Using impact accounting to reduce land use impacts
This post is the 2nd part of a series that will introduce and examine the value factors produced by IFVI’s Interim Environmental Methodologies and the Global Value Factors Database. Today’s Topic: The Interim Land Use and Conversion Methodology. Find the 1st post in the series here.
Did you know that:
- Converting forests to pasture in Brazil can lead to more than $250,000 per hectare in negative societal impact?
- Sourcing cotton from already established cotton fields has a much smaller impact —53 times less— compared to converting new land for cotton or other textile fibers?
- The damage caused by paved and developed land in Aruba is more than 1,000 times greater than that in Yemen ($107,743 vs. $101 per hectare per year)?
- In China, a timber plantation has one-third the negative impacts of a corn field?
- Implementing sustainable pasture management can reduce negative impacts by up to 18%?
These are examples of impact information revealed by the value factors produced by the IFVI Interim Land Use and Conversion Methodology and allows companies and investors to improve their decision-making. For example, using the Land Use and Conversion Methodology can inform:
- How your business manages land and nature to meet biodiversity targets,
- The extent of reliance on materials extracted or produced on land,
- How corporate expansions drive environmental impact and consumer concerns,
- How rising supply costs can drive a comprehensive strategy of where and how you source materials.
How do you actually value the impact of land use and conversion?
Nature provides society with vast amounts of value. More than $220 trillion (2024 USD)1 is provided by nature to support people every year, notably larger than the global economy. We recognize some of this value in the form of products that we use—think agriculture for food, fibers for clothes, timber for construction. These are called provisioning services. Other value we may recognize but think about more abstractly — the value to society for recreation, spiritual importance, aesthetic beauty, or inspiration for art and design. These are called cultural services. A third category of value is equally as important but often hiding in support — the ability to regulate climate, mitigate damage from extreme storms, or maintain a rich and diverse set of species. These are called regulating services. Taken together, these form a global, comprehensive framework for valuing nature called ecosystem services.
For nature to provide ecosystem services it needs land to grow, breathe, protect, and support. When humans and businesses occupy this same land for other purposes, the value that nature provides is also reduced. The Interim Land Use and Conversion Methodology values these impacts on society by asking the question: how much of the ecosystem service value is lost when land is used in an alternative state? To answer this question, the Methodology utilizes the Ecosystem Services Valuation Database (ESVD), a rich meta-analysis of several decades of research with 9,500 ecosystem service estimates across six continents. By combining the ESVD with a series of other data sets, we can assess the loss in ecosystem service value between the pristine state of land and the land use of interest. The negative impacts produced from these valuations are synthesized in the value factors presented in the Interim Land Use and Conversion Methodology and Global Value Factors Database.
Perhaps not surprisingly, how much value nature provides, and how much value is lost by using land for other purposes, varies significantly based on a number of factors, including:
- the ecosystem that existed on the land before,
- the geographic climate which varies across the globe,
- what the land is now being used for as an alternative (certain types of land use and conversion are more damaging than others),
- whether that land has been recently converted or has existed in the present state for a long time (converting new land has a greater impact than using land that has been converted long ago).
How much each of these components contribute to negative impacts of land use and conversion yields many interesting insights.
How much worse is paved land than agricultural land?
The Interim Land Use and Conversion Methodology has value factors for 18 categories of land use, 17 of which are for various food and agricultural practices. Why? Globally, agriculture makes up nearly 40% of land use.2 For most businesses, these categories will be the most prevalent land use across the value chain.
But not all agricultural practices have equal impact. Forestry land use and conversion tends to have less negative impact than other categories. In France, forestry land use has an impact of $8,334 per hectare per year while cereal and grain land use has an impact of $13,940. Forestry sites have greater biomass, species, and diversity than other types of agriculture explaining why forestry impacts are not as significant as other types of agriculture. On the other end, many traditional agricultural crops (e.g. vegetables, fruits, grains, plant-based fibers) have relatively similar impacts. In China, the value factor for conventionally grown wheat, other grains, oilseed, sugarcane/sugar beets, and plant-based fibers all hover around $4,500 (per hectare per year).
The largest impacts from land use are captured when land is cleared (the paved category in the Methodology). This category captures all land where nature has been removed entirely such as buildings or roads and leads to complete loss of ecosystem service value. Across all countries, the average paved impact is ~$10,000 per hectare per year with impacts reaching greater than $30,000 in 10 countries.
Why are land use impacts so high in island nations and so low in North Africa?
The impacts of land use and conversion affect some countries more than others. Seven countries consistently rank at the top of the list of highest value factors: Aruba, Bahamas, Cayman Islands, Channel Islands, Curacao, St. Kitts and Nevis, and Turks and Caicos. Among these, a common theme begins to reveal itself and it is not that many of these would make great holiday destinations.
Why would land use and conversion have such large impacts in small, tropical, island nations? The simple answer is because of how valuable the ecosystems that dominate these islands are. Coastal ecosystems such as shorelines, mangroves, and river deltas provide substantive benefits for human well-being. Stable coastal ecosystems help mitigate damage from extreme weather events, provide numerous food and water resources, have high recreational and cultural value, and maintain high diversity. This large and diverse set of ecosystem services from natural land means that land converted to other land uses will have large impacts.
In contrast, countries from North Africa and the Middle East populate the list of lowest land use and conversion value factors including Afghanistan, Chad, Djibouti, Jordan, Libya, Mauritania, Niger, Sudan, Yemen, and Pakistan. These countries are dominated by deserts or arid grasslands which, relative to coastal systems, have fairly low ecosystem service values. While many other components of the models are driving country-by-country patterns, these notable differences in ecosystem services values of each biome can explain a lot of the difference.
The global distribution of land use and conversion value factors depends on what the land is used for. Click through the drop-down menus below to explore the distributions and global patterns of the land use value factors.
What can I do with this information?
Every day, companies make decisions that have impacts on land use and conversion such as procuring new primary materials, expanding production facilities, or altering product distribution systems. The 7,848 land use and conversion value factors in the Interim Methodology provide organizations with the information to influence these decisions immediately, without having to develop complex information for each scenario.
Here are a few examples:
- A textile company in Azerbaijan discovers that pivoting to sustainably-produced leather would reduce their land use impact by more than $2,000 per hectare, or 17%.
- A global automotive company expanding into South America concludes that establishing new production and distribution facilities in Ecuador ($447,158 per hectare) will nearly double their land conversion impacts relative to Paraguay ($227,030 per hectare).
- A large baking company reassesses its grain sourcing for its cookies and finds that land use impacts are more than double for their grain from Canada ($9,999 per ha) vs. their grain from Australia ($4,273 per ha).
Taken together, the Interim Methodology reveals that lower land use impacts come from (1) using already converted land instead of clearing land, (2) considering geographical variation to minimize land use in areas where significant negative impact would occur, and (3) adopting sustainable practices in land management. And while land use is inevitable to sustain human livelihood, minimizing new conversion and even reconverting land back to natural states (i.e. restoration) can drive significant positive impacts.
In all cases, the suite of information to make decisions becomes richer and allows land use and conversion impacts to be understood alongside financial information. While this post highlights land use and conversion, decision-making becomes even richer when combined with other impact or financial accounting information. While it’s possible to focus on land use and conversion impacts in isolation, that has risks, and the insights multiply exponentially when impacts are considered more holistically. For instance, the same tough decisions facing the textile company mentioned above can be analyzed together with the tradeoffs with water consumption or wage-related worker impacts of each decision. Including impact accounts with financial accounts can provide you with a clearer cost-benefit analysis for your organization and society.
–Carter Berry & Marc Rosenfield, IFVI
These data are derived from the value factors in IFVI’s Interim Land Use and Conversion Methodology and the Global Value Factors Database and are subject to the terms and conditions of those documents.
We want to hear from you! If you have questions or comments about this post or the Interim Methodologies, please reach out at research@ifvi.org.
Want to learn more about the Interim Land Use and Conversion Methodology? Click Here.