By Darci Palmquist
Analysis #1: What Is the Value of Water — for Today and Tomorrow?
The 800-mile Brazos River cuts a long path across Texas before emptying into the Gulf of Mexico near Freeport. It is home to fish and other wildlife and supplies water to more than 1 million people. It's also critical to an array of agriculture and industry operations, including the Dow Chemical Corporation’s facility in Freeport, Texas.
With a drought savaging Texas, it isn’t news that water is valuable here. But current water scarcity is likely to rise as demand increases due to population growth. At the same time, climate models predict there will be less water flowing in the river in the future.
- So how can companies such as Dow account for the value of water and the role that marshes, forests and other ecosystems play in maintaining water flow?
- And how can those companies use this understanding to plan for current and future availability of water from the Brazos to both its operations and stakeholders in the area — including nature?
"Businesses know the cost of raw materials, they plan for future capital improvements and they project labor costs," says Michelle Lapinski, director of corporate practices for The Nature Conservancy. "They need to be able to value the benefits from nature that they depend on — and conversely, conservation needs to understand how to integrate the values of those benefits into business planning."
To help Dow and other water users plan for future water scarcity, Jennifer Molnar and other Conservancy scientists are working on a plan that promotes conservation of the Brazos, including:
- Assessing supply and demand trends to create models of future water availability in the Brazos River;
- Identifying "green" and "gray" infrastructure options that could help maintain flow in the river; and
- Analyzing the economics of those options to understand which ones will produce the most value for water users, including Dow, and the environment.
“Improved accounting of the value of water, based in part on a better understanding of how ecosystems regulate water quality and quantity, can position businesses to make better decisions about water use — and in turn benefit the health of those ecosystems,” says Molnar, who directs the Conservancy’s Sustainable Science program.
The information and tools that Molnar's team develops will help companies like Dow to factor nature into their business practices. For example, investing in natural infrastructure — such as restoring a marsh—could be an innovative approach to sustaining water resources.
"These solutions can be more cost-effective than traditional engineered solutions, while also providing a variety of public and environmental benefits,” says Molnar.
And the methods developed here could be applied in other river basins to analyze water shortages in the face of climate change and increasing demand.
Analysis #2: Can Planting Trees Be a Smart Business Strategy?
Houston is among the U.S. cities with the highest ground-level ozone concentrations (a major ingredient of smog) and industrial sources are the primary cause. A successful emissions mitigation project by Dow could set the stage for other companies to do the same — and lead to substantially improved air quality in the area.
One solution: Plant trees. The value of planting trees is clear to conservationists: forests create habitat, provide recreation, filter water and improve air quality.
- But can the benefits of tree planting be measured in terms of dollars — and can that value get businesses more interested in doing conservation?
- And could a company use large-scale tree planting to benefit its employees and the surrounding environment, reduce costs and achieve air quality compliance goals?
The Conservancy's analysis will look at the opportunities for planting trees in the area of Dow's facility in Freeport, TX, and the benefits that afforestation could achieve—in improved air quality as well as other public benefits like recreation and water filtration. The scientists will look at specific questions such as:
- Could large-scale tree planting have a measureable effect on air quality in the region?
- If so, what types of trees should be planted, where and how many?
- What is the cost-effectiveness of tree planting as compared to engineered pollution controls?
- And what other benefits would the trees provide Dow and the public?
"We're hoping to show that tree planting can be an effective new business strategy,” says Molnar. “And along the way, we'll develop methods and tools for other corporations to use."
Analysis #3: What Is the Value of Coastal Habitats in Reducing Future Business Costs?
For corporations located on the coast, natural hazards like hurricanes can have serious ramifications on the bottom line — including property damage, production losses and higher insurance costs.
And these risks are likely to increase in the future: climate models predict that the Texas Gulf Coast will be threatened by hurricanes of increasing frequency and magnitude and sea levels in the region could rise by more than a foot by 2050.
“The standard corporate approach to reducing risk from these natural hazards is to build concrete structures like seawalls and levees,” says Molnar. “But natural areas along the coast such as marshes and reefs can provide significant protection.”
How? Marshes and reefs act as natural buffers from storms, reducing wave damage and absorbing storm surges. Maintaining these habitats in the face of increasing erosion and sea-level rise may help a company avoid the cost of building engineered solutions ("gray infrastructure") in the future.
To evaluate the value of “green” and “gray” infrastructure along the coast in Freeport, Texas, Conservancy scientists will:
- Model the role coastal marshes play in protecting Dow’s facilities and local communities from storm damage;
- Calculate the monetary value of that protection in order to inform corporate risk management decisions on levee construction;
- Assess the additional benefits marshes provide to wildlife and to communities in the region, like sustaining fisheries and recreational use.
“We want to show the role that habitat protection and restoration can play in protecting corporate facilities,” says Molnar. “In order to do that, we need to be able to put the value of these marshes into language that businesses understand — risk management — while also highlighting the broader public and environmental benefits that can come from investing in them.”
Through their analysis, Conservancy scientists will develop ways to evaluate the cost-effectiveness of green infrastructure solutions compared with gray infrastructure. The tools and lessons from this work could be applied in corporate risk decision-making around the world.
Darci Palmquist is a senior science writer with The Nature Conservancy.