Accounting for natural capital helps to preserve nature and water resources: President Tharman
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President Tharman Shanmugaratnam, who is also co-chair of the Global Commission on the Economics of Water, in dialogue with Temasek's Robin Hu.
ST PHOTO: GIN TAY
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SINGAPORE - The idea of putting an actual value to natural resources like water in economic terms is gaining traction with countries, but large corporations have also realised that natural capital accounting is “in their own interest”, said President Tharman Shanmugaratnam.
“Water doesn’t come from the tap. It comes from natural ecosystems... We’ve got to preserve the ecosystems, be they forests or wetlands, or ensuring we are not over-extracting from rivers or groundwater,” he said in a dialogue session on June 18, when the topic turned to how to price water correctly.
Incentivising the conservation of water and the ecosystems that produce water
Natural capital accounting shows how natural resources contribute to the economy and how the economy affects natural resources.
It can provide a broader picture of development and economic progress than standard measures such as gross domestic product.
“Countries are now taking very seriously the mapping of their natural resources, their natural capital,” said Mr Tharman, who is also co-chair of the Global Commission on the Economics of Water.
He noted how the Philippines started its systematic geospatial mapping of all its natural resources including water sources in 2023, “so that it knows exactly where its resources are and what needs to be preserved”.
The archipelago’s rich minerals, cropland, timber and marine resources make up about 20 per cent of the nation’s wealth and GDP.
Heavy users of water such as drinks manufacturers – “Coca-Cola, Pepsi, Heineken and so on” – now realise that their business is unsustainable “unless they invest upstream in (conserving) the natural catchments, help farmers to use water more efficiently and treat that as part of their business model”, Mr Tharman said.
“They are adopting various forms of natural capital accounting in its primitive form at the very least, because they know it is in their own interest.”
While firms may not be mandated to do natural capital accounting now, they know it will be necessary 10 or 15 years from now, he added.
He said he was impressed by some companies that are taking natural capital assessments seriously, citing how Singapore-based Olam Group, a supplier of food ingredients, feed and fibre, has integrated this systematically into its business.
“It knows that it has to preserve sustainability upstream, not just in the plant where it’s doing the manufacturing or the processing,” he added.
Besides such voluntary actions and bottom-up approaches, the President said a top-down approach is also needed, “which eventually has to translate into regulatory practices and disclosure practices. Just like we’ve achieved for carbon, we have to move on to biodiversity and water.”
Mr Tharman noted how the 15th United Nations Biodiversity Conference in December 2022 set a precedent for biodiversity and ecosystem accounting.
A major goal to protect 30 per cent of the world’s land, freshwater and ocean areas by 2030 was a key outcome of the conference.
“In order for us to preserve that instinct of conserving water and the ecosystem that produces water, and all the benefits we get from water, we have got to first account for it,” he added.
“We’ve got to know where it is, we’ve got to know every resource that leads to this supply for water, and we’ve got to value it. If we don’t value it, there’s no incentive to preserve it.”
“When it comes to water, I would say at least 75 per cent of the technologies required for us to solve this crisis to stabilise the global water cycle are available. They are mature and they too need to be scaled up,” Mr Tharman said, urging private-public collaboration.
He said the most important step in that is to start valuing water seriously, while subsidising the poor so they have access to clean water.
“But if we don’t price water, we are going to discourage innovation, we are going to discourage water conservation, and it’s going to be terrible for the poor.
“If you don’t price water, it’s terrible for the poor because water will be used excessively in industry and by the largest farmers, by the largest users, and we won’t have enough for the poor.”
Dutch microbiologist Gertjan Medema, who pioneered the use of wastewater surveillance to curb the spread of the coronavirus during the Covid-19 pandemic, was named the 2024 water prize laureate on June 18.
The prize honours outstanding contributions by individuals or organisations towards solving the world’s water challenges by developing or applying innovative technologies, policies or programmes.
