Streamlining investment into natural capital

High transaction costs can deter investment into natural capital

The natural resource management (NRM) sector is lead by earnest, science-driven and highly motivated individuals who who seek to sustain the natural resources used by people, and create the best environmental outcomes, often with only meagre financial investment.

The concept of natural capital frames natural resources as assets, which provide environmental, and economic benefits to people even without direct human intervention or exploitation, as well as social and cultural benefits.

This framing, where the value of natural capital assets is considered along with the services they provide, opens the NRM sector, and opportunities for natural capital improvement, up to a wider cohort of investors.

Still, the sector is complicated, and environmental systems are complicated. The benefits of natural capital improvement are difficult to directly quantify for investors.

Traditionally, funding in the sector has been delivered through government programs, which rightly require a high level of probity and reporting to substantiate investment.

However, these constraints create transaction costs that must be paid before any money is even spent on the ground. The result in most cases is that less than half of announced budgets ever make it onto the ground, where it is needed most.

A flow on effect, is that potentially substantial non-government investment into natural capital does not occur because investors are turned off by the high transaction costs.  This in turn creates a situation where the appeal for investment beyond government commitments are difficult to initiate.

Truii has created Natural Capital Suite to streamline investment into natural capital

Over the last eight years Truii has been on a journey with the Queensland and Australian governments supporting investment in water quality improvement projects in catchments that directly impact the Great Barrier Reef.

An outcome of this work has been the development of web applications that reduce transaction costs at many points of the strategic planning, project design, delivery and reporting workflow involved in NRM.

Truii is adapting what we have learned from supporting the delivery of water quality improvement projects in the Reef, to create tools that support and streamline the delivery of various types of natural capital improvement projects, applicable anywhere in Australia.

Truii’s Natural Capital Suite is a collection of web applications that target constraints in the natural capital market. They aim to reduce the transaction costs that are associated with delivering nature-based outcomes, by making strategic planning, project design, delivery and reporting easier and more accessible.

The elements of each application in the Natural Capital Suite have a common theme of using the best available science to quantify the value of investment in on-ground activities that benefit the environment, economy, society and culture. To date we have three Natural Capital Suite applications, which we describe below, with more in the pipeline.

Learn more about the Natural Capital Suite >>

Natural Capital Region

Natural Capital Region is for large scale investment programs to determine what type of activities are most cost effective to fund. Natural Capital Region is developed on a region-by-region basis with NRM region specific data and region-specific libraries of potential on-ground actions with their local benefits and costs.

Natural Capital Region quantifies the benefits of investment programs across 20 sub-indicators that are summarised in terms of change to:

• Water quality
• Biodiversity
• Social
• Economic
• First Nations
• Climate change (carbon, methane reduction)
• Land resilience

Natural Capital Region can be used to explore and develop future on-ground investment portfolios (predicting the likely outcomes and costs) as well as to report on the likely outcomes of historical programs.

Currently, Natural Capital Region is available for:

• South East Queensland
• Queensland Murray Darling Basin
• Burnett Mary
• Mackay Whitsundays
• Margaret River Region (Western Australia)
• Queensland Lake Eyre Basin

If you want access to any of these regions or to set it up for your own region, get in touch. Our intention is to ultimately achieve national coverage, but our roll out is governed by interest and opportunity.