If you believe...An alternative vision for the role of the state with Dr. Sophus Zu Ermgassen

What role does the state have to play in nature recovery?

If we are serious about halting the decline in biodiversity do we need to lay out a more ambitious agenda that can unify the currently fragmented aspects of private nature finance, state intervention and the role of public sector institutions. This is part of the argument raised buy Dr. Sophus zu Ermgassen and a team of experts in a recent pre-print: https://osf.io/preprints/osf/td4qj

We talk to him about this mission-driven approach and what types of changes need addressing if we are to see fair and inclusive nature recovery that can actual deliver a restoration of our natural environments and not just the creation of functioning biodiversity markets.

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The Leverhulme Centre for Nature Recovery is interested in promoting a wide variety of views and opinions on nature recovery from researchers and practitioners.

The views, opinions and positions expressed within this podcast are those of the speakers alone, they do not purport to reflect the opinions or views of the Leverhulme Centre for Nature Recovery, or its researchers.

The work of the Leverhulme Centre for Nature Recovery is made possible thanks to the support of the Leverhulme Trust.

Transcript

Stephen Thomas  0:05  
Welcome to the nature recovery podcast, we're going to take a closer look at some of the solutions to counter biodiversity decline. And we'll find out more about the people behind these ideas

Stephen Thomas  0:26  
Hello, and welcome to the nature recovery Podcast. I'm very lucky that my guest this week is Dr. sophus zoo of Gassen. And we're gonna be talking about mission orientated public policy for nature recovery. That's quite a long phrase, if you want to know what it means you can read the paper that surface is written with a team of experts, and I highly recommend that you do so is very approachable, very readable, very aspirational. In short to me, it helped me understand the types of systemic and societal change and public policy changes we're going to need if we are going to halt biodiversity decline and recover nature. And it made it feel more real. This is not something that is some wild dream, you know, we can hold the decline of biodiversity, we can recover nature, it is absolutely possible, if not plausible, it just requires the type of systemic change that we've seen through the creation of the National Health Service, or through the Apollo mission. We need public and private companies, organisations, you know, working in sync to deliver on a clear mission. And I think at the moment, one of the challenges with the nature space is there's a lot of fragmentation. There's a lot of exclusion. But you don't want to hear me talk about the paper you want to hear about the author speak about his work and what you're seeing, so I'm going to hand over to Sophus

Stephen Thomas  1:48  
My guest today is Sophus zu Ermgassen. He's an ecological economist specialising in biodiversity finance, major positive organisations infrastructure, sustainability, sustainable finance, biodiversity offsetting and ecological economics is research regularly features in popular media such as the guardian, BBC Countryfile, the times, Sky News, the Financial Times, and more. And he is currently holding three expert advisory roles for the UK Government on natural England's biodiversity negative monitoring and evaluation expert advisory group, the UK Treasury's biodiversity economics working group. And he's also an expert advisor to the International Advisory Panel on biodiversity credits. Welcome to the podcast Sophus.

Sophus zu Ermgassen  2:28  
Thanks so much. Okay.

Stephen Thomas  2:30  
So you have a new paper coming out called Mission orientated public policy for nature recovery. Do you want to just maybe tell us a bit about sort of how that came into being and the thought behind putting the team together that created this?

Sophus zu Ermgassen  2:49  
Yeah, okay. So for a long time, I've been really interested in the work on mission oriented public policy. Kind of the big picture idea here is that I'm a bit worried that public policy has become increasingly like, opened up doors for an extractive relationship between governments and the private sector. And some of the really great ambitious public policy programmes of the past. They did this amazing thing where they created a really interesting symbiotic relationship between the state and market to guide markets basically, towards solving overall big picture societal challenges. And there is a an amazing researcher called Professor Mariana mazzucato, at the Institute for Innovation and public purpose at UCL who's done a lot of work on these mission oriented public policies. And the kind of one of the classic case studies here is the space race, that quite astonishing, public private ecosystem that was created to put a man on the moon within a decade when, when genuinely the technology to do that didn't exist before. Before that was achieved. So absolutely incredible politic public policy programme. And to actually do that, to get a man on the moon required a really impressive set of public policies. And it required quite a lot of innovations in public policy to be able to deliver that. So all sorts of strange things are big innovations in management science. So the way that they manage the project that they did, that led to a number of innovations to make sure that teams coordinated to achieve basically to deliver each of the really small, individual technological innovations to like individual components, but then overall project management that brought all of those together into a big structure. So really interesting stuff. Really interesting innovations in contract and procurement law that tied the private sector to delivering to certain timelines. We With quite restrictive or punitive measures in there so that if they didn't deliver to budget and time that they were punished that it was a way of organising all of the activity of these markets to delivering some kind of overall public good, which was the stage race. And so, you know, the big quite focus here is, can we apply the same kind of really ambitious, interesting public policy that harnesses entrepreneurship and private markets towards delivering overall social goals? And can we apply that kind of framework to nature recovery to achieving the global biodiversity framework? Okay,

Stephen Thomas  5:32  
yeah, that's interesting, because I, you know, I read a report saying that about 50%, of gross domestic product, globally, I think is moderately or highly dependent on nature and ecosystem services. And obviously, you have hinted at a cop 15 negotiator stressed the urgency of investing to hold and restore nature lost by 2030. And if you search around, there's a lot of reports that focus on biodiversity financing, and this sort of funding gap than the money that we need to restore nature. I think it's currently pegged at around 700 billion US dollars. And much like sort of climate mitigation, you know, there's a huge scale of the challenge. And it makes a case in some areas for blended finance and investors also acting via biodiversity funds, biodiversity credits, investor stewardship, investing, engaging with corporates and governments. But when you think you've framed a lot of nature in this manner, it might seem to suggest that actually, it's a very technical exercise that is the world's biggest startup, if we can just raise 700 billion, then the goal is met. And we'll stop the decline in nature. And I think sometimes framing things as a target, it can be useful for galvanising private investment, but you hinted there about, it's I think it's more than the money. So I mean, how do you think about this idea of like, you know, fundraising to save nature, you know, we we need the money to do things. But

Stephen Thomas  6:54  
are there tensions that is it a plausible way of looking at that sort of approaching nature? And you sort of hinted at some of the other aspects that we really need to look at in terms of when we're galvanising or engaging with the private sector? It's not just about fundraising. Right? Yeah. Wonderful. That's

Sophus zu Ermgassen  7:07  
it. A really interesting question. And so I, the overall problem is nature is in decline. And in order to remain within our planetary constraints, we need to both halt the decline of nature and start regenerating nature, especially in countries with very low levels of biodiversity intactness remaining. So that's the challenge. And there are lots of financial drivers and solutions to that problem, but they are by far and away, not the only pieces of the puzzle here. And so on the finance side. Probably the largest driver of of the largest financial driver of biodiversity loss is perverse subsidies from government to economic sectors that fundamentally impact negatively on the environment or on biodiversity. So that's the perverse subsidy regime. And then yes, there are also these really large scale conservation funding shortfalls, which basically money is required to buy land, bring it out of production, manage it, so that it, it manages these ecosystems holistically to maintain their resilience and integrity and provide, you know, all of the services that they that they perform to underpin our economies and human welfare. All of that requires money to some degree. But it's a really interesting question, you know, firstly, what are the limits in analysing the problem in this way? And then also, where does that money come from? And what are the kind of what are the different ideological positions towards where that money should come from? I find all of this absolutely fascinating.

Stephen Thomas  8:50  
Okay, and so you can you hear they're both the two potential role for not just public finance, but I guess government coordination in one hand in the government's are funding, you know, restoration of biodiversity or halting biodiversity. But on the other hand, there's also sort of subsidies that kind of are damaging. So you have this strange thing where you might have a government and they're looking at, you know, housing in one lens, but then water in the environment and another one and transport another one, and it's sort of not integrated. And I think reading through your paper I saw, it's kind of cool for a kind of, you know, more integrated, holistic approach about focusing on that mission. So starting with the mission and kind of going down and looking at all the aspects of government that you've you've sort of touched on is that this was one is that a fair analogy and an on that as well, do you think currently certainly within the UK with the Western governments that we've probably over emphasised the private finance role and and not enough of the of the, you know, the government driver government coordination of the public, the role of the public, and agencies?

Sophus zu Ermgassen  9:57  
Yeah, okay. Another wonderful question. So, if you look at the UK government's sort of high level strategies, nature conservation strategies, you can see that there are some large and interesting public policy components. I think probably one of the major things here is following Brexit, we've left the Common Agricultural Policy, a common agricultural policy is about a third of the EU budget, it's absolutely enormous piece of public policy, leaving that the cap is also widely known to be highly environmentally destructive, leaving that created, you know, an opportunity for big public policy. And we've risen with the the creation of the environmental management schemes, elms, which is a kind of public policy, environmental subsidy regime that's resilient its place. So that that is big public policy. But the other major component of the UK national sort of conservation strategy is this creation of private markets through the UK nature markets framework to incentivize more private investment into nature conservation and restoration. That is a really big a quite a fundamental part of our overall public policy programme. And, yes, in short, I argue in this paper, I really think that deferring solving society's great problems to market mechanisms, and then not providing those market mechanisms with sufficient oversight is a huge gamble. And there's a very large chance that they will not solve your problem. And so in this paper, I believe in the power of markets to deliver environmental improvements in some of our own work, for example, on biodiversity net gain, we've shown that there is systematic governance problems that underlie these markets, which means that they're not doing many of the things that you think they're doing, they're not delivering the kind of benefits that you think they are. And so if you want a market led approach to delivering biodiversity, improvements to addressing niche recovery, then those markets need really great oversight from entrepreneurial, interested, engage markets to constantly adapt and push their outcomes towards overall societal goals. So yeah, and I would definitely advocate for, for better oversight of environmental markets and aligning the goals of those environmental markets with these overall nature recovery mission. And I think that requires quite a proactive role for the state. So

Stephen Thomas  12:30  
So you talk, you talk in the paper about the reform of the financial system. But I think the way that you phrase it, to me, it came across as actually more pragmatic than a complete sort of overhaul of our of our system. But looking at that way of, you know, if we have this market driven system, and we want to have better coordination, then actually, something needs to be done or adapted about it, if we're going to have it achieve its aims, I think there's a passage and I'll read back to you that sort of, you know, financial markets will not fund actions that deliver common or public goods in the absence of mechanisms,

Stephen Thomas  13:01  
to commodify benefits and deliver a competitive return on investment. And I think that's something that sort of hits at the heart that, you know, there's nothing fundamentally wrong with financial markets, they are, do what they are, but they're all about getting a return on investment, and commodifying benefits. And actually, that becomes very problematic when you look at nature, because then you're sort of, you know, what is the return on investment for protecting nature? And the answer is possibly nothing. In some cases, if, you know, if I was investing my pension, while I'd hope it'd be ethical, I'm not sure some of the biodiversity schemes are going to offer me the greatest return on investment because Nature doesn't produce cash. And we haven't got to a way of really quantifying or valuing or, you know, there are ecosystem services as natural capital, but they don't have the same sort of cash capital output that investing in a company that's selling x, y and Zed does. But if we were to equate returns, investment terms of you know, health, well being air, water quality, all of these things, you know, hope and happiness, then you could argue that nature offers the best return on investment possible, outside of being maybe a good person and kind to others. So I guess, you know, within this paper seem very aspirational, but also the, you know, there is a realistic and pragmatic. And I guess you do you think these kinds of reforms are, are possible. And if a state did want to try and reform this sort of market based system, what what types of tensions are they likely to face?

Sophus zu Ermgassen  14:26  
Wonderful. Yes. Okay. So a chunk of our paper is on aligning markets with the overall mission, which I believe means that these things require, as I said, like entrepreneurial involvement from the state constant adaptive management, learning to guide these markets towards overall social outcomes. But what you pointed out in your question there right is that there is a huge amounts of nature recovery that markets will not deliver under any circumstances, because it does not align with profitability goals, and it cannot be cajoled into aligning with profitability goals. So there are have enormous limits to what markets can do to deliver overall nature recovery markets, if you create the right market institutions, if you create the right environmental markets, that commodify some aspect of nature in a way that is profitable, that allows them to deliver market rates of return to investors, then the market will deliver that thing. But there are many, many drawbacks with our commodification processes for biodiversity, the way that you measure it for the sake of commodifying it. So it sort of, by definition, means that the market will provide you all of that thing in the market will perform in the way that you measure biodiversity. So I'll give you a really nice example. I think. So we've been doing a lot of work on biodiversity net gain in England. And, and biodiversity is measured using the biodiversity metric, which is designed by different Natural England. And it's essentially an Excel spreadsheet that measures the diversity of habitats, their condition and their size. And what we've shown in our data analysing, so biodiversity net gain in early adopters, so before it was implemented nationwide only a few weeks ago, is that left to its own devices. This market like mechanism for delivering biodiversity improvements, is delivering a really small subset of biodiversity. Essentially, what is profitable in this particular market is, is the habitat types where you can deliver the most units, at least cost and least hassle. And so in our data, we're seeing this huge signal where developers are over delivering moderate condition, other neutral grassland. So one condition level of one specific habitat type. And that's because the markets are incentivizing you towards delivering the most profitable thing. So there's one really nice case study of all your fundamental limit to markets, they will deliver you quite very efficiently the thing that optimises them, but what if that's not what's actually best for nature. So here, you know, I would say that to good oversight of something like that the biodiversity net gain market would constantly be observing these outcomes, and recognise that the other market is is working, it is producing the biodiversity that is required to meet these developers legal liabilities, legal requirements, but it's not actually aligned with what is best for nature. And then it would tweak the policy parameters to guide those markets towards delivering a more heterogenous suite of habitats. That much that is much better aligned with what we know from ecological science is aligned with the principles of nature recovery,

Stephen Thomas  17:43  
just thinking about, you know, we don't even know probably all the benefits we get from nature, and it's far more complex than

Stephen Thomas  17:50  
a single police agency, such as carbon, and even then with carbon markets, they're not exactly trouble free. So then, you know, we have a market for pollination, that's great. But if we just have focus on the pollinators, and not the flowers, or whatever, like it's such a complex system to try and to try and quantify and I think there's just inherent risks in there. But it is the sort of the the default model that we're used to. So I find, yeah, I find that and obviously, there's lots more in the paper other than just about kind of being a market and financial report reform. But I think sometimes there's a laziness of just expecting this market system to kind of fix it. I think you've sort of explained there why, why relying on that alone is challenging, and we need to be potentially broader in our thinking. And when I think when I think about sort of nature policies, or in polling that I've looked at the they do seem to be consistently popular, especially with younger voters, they often get merged in with climate and environmental policies that were I'd argue this some key distinctions, but they're generally always falling behind issues like health, immigration, the economy, and then always falling behind the sort of issues of the moment like EU membership or current complex or the current crisis at the time. For me, the environment is such a big driver of health and immigration and the economy. I may not be in the mainstream with these opinions. But

Stephen Thomas  19:07  
I think it also hints at the way this policy landscape is very fragmented in the way that we approach these issues. And so that's why I like this idea of this this mission driven approach. You know, the moon landing and I think I spoke to Sandra Diaz on this podcast, and she was also talking about this the way we transform economies during wartime or or how we just flipped the whole economy during COVID. So it is possible.

Stephen Thomas  19:30  
I guess, a more personal question. Are you hopeful that you might see signs at least that this this upheaval can happen in your lifetime?

Sophus zu Ermgassen  19:38  
Yeah, absolutely. I mean, there's the classic thing that where the people who are utterly hopeless tend not to work in that thing. Like, if I was utterly hopeless, then I wouldn't be devoting my life to trying to solve these problems. That's that's one thing, but it's very much the I am not a naive optimist. It's very much a conditional optimism. And there are some trends, that I see that very much push against the direction of travel that I think that I would aspire to for for next recovery goals. Yeah, I think the the I think you know how far away we are from the idea of mission oriented strategy for next recovery at the moment. And arguably your with the increasing role for private finance in the conservation landscape, that pushes us more towards our theory of change being aligning market outcomes with nature recovery, and less, further away from what I would say would be like, from a public policy landscape that sees great entrepreneurial governance from the government, delivering both market and non market forms of nature achieve our overall niche recovery goals. So in a sense, like I see, less, a more powerless state over time, bringing us further away from this kind of mission oriented approach, as partly one of the aims of this paper was to try and respond to the idea of, of what is possible within the idea of, of niche recovery and public policy. I mean, so the the kind of empirical component of this paper was bringing together a bunch of the really high level, biodiversity and environmental policy experts in the UK to deliberate right on the kinds of policies that we would need to see in order to align society with the golden age of recovery. And I found that workshop, incredibly inspiring. So why this is one of the drivers behind my kind of conditional optimism is just every day, I see the most incredible inspiring people working in nature recovery. And, and these are thrilling, exciting and inspiring people. And the more individual organisations and the more public fora, that where these people are, the more inspiring messages. So these are the kinds of things that give me hope it's the people, but the prevailing sort of economic trends and trends towards financialization as a kind of flippant term, but a trend towards increased market focused governance of social priorities. These are trends in the opposite direction from what I would want. Yeah.

Stephen Thomas  22:19  
And it's a very, I mean, this is a common, it's a very accessible, readable paper, you know, often academic literature is, is, can be quite niche and quite hard to engage with. So just thinking so outside of the traditional academic audience, you know, who would you hope would sort of look at your paper as well? Are there any kind of groups in particularly your sort of targeting from practitioners policymakers is, you know, are you are you sharing it beyond the wider sort of publication?

Sophus zu Ermgassen  22:48  
Yeah, really good. So I mean, put my personal ambitions for this is I'm hoping that that we can make the case that this should be part of a genuine political programme. You've pointed out that the environment is not the top vote winner. But it is one, it's consistently one of the the bundle of top issues and it shows some stability there over time. And I believe, you know, as the intensity of these environmental conflicts and climate change rises, I'm hopeful that it will remain high on the agenda. And so I'm hopeful that you know, that a political programme that that actually, that actually addresses the systemic drivers of biodiversity loss could be appealing, especially to younger voters. So I mean, in a sense, this paper is targeted at trying to sell the idea, the inspiring vision of nature, recovery, right to voters. And just, I find the, the the imagery and the kind of ambitious structure of mission oriented policy, as quite, I think, quite a politically appealing message as well. Definitely,

Stephen Thomas  23:53  
it's sort of something to get behind. So yeah, I would highly recommend anyone having a look at it, and sharing it. What are you working on now? What you're working on next? What's kind of have an interest in developing this idea further, are you kind of looking at other other areas when you're not on advisory boards and doing all kinds of

Sophus zu Ermgassen  24:10  
things? Yeah, we've got a bunch of things that I'm really excited about at the moment, and we've got some ongoing work to try and hold the financial sector to account. So a paper that has just been submitted, analysing the the biodiversity commitments of the world's largest private equity firms is a very large sub sector in the financial in the financial sector, which has very consequential impacts on biodiversity. So we're trying to hold these more hidden sections of the financial sector to account doing a lot of work right now and biodiversity credits, which is a completely brand new emerging concept, which people are hoping will turn into a kind of asset class for delivering biodiversity improvements. But if there's one thing we've learned For the last 50 years of implementing sort of biodiversity related, market like mechanisms and biodiversity offsets the voluntary carbon market, etc, it's that these things are not simple. And they require, in my view, to deliver to make biodiversity credits effective at delivering the biodiversity improvements that they promise, it really requires learning every single one of the lessons from these past markets. So I'm doing a lot of work to try and bring the lessons from these past environmental markets to biodiversity credits as well. And then I'm doing a lot of work speaking with sort of elite, biodiversity finance, people, both investors, asset managers, consultants, to try and understand the barriers and opportunities for increasing private finance to deliver biodiversity conservation in a way that that guarantees that it delivers its ecological objectives and doesn't just and doesn't ignore ecological objectives for the sake of getting the market going, which is something that I see quite a lot.

Stephen Thomas  26:02  
Yeah, we're seeing that, as you were saying that there's often the sort of the definition of success can be well, the market is working, we've set this thing up and it's working. But actually, then this sort of

Stephen Thomas  26:13  
the separation from the overall principle of what was it intended to do, right to kind of meet in nature is still declining, but there's great market now we've created is working, and we've got, you know, sellers and buyers. So that's a success. And I think that's, that's where I like that kind of very simple Apollo mission, mission driven, it's like, you know, if it is delivering something that is part of the mission, then it then it's a success. But if it's just trading money backwards and forwards, and actually, there's no good outcomes for people for nature, for the environment, then maybe we need to look again at that. And maybe some things just need tweaked, but maybe some things need to meet the deeper reforms. So yeah, I'm inspired as ever talking to you, just to finish up with a couple of more personal questions. So if I was to give you a couple of weeks to go and spend some time in nature, where would you go? Because what does nature mean to you? What are the kinds of environments or biomes where you would, you know, want to want to go to Sandra DSN. And she went to go to the beach, there's nothing there's nothing wrong with sand Santorini on a tourist holiday, but what is nature are a nice part

Sophus zu Ermgassen  27:18  
of nature mean to you, I'm a real sucker for a temperate or tropical rainforest and river gorge. Like they just they just get me very specific, ideally with rapids or a small waterfall in them. Like they just that that is the closest I get to like a proper authentic nature spiritual experience. I do like they've got a very nice cool microclimate. It's exactly what you get the liverworts and all these kinds of things when you see the mist of the moisture droplets in the air, reflecting often with these beautiful factors, whatever it is just that's these these river gorges get me? Well,

Stephen Thomas  27:52  
if the river gorge or tourist industry wants a spokesperson, you would be it'd be perfect for it. Final question, we've asked this question to every guest and we've never got, I don't think the same answer twice. So. So first, what does nature recovery mean to you? Yeah.

Sophus zu Ermgassen  28:11  
On the kind of biophysical level, right, it's about increasing the quantity and quality of nature, so that human society can flourish forever, in balance with the living world. But I think it goes deeper than this. For me, it's also just about rediscovering a spiritual connection to where we come from, and ultimately rewiring all of our production and consumption systems and just intrinsic decisions, where we have a full appreciation for where every single impact of our consumption comes from the the ecosystems that created its raw materials. We just have respect for it all. And ultimately, therefore, you know, we see great spiritual satisfaction through our relationship as part of the never ending history of our balance with the living world. As

Stephen Thomas  29:01  
beautiful reminds me with George Monbiot was on the weekend was posting about the attitude of like, well, the earth will be fine. It doesn't matter what we do, because biodiversity will recover. And it's like well, yeah, and millennia, but will be completely different. But actually, we are part of nature, we have this connection and to, to see the loss of this beautiful, natural world. And these river gorges becoming, you know, poisoned and things dying in our lifetime. And not not to feel that pain, not to feel that connection, not to want to try and do something about it. But also on the flip side, to be part of that healing, potentially to be part of that recovery is a really deep, intrinsic, tribal, spiritual, whatever phrase you wanted to do, which I think is ultimately so rewarding. So

Sophus zu Ermgassen  29:41  
it gives you a sense of purpose that's larger than yourself. I mean, the timescale at which we need to move to a sustainable economy, when we have to move very, very fast, but we're talking about building towards a project that that where the goal will be the outcome will be measured across the timescale of like the whole of humanity's Did you know that we are building towards something that is easily outlive you? And it's that sense of my small place with a really enormous, dynamic, evolving story that gives me a sense of purpose and integrates with joy.

Stephen Thomas  30:14  
When you frame it like that, it sounds bigger, better and bolder than going to the moon. So So first, I want to thank you very much for your time and have a great day. Thanks so much.

Speaker 1  30:29  
You've been listening to the nature recovery podcast with me Stephen Thomas. Please don't forget to subscribe wherever you get your podcasts. And if you can, please consider leaving us a review, as it will really help other people to find us. Also, why not consider sharing this episode with someone you know? You never know. You might get them interested in the wonderful field of nature recovery. If you want to find out more about the activities of the libre Hume Centre for nature recovery. You can find us on Twitter at nature recovery, or you can visit our website for more information at www dot nature recovery.ox.ac.uk Thanks so much for listening

Transcribed by https://otter.ai