Five countries, five ways nature supports people

Last year in the Philippines, the government passed a national mandate requiring country decision-makers to account for the economic and societal impacts of natural capital – in other words, the value of land, air, water, biodiversity. Researchers at Stanford’s Natural Capital Project (NatCap) helped bring together a team to support this mandate and the country's broader goals. 

“Countries with ‘policy windows’ like this one in the Philippines are at a key moment for leveraging both external and internal expertise to launch their efforts forward,” said Mary Ruckelshaus, executive director of NatCap. 

To leverage this policy window required groundwork that had already been underway: in 2023 NatCap, with the Philippines government and the Asian Development Bank (ADB), had launched a Philippines pilot project under the People, Planet, Prosperity (or “3Ps”) initiative. For the past two years, country pilot teams across the initiative – representing pathbreaking combinations of government ministries like finance, environment, economy, and more – have met regularly with multilateral development banks (MDBs) and NatCap, co-creating specific natural capital approaches to the challenges each country faces. Each pilot approach was geared toward meeting the country’s economic development, climate, and nature-related policy and finance goals. 

NatCap and its many collaborators have now published reports and case studies from the five 3Ps pilot projects coordinated with ADB – including the Philippines-based project – sharing their processes and real-world outcomes. Outputs from projects with additional countries coordinated with the Inter-American Development Bank are on the way (Belize and Colombia projects are now shared here).

Natural capital approaches incorporate nature’s benefits (or “ecosystem services”) into decisions and can motivate investments in ecosystems, improving the well-being of both people and nature. Here are five on-the ground examples from the 3Ps project.

Ecosystem benefits, not just vulnerability

The Philippines 3Ps project centered on applying a natural capital lens in watershed management planning, and implementing natural capital accounting, in collaboration with the Ecosystems Research and Development Bureau within the Philippines Department of Environmental and Natural Resources (DENR).

Natural capital accounts measure stocks of natural assets and the flows of ecosystem services they provide to society, often compiling this information using a standardized, replicable approach that allows for monitoring change over time. Watch this 2-minute animation on natural capital assessments and accounting.

Historically, DENR had focused on understanding the state of watersheds and their vulnerability to climate change and development pressures. This didn’t capture a key element of ecosystems: where and how ecosystems provide the greatest benefits to people. 

The team modeled and mapped the supply of key watershed ecosystem services in the Santo Tomas watershed in the Philippines, using NatCap’s open-source InVEST software suite, assessed their economic value, and set up natural capital accounts following the United Nations’ System of Environmental Economic Accounting. 

Under DENR leadership, the methodology and workflow the team established are now being used as a model for other watersheds, and are part of the basis for a new ADB loan to help the country implement a national system of natural capital accounts, and meet the national mandate. 

Targeting investments and broadening support

As with all governments, DENR has a limited amount of funding for nature preservation and restoration. Knowing which areas of forest or other ecosystems are providing the greatest benefits to people – such as through preventing soil erosion and pollution into waterways and enabling clean and plentiful water for drinking, irrigation, and energy production – is useful for targeting investments and regulations to have the greatest impact. Understanding nature’s benefits can also generate broad-based support across government and economic sectors for incorporating nature into their planning and investments. 

“By integrating natural capital accounting (NCA) into planning and decision-making, we recognize ecosystems as essential to our economy, wellbeing, and future,” said DENR Secretary Raphael P.M. Lotilla in a statement about the project. “NCA enables us to make informed decisions that reflect the true cost of environmental degradation and the real value of clean air, water, food security, and climate resilience… It is not just a technical tool - it is a pathway to equity, justice, and survival.” 

Natural capital assessments and accounting can also provide a basis for financial mechanisms that support nature and people, such as payments for ecosystem services (PES), mechanisms through which downstream beneficiaries contribute financially to upstream efforts to preserve ecosystem integrity and the services this provides. Such a mechanism is now being explored in the Cook Islands, where another 3Ps team worked under the vision of the National Environment Service and the Ministry of Finance and Economic Management to co-develop a natural capital assessment and valuation for the Muri Lagoon, a key tourist area. 

The Cook Islands pilot helped zero in on where “riparian buffers” (i.e., vegetation along streams) and wastewater management infrastructure would be most effective for water quality and flood control, and how much locals and tourists are willing to pay for these services. In addition to using the information to seek additional financing for an ADB loan to build a wastewater treatment plant, the assessment and valuation is providing a scientific basis for a potential PES scheme to compensate landowners or local organizations for watershed restoration or management.

Developing skills and expertise

A key component across all of the 3Ps pilot projects has been developing long-term, durable capacity in natural capital approaches, both technical and policy-related. 

At the request of the Philippines DENR, NatCap led an extensive seven-session training course on natural capital assessments; ADB and technical experts from EEG Philippines also led trainings on economic valuation and natural capital accounting. The newly trained experts in the Philippines co-led the natural capital assessment and valuation for the pilot. This project complemented work already underway in the Philippines, as it followed publication of their Roadmap to Institutionalize Natural Capital Accounting in 2022, and creation of a Natural Capital Accounting Technical Working Group with high-level representatives from across the government. 

Meanwhile in the Cook Islands, in-person and virtual training workshops supported long-term technical and policy capacity to continue valuing nature in decision-making, in ways that align with traditional ecological practices. This included learning about two InVEST models (NatCap’s open-source ecosystem services modeling software) and how they can be applied for the Muri Lagoon and Rarotonga, and how to conduct economic valuation of ecosystem services.

Learning across projects

The 3Ps project built on two decades of collaborations, during which NatCap has worked across more than 75 countries to incorporate nature’s benefits into decisions, motivating investments in ecosystems and changing incentives and capital flows to improve the well-being of both people and nature. The development banks - whose role is critical in scaling these approaches to have global effects – have also been leading the way in promoting “nature-positive” approaches across the dozens of countries in which they work. The 3Ps project was NatCap and the banks’ most coordinated collective effort to date. 

“The 3Ps project helped ADB highlight the importance of natural capital assessments as a means of identifying investment needs and policy action,” said Narayan Iyer, senior natural resources and agriculture specialist at ADB. “These kinds of assessments are being mainstreamed in ADB’s natural capital approach to operations.”

The three other NatCap/ADB 3Ps pilots were in Armenia, China, and Sri Lanka:

• In Armenia, the work informed the Ministry of Environment’s river basin management planning, and advanced a novel “Water Value Indicator” highlighting which regions and ecosystems contribute to and protect the water supply, the sectors that derive the most value from this, and how these values might be impacted by climate change.
• In China, the team produced a “gross ecosystem product” account for a key region within the Yangtze River Basin, for use in government planning and investment priorities.
• In Sri Lanka, the pilot project demonstrated a proof-of-concept approach to identifying where strategic investments in ecosystems (e.g., restoration of agricultural lands to forest) could maximize sediment reduction benefits for energy and water security, while minimizing economic losses from this possible change in land use. This work helped the Sri Lankan government and the Asian Development Bank agree on a recent $200 million investment in watershed management.

In addition to the five countries NatCap engaged in with ADB, the broader project involved the Inter-American Development Bank and the World Bank, and 16 countries in total. By convening several 3Ps global forums at Stanford and at ADB headquarters in Manila, and holding sessions at Conferences of the Parties and at meetings hosted by the Global Environment Facility and the MDBs, the collaborators have shared innovations and challenges from across the pilots, synthesizing lessons to publish and promote more broadly and building a global network of practitioners experienced in natural capital approaches. The mix of countries and MDBs has boosted a key aim of the 3Ps project: to more quickly scale up the use of natural capital approaches in country decision-making and in development bank operations. 

Two of the pilot projects in Latin America and the Caribbean region, coordinated with the Inter-American Development Bank and funded by the Global Environment Facility, will have results published soon. The World Bank published case studies on its related projects in 2024. The 3Ps project will also soon launch a massive open online course geared primarily toward development bank staff, to help spread uptake within the banks and beyond.

Join us for a webinar on November 3 at 5:00pm PT, the last in the ADB Natural Capital Lab Webinar Series, Investing in Nature for a Prosperous Future in Asia and the Pacific, to hear more about the Cook Islands pilot plus highlights and lessons learned from all five of the ADB/NatCap-affiliated pilots. 

The five pilot projects coordinated with ADB were supported by the Gordon and Betty Moore Foundation. The IDB projects are supported by the Global Environment Facility. The World Bank projects were supported by PROGREEN, a World Bank Multi-Donor Trust Fund.