Minister Pennelope Beckles: Remarks at the Launch of the Caribbean Natural Capital Hub

Remarks by

The Honourable Pennelope Beckles

Minister of Planning and Development onthe occasion of the Launch of the Caribbean Natural Capital Hub

 

Hyatt Regency Hotel, Port of Spain

Tuesday July 12th, 2022

 

Salutations

  • Board of Directors and Management Team of ANSA Merchant Bank
  • Members of the Diplomatic Corps
  • Representatives of Donor Organisations
  • Member of the business community
  • Invited Guests
  • Members of the media
  • Ladies and gentlemen

 

Good morning everyone,

 

It is my distinct pleasure to address you as ANSA Merchant Bank launches its Caribbean Natural Capital Hub.

 

I would like to begin by thanking the Board of Directors of the Bank for their vision in creating this initiative, and for inviting us to this forum.

 

For too long have practitioners of ecological conservation lamented the lack of corporate engagement in conservation activities. So, seeing the banking sector take up this call is a true sign of progress and a shift in the sustainable development paradigm. It is also fairly obvious, that economies across the Caribbean are very much predicated on natural capital, by which I am referring to biological and land resources.

 

The performance of these very economies are inextricably linked to the integrity of our ecosystems, since they underpin the fundamental attributes required for human development, which are food security and the provisioning services that maintain our supply of potable water and natural raw materials. So to be here today, addressing you, is indeed very gratifying. It is an affirmation that the business fraternity understands not only the link between the economy and the environment, but the value to be derived from that link. And it also implies an understanding of the ethos that the pursuit of profitability should never come at the expense of sustainability.

 

Ladies and Gentlemen, our country as well as several other CARICOM states have faced chronic and acute environmental problems, many of which have been avoidable, and many of which have been due to externalities beyond our control. In both cases, there have always been things we could have done to mitigate and adapt to those problems. While the Government has a major role to play, there is only so much any administration can do on its own. The cooperation of its citizens, especially its corporate citizens, therefore, is essential to any successful effort to surmount environmental liabilities and turn them into opportunities and gains.

 

What I like most about this concept of the Natural Capital Hub is that it is based on the platform of an emergent form of accounting which considers the worth of ecological assets. The concept takes into consideration that with care, ecological assets and services add value while reducing costs in any given development and with neglect or inappropriate use, they depreciate exponentially. These are terms any businessman will understand and appreciate, once they are explained in the right context.

 

A good example of The Economics of Ecosystems and Biodiversity is the linkage of watershed management and potable water supply. Healthy watersheds as we all know, cycle nutrients, and purify and store water, where all that’s required is abstraction. In the absence of this ecosystem, the engineering solution is a water purification plant or desalination plant, which requires capital and recurrent expenditure for installation, operation and maintenance, sometimes to the extent of billions of dollars. This doesn’t take into consideration that the watershed provides a myriad of ancillary services and products which come at no cost, with no downtime or periods of upset conditions.

 

Here in Trinidad and Tobago, the 5th National Report of Trinidad and Tobago to the Convention on Biological Diversity (CBD), which was approved by the Government in 2017, provides an overview of the economic importance of ecosystem services supported by the country’s biodiversity. The report states that the ability of this country’s watersheds to deliver water of good quality (that is, water purification services) is valued at approximately five hundred and twenty million TT dollars (TT$520 Million) or eighty-eight million US dollars (US$88 million) annually. The forests in Trinidad’s Northern Range provide soil retention services that are valued as high as six hundred and twenty-two million US dollars (US$622 million) annually, representing as much as 6.8 per cent of central government’s annual revenues.

 

It is laudable that one of CARICOM’s leading private-sector financial institutions is pioneering the change in the approach to the funding of development. What this does, to borrow some industry language, is potentially change the “leadership thought” on the policy framework for loan disbursements and the larger assessment of risk. This could build momentum and generate critical mass in the sector to the point where it becomes compulsory. The possible reorientation of a financial system to one which incentivises environmentally-compatible projects, while steering those which have potential or proven significantly negative ecological impacts toward ecological sustainability, would have a ripple effect among developers, project proponents and the wider economy. In fact, the finance sector could bring about a pivot of our economy and mode of life.

 

Think of a singular example, where the initial higher costs of constructing green and smart buildings which have smaller carbon footprints would be ameliorated over time, and this timeframe would be ever decreasing, as technology improves and becomes cheaper with abundant use. Already, that may represent radical change in the construction sector, from housing to commercial properties. In the medium to long term it would represent a better return on investment. Remember we in the Caribbean have the benefit of perennial solar energy, so why not encourage its use to the fullest extent?

 

On the other hand, we, as Small Island Developing States have a paucity of land, so, encouragement by the financing sector to utilise land in a more efficacious fashion, where degraded lands are recovered and utilised, while productivity is enhanced, will streamline our economies and make them more resilient to inevitable adverse events and trends, whether these are natural or fiscal in nature. Market-driven approaches to environmental and social governance I believe, are vehicles that can help drive sustainable development, since it utilises the linkages between livelihoods, profitability and the environment.

 

The picture is broadened even further when the Natural Capital concept is cascaded to projects at the community level, to support local initiatives which are market ready, but which would find difficulties to obtain capital through traditional financing modalities. The possible applications are too numerous for me to mention here, but the point is that there is ample scope for this concept to take root and grow in financial services and our economy as a whole.

 

As I close, I would like to recognise the ability and diligence of the brain trust, which has put on an event to promote a concept which is so relevant to our region’s current circumstances. It certainly highlights the fact that the most progressive way forward for us as global citizens is to recognise the link between the economics of ecosystems and biodiversity valuation. I look forward to future delivery of other fertile innovations and wish you all the best in actualising this one.

 

Thank you.