Valuing Nature: Why Natural Capital Matters
Natural capital and ecosystem services are not just abstract concepts—they are the foundation of our economy, well-being, and way of life. Yet, because nature lacks a clear price tag, it is often undervalued and neglected. This blog explores how we can better measure and protect our natural assets, ensuring they continue to support our communities, particularly those living near pristine alpine lakes and headwater regions, for generations to come.
WHY PRISTINE HEADWATERS AND ALPINE LAKES MATTER
Communities living at the headwaters of our rivers and around stunning alpine lakes are the first to feel the impacts when natural capital is degraded. These landscapes provide crystal-clear water, breathtaking scenery, and ecosystem services that underpin local economies. From Whakatipu to Wānaka, from Tekapō to Taupō, these regions attract millions of visitors who contribute billions to local businesses.
But alpine lakes are fragile systems. Pollution, land-use changes, and climate shifts can rapidly degrade water quality, harming both the environment and the people who rely on it. Without strong protections, what was once a pristine lake can quickly become a costly environmental problem.
A stark example is Lake Taupō and Lake Rotorua, where declining water quality has required massive taxpayer-funded restoration efforts costing upwards of $280 million over the past two decades. These figures highlight the enormous “deferred maintenance bill” communities face when natural capital is neglected.
For headwater communities, protecting natural capital is not just an environmental concern—it’s an economic imperative.
- Tourism, recreation, property values, and even agriculture depend on clean, well-managed water sources.
- Once degraded, lakes and rivers take decades to restore, costing millions—or even billions—of dollars.
- House prices in tourism-reliant towns are tied to the quality of the natural environment. A quick back of the envelope desktop analysis of 100 properties in Wānaka found that on average, land values with lake views are $1068 per square meter more expensive.
The Parliamentary Commissioner for the Environment’s Warning
The Parliamentary Commissioner for the Environment (PCE) [1] has repeatedly warned about the risks of failing to properly value natural capital. Their 2021 report on environmental stewardship and tourism noted that New Zealand’s tourism industry is fundamentally reliant on our natural environment, yet we systematically fail to invest in protecting the very landscapes that draw visitors.
The PCE has also highlighted the hidden costs of declining water quality, pointing to the escalating expense of water treatment, loss of recreational opportunities, and declining freshwater biodiversity. The message is clear: if we do not properly account for the value of our natural assets, we risk degrading them to the point where recovery is costly—or impossible. The paucity of hard numbers on the contribution of nature’s value does not make it any less important.
NATURE AND WELLBEING: THE HUMAN CONNECTION TO NATURAL CAPITAL
Our relationship with nature goes beyond economics—it deeply affects our mental, emotional, and physical wellbeing. Research has consistently shown that access to green and blue spaces (such as lakes, rivers, and native forests) is linked to:
- Lower stress levels and reduced anxiety [2].
- Improved physical health, including lower rates of heart disease and obesity [3].
- Greater social cohesion, with communities that have strong natural assets reporting higher levels of happiness and community engagement [4].
For Māori and indigenous communities, the connection to nature is deeply cultural. Whenua (land) and wai (water) are not just resources—they may also be ancestors, taonga (treasures), and sources of identity. Degradation of natural capital is not just an ecological issue; it is a loss of whakapapa (heritage) and connection to the past.
Research by Manaaki Whenua – Landcare Research has found that biodiversity loss in freshwater ecosystems has significant social consequences, impacting not only ecological resilience but also human well-being and cultural identity [5].
In Scotland, policymakers are incorporating “Natural Health Services”[6] into public health strategies, recognising that access to clean, natural spaces is essential for mental health. Similarly, a study out of the UK [7] estimated that physical activity in natural environments saves the healthcare system approximately £2.2 billion annually due to the prevention of diseases linked to inactivity.
New Zealand must follow suit, ensuring that environmental policy is not just about conservation but also about improving human lives. However, the New Zealand Government [8] has decided that councils will no longer be required to consider wellbeing in their planning and operations in the hope that they will focus on must-haves (drains, roads, rubbish collection, etc), rather than parks, trees, cultural centres and bike trails – the nice-to-haves.
MEASURING TO MANAGE: THE TRUE VALUE OF NATURE
As the saying goes, “what gets measured, gets managed.” Without proper valuation, we fail to factor the environmental costs of economic decisions, often prioritising short-term gains over long-term sustainability.
Recent research commissioned by the Department of Conservation highlights the scale of what’s at stake:
- Public conservation land contributes an estimated $10.6 billion per year in ecosystem services, much of which is concentrated in alpine and headwater regions [9].
- The value of natural and physical capital (tracks, bridges, huts, etc.) on public conservation land is estimated at $134 billion.
- The economic output from tourism on conservation land was $4.3 billion annually before COVID-19, reinforcing the financial importance of protecting these landscapes [10].
Even from a business perspective, investing in natural capital makes sense. In the UK, wetland restoration projects designed to improve water quality are estimated to provide £955 million in net value over 60 years [11].
Here in New Zealand, research by Eco-Index [12], a Christchurch-based environmental consultancy, estimates that the ecosystem services from lakes and rivers are valued at around $58,000 per hectare per year. Compare this to the gross farm income per hectare for top-performing sheep and beef farmers, which is just $1,500 per hectare per year.
This valuation gap underscores the importance of investing in catchment health. If alpine lakes and headwaters deteriorate, entire downstream ecosystems—along with the communities that rely on them—face significant economic and ecological consequences.
Manaaki Whenua – Landcare Research: The Cost of Biodiversity Loss
Research by Manaaki Whenua – Landcare Research [13] further underscores the financial and ecological risks of ignoring natural capital. Their studies have shown that:
- The loss of indigenous biodiversity in freshwater ecosystems has direct economic consequences, reducing the resilience of these systems to climate change and pollution.
- The decline of wetlands and riparian zones has already resulted in the loss of ecosystem services worth billions of dollars over time, impacting everything from flood control to carbon sequestration and water purification. For context, their research highlighted that there is an estimated $8.7bn of gross use value of New Zealand’s remaining wetlands.
Their work highlights the urgent need to integrate natural capital accounting into policy and decision-making, especially for regions like the South Island’s alpine catchments, where ecosystems are particularly vulnerable to climate and land-use pressures.
THE GLOBAL COST OF IGNORING NATURAL CAPITAL
Other countries provide cautionary tales. In Chile, the economic impact of seven invasive plant species was estimated at US$90 million per year, with projected losses of at least US$2 billion without intervention. This highlights the enormous financial burden of failing to protect biodiversity and ecosystem services.
Meanwhile, in the USA, following the 2010 Deepwater Horizon oil spill [14], researchers estimated that non-market recreational fishing losses alone amounted to US$585 million—a figure that doesn’t even include long-term ecological damage or broader economic losses.
These examples demonstrate that failing to protect natural capital leads to massive economic costs, many of which are shouldered by taxpayers and local communities.
Investing in Headwaters: A Non-Negotiable Priority
Communities at the headwaters of our rivers are both the stewards and the beneficiaries of these landscapes. However, without proactive investment in ecosystem health, the financial burden of restoration will fall on future generations.
For alpine communities, the stakes are high:
- Tourism economies rely on pristine lakes and landscapes.
- Poor water quality leads to declining property values and lost revenue.
- Degraded ecosystems increase the cost of infrastructure, such as drinking water treatment and flood mitigation.
If we fail to measure and manage our natural capital today, we risk not only ecological collapse but also massive economic and social costs.
CONCLUSION
Our environment, economy, and well-being are deeply interconnected. For headwater communities, protecting natural capital is not just about conservation—it’s about securing their future. Recognising the true value of nature enables smarter investment in conservation and sustainable development.
New Zealand’s pristine lakes and headwaters are not an infinite resource. Once degraded, their recovery is slow, costly, and uncertain. We must act now to protect these ecosystems—not just because it’s the right thing to do, but because failing to do so will cost us far more in the long run.
The message is clear: protecting our pristine lakes and headwaters is not a luxury—it’s a necessity.