies) are sometimes multiplyingfaster than solutions. The science and policychallenge for the next 20 years is to learnhow to organize socio-ecological systems sothat ecosystem services are maintainedwithout taxing society’s ability to invent andpay for solutions to novel, emergentproblems.




Appendix 3: Scenario Quick Guide

The past 20 years have shown that some ecosystem servicescan be maintained or improved by appropriate macro scalepolicies. Notable successes occurred in reducing orcontrolling many global pollutants and in slowing, or in somecases reversing, loss of marine fish stocks. In some situations,it turned out that ecosystem services improved as economiesdeveloped. On the other hand, it appears that global actionfocused primarily on the economic aspects of environmentalproblems is not enough. In some regions and nations,ecosystem services have deteriorated despite economicadvancement

Global Orchestration Globalised

Regionalised

Reac

tive

Proactive

“One planet approach” “We’re all in this together” “Prosperity withoutgrowth”

Globalized, with emphasis on economic growth and public goods.

Large-scale, high productivity agricultural mono culture. Water allowanceschemes.

Growing middle class, increase in wealth, technology access, improvementin health although increased spread of pathogens.

International regulations with monitored quotas, detailed reportingrequirements, true cost accounting and severe financial penalties.

Corporate responsibility, long term investments, added value requirements,new markets.

Environmental security due to increased reliance on mono culture.

‘Punch-lines’:

Political landscape:

Environmentallandscape:

Social landscape:

Access to environmental resources:

Business response:

Drivers to 2050:

Investments in environmental technology seem to be payingoff. At the beginning of the century, doomsayers felt thatEarth’s ecosystem services were breaking down. However,looking back over the past 20 years, we see many successesin managing ecosystem services through continuallyimproving technology. Investment in technology wasaccompanied by significant economic development andeducation, improving people’s lives. On the other hand, notevery problem has succumbed to technological innovation.In some cases, we seem to be barely ahead of the next threatto global life support and new environmental problems oftenseem to emerge from the most recent technologicalsolution.

Techno Garden

“Knowledge is power”“We are all connected”

Globalized, with emphasis on green technology and corporate input.

‘Punch-lines’:



Social landscape:


Business response:

Drivers to 2050:

Large-scale agribusiness, genetically modified crops, technologicallymanaged ecosystems, low-water innovation, but still some areas ofdeprivation.

Loss of local cultures, techno-immigrants, cheap global communication,slowed population growth.

Highly engineered systems vulnerable to disruptions, global diversity ofecosystem products and services means more stable provision, but at a cost.

Investment in emerging computer, communication, and material sciencetechnologies.

How to address problems brought about by technology at a continuingaffordable cost.

TechnoGarden

AdaptinMosaic

GlobalOrchestration

Orderfrom

Strength

Globalised

Regionalised

Reac

tive

Proactive

TechnoGarden

AdaptinMosaic

GlobalOrchestration

Orderfrom

Strength



Since 2000, the availability of ecosystem services has fallenbelow minimal needs for human wellbeing in some regionsof the world while being maintained or even improved inother regions. Widespread loss of faith in global institutionsand fear of terrorism led rich countries to favor policies thatensured security and erected boundaries against outsiders.Even in better-off areas though, there have been somebreakdowns of ecosystem services. Climate change was oftenmore rapid than response capacity. Overall, the current globalcondition of ecosystem services is highly variable anddeclining on average. Even the places in the best conditionare at risk, although citizens of wealthy nations enjoy atolerable level of ecosystem services and human well-being.

Order from Strength

The past 20 years have brought a mix of successes and failuresin managing ecosystem services. Some regions strengthenedthe centralized environmental agencies that emerged late inthe twentieth century, while others embarked on novelinstitutional arrangements. Some approaches turned out tobe disastrous, but others proved able to maintain or improveecosystem services. As a result, the world in 2030 is a diversemosaic with respect to ecosystem services and human well-being. A considerable variety of approaches exists, andregrettably some regions still cannot provide adequateecosystem services for their people. Other regions are doingwell, and remarkable successes have occurred on everycontinent.

Adapting Mosaic

“We know how to do it best” “Local knowledge is local power”

Regionalized, with emphasis on local adaptation and flexible governance.

Neglect of multi-regional systems, crisis more frequent, water shortagesexacerbated.

Desire for localism with high migration pressures.

Uneven distribution and access to ecosystem products and services.Complex network of securing local agreements.

Short term agreements due to high risk of supply, need for diversification.

Rebuild ecosystem services in the regions where they have collapsed andincrease and transfer the lessons of regional success to the global commons.

‘Punch-lines’:



Social landscape:


Business response:

Drivers to 2050:

“Safety and security first”“National strength is national success”

Regionalized, with emphasis on national security and economic growth.

Major global degradation of many large-scale environmental systems withsmall pockets of health.

Increased global inequality, rapid disease, pollution and population growthin poor countries.

Shortages and disputes over resources common, issues affecting wealthynations more likely to be addressed, wealthy buy up resources increasingequality gap.

Greater investment in and control over local resources, developing localtrade agreements.

Social pressure for supporting the poor and improving wider ecosystemmanagement.

‘Punch-lines’:



Social landscape:


Business response:

Drivers to 2050:

Globalised

Regionalised

Reac

tive

Proactive

TechnoGarden

AdaptinMosaic

GlobalOrchestration

Orderfrom

Strength

Globalised

Regionalised

Reac

tive

Proactive

TechnoGarden

AdaptinMosaic

GlobalOrchestration

Orderfrom

Strength


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