EcoSystems Approach to Accounting

There are real problems which must be
addressed. India will lose, much as the
world will, over 100 species of mammal over the next two decades. The endeavour to put a value on its environmental assets cannot be undermined.
We need to rely on such estimates as the Government and institutions in the NGO sector can put out.
The Government’s nationwide plan under the Biodiversity Conservation Prioritisation Project to evaluate and draw up an inventory of species (mammals, reptiles, amphibians, invertebrates, fish, birds and plants) according to their economic value and endangered status, assumes a deal of importance. The project is so far believed to have assessed 1,800 species. The number of species to be assessed is hundreds of thousands, may be a couple of millions. The BCP project authorities will need to respond to initiatives of the private sector conservation industry and on such inputs as will be generated on natural wealth, be prepared to extend their abilities for assessments that will help in the economic valuation of species.
At the moment, a Conservation Company has to accept that its shares are worth precisely what people would pay for them in a free market. The issue price, for a company going to the market with a public issue, will have to be based on acceptable accounting principles rather than using the concepts of ‘economic value’ which would take into account the value of the company’s environmental assets.
How do we tackle this inability to place any value on rare or endangered wildlife and other environmental assets?
Here are a few constructs that need to be reviewed if we are to build a future where business and ecology coexist comfortably.
• The only place where there is sufficient funds to save India’s wildlife is in the marketplace;
• The market can be used to save the country’s wildlife;
• The Company is pledged to be in the business of conservation;
• The Company’s assets are wildlife;
• If you buy a share of the Company, then you are buying wildlife;
• If you sell a share of such a company, then you are selling wildlife;
• The Company is not in the business of taking wildlife from the wild and selling them in boxes to zoos and parks.
• The Company believes that wildlife should be nurtured in the wild;
• The Company is an instrument which allows legitimate trade in wildlife for the benefit of wildlife.
THE PROBLEM
• According to accounting standards, non-current assets can only be revalued at their recoverable value;
• According to all environment and wildlife regulations, wildlife cannot be sold.
• Wildlife assets therefore have to be valued at zero.
WHICH LEADS US TO OUR PROBLEM:
• The Company’s only assets are wildlife which have to be valued at zero.
• Therefore the Company is one with ‘zero’ assets;
• The Company issues shares. These shares are traded on the market by shareholders;
• The shareholders wish to know what their shares are worth.
• What are their shares worth?
• What will their shares be worth in ten years?
• How do we put a value on the Company’s shares?
Take a hypothetical example:
• We have a series of Conservation Companies called A, B, C, etc.
• The only assets of each are wildlife. Therefore each company has total assets of zero.
• Company A is caring for 1,500 rare species of Rothschild’s parakeets on a block of land in the sub-himalayas.
• Company B is caring for 2,300 parakeets on a land area in the Orchha range of M.P.
• Company C is caring for 520 parakeets in the western ghats.
• There are no other parakeets left in the world.
• Company A also has 120 load-skinned frogs. This represents 72 per cent of such frogs left in the world.
• Company B is also caring for 54 per cent of the world’s one rare species of lizards.
• Company C is caring for 32 per cent of the world’s particular species of platypus.
• Now you have some money you want to invest in conservation projets. How are you going to decide which company to put your money into?
Another example:
We have the same Conservation Companies as above.
Company A puts out a management plan that shows that in ten years. A will increase its percentage holding of several other rare floral or faunal species.
How much will Company A’s shares be worth in ten year’s time?