A new analysis by natural capital consulting firm Trucost centered on soybean and palm oil crop production in Brazil underscores the environmental value of agroforestry cultivation. It also offers vivid evidence of why more companies should account for the environmental impact of their business practices.
The exercise compares the environmental impact associated with growing a single crop, known as monocultural production, with agroforestry, where a crop is integrated with indigenous trees or crops, such as bananas or cacao.
In the case of palm oil production, the environmental value of agroforestry was three times higher than monoculture — about $176,044 (R$410,853) per hectare versus $52,384 (R$122,253) per hectare, according to the Trucost analysis. (One hectare is about 2.5 acres.)
For soybeans, the environmental value of integrating these crops with indigenous forest vegetation was 11 percent higher than for the single-crop approach: $488 (R$1,139) per hectare versus $441 (R$1,031) per hectare.
"As buyers or users or growers, you would be looking at this data to examine how these methods would work for your particular circumstances," said Richard Mattison, CEO of Trucost, which created the first index to identify businesses that lead their industries in valuing natural capital aside traditional operational metrics.
The analysis published Wednesday builds on information collected through the TEEB for Business Brazil project, a multi-year study of ecosystems undertaken by Conservation International. The corporate sponsors included Monsanto, which submitted data about production of soybeans on plantations in Western Bahia; and Natura Cosmetics, which was interested in comparing monocultural palm oil production methods with metrics about agroforestry gathered by the Sustainable Palm Oil Agroforestry Project (a study undertaken by several Brazilian agricultural organizations).
One of the biggest factors identified in the analysis was the greenhouse gas emissions created by fertilizer used in each production method. Trucost also looked at the impact on "provisioning services," which are products derived from an ecosystem such as food, timber and water; and "regulating services," which include the ability of an ecosystem to regulate climate change or diseases.
It discovered, for example that by cultivating a mix of 80 percent soybean with 20 percent indigenous Cerrado forest such as pequi, the ecosystem would benefit from certain health and climate regulation factors. The "provisioning" value of soy, however, has a higher monetary value than pequi fruits or oils.
On the flip side, the analysis shows that agroforestry approach to palm oil cultivation — growing it in concert with cocoa, passion fruit, pepper, banana, cassava, acai and other species — can help diversify farmer income.
"We believe that a detailed consideration of the dependence on ecosystem services is fundamental to the business sector and society as a whole," said Luciana Villa Nova, sustainability manager at Natura, in a statement. "We see TEEB as an opportunity to foster discussion about a new economy that is greener, more inclusive and more accountable."
To make natural capital data more meaningful, companies such as Monsanto and Natura should pull these findings into traditional cost analysis systems to more closely examine other factors, such as yields for each method and where agroforestry methods might be scaled most effectively, Mattison said. That way, they will be able to determine the sweet spot where the environmental benefits are in harmony with other profit and loss considerations.
Trucost notes in its comments about the analysis:
Companies that use environmental valuation alongside traditional financial accounting can understand and reduce their exposure to these risks. Companies can also use valuation to better communicate the environmental and social benefits of voluntary corporate responsibility programmes to enhance the reputations of their brands.
The good news is that the value of natural capital is weighing much more heavily on the minds of sustainability executives. How to develop practical and realistic ways of included this concept within traditional accounting methods or risk analyses is a much harder challenge, but early pioneers have begun to share their experiences and results with others through the new Natural Capital Business Hub.
Top image of palm fruit by dolphfyn via Shutterstock