Investing in nature: Building local economies through conservation – McKinsey

April 20, 2023Is protecting nature and natural resources antithetical to growing the economy? These vital goals dont have to be at odds.

Expanding areas of nature conservation and increasing investments is often seen as limiting job creation, but this tradeoff is often false, says Duko Hopman, a McKinsey partner who focuses on nature conservation and natural capital innovation. Entire communities economic activities rely on intact ecosystems and healthy natural capital.

Duko works on nature conservation projects from Fiji to Africa, and recently in Central America. One aspect of this work is expanding protected lands, whichwhile good for the environmentcan restrict local economic activity, such as fishing.

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Meet some of our colleagues working to accelerate nature conservation and strengthen local economies.

Alejandra Carson, a McKinsey business analyst based in Bogota, Colombia, traveled to various communities to understand their needs. She explained that through use of geospatial data from McKinsey, local authorities would be able to target areas that are most in need of conservation to protect fish populations. By opening specific areas for fishing, local communities can report their catch numbers, helping with monitoring and ensuring the optimal plan for preventing overfishing is in place.

These communities came in with a scarcity mindset, that this land and their livelihood would be taken away from them, says Alejandra of her workshops with local communities and government stakeholders. But they left understanding that this plan makes them part of a solution that ensures there will be fish for their children and grandchildren.

McKinseys team of scientists, based in Belgium, uses analytics to determine where issues such as deforestation and natural resource depletion is most acute and then creates maps that outline where to plant trees or create conservation areas, calculating cost and risks to the area as the climate changes.

This use of analytics not only protects local communities and natural environments, but many corporate supply chains, which the data shows would see major disruptions without investments in the health of natural capital, says Duko.

We have the data now to show how important natural capital is and what the solutions areit can no longer be ignored.

Maintaining healthy ecosystemsforests, biodiversity, waterways, and moreis essential to sustaining communities, businesses, and the planet itself. Its also key to fighting climate change. Yet while about 80 percent of global Fortune 500 companies have targets for carbon emissions reductions, less than 5 percent have the same targets for biodiversity and nature-related loss, says Kartik Jayaram, a McKinsey senior partner based in Nairobi, Kenya.

That is a very stark difference, says Kartik. Our research shows that companies can take actions on their own that can address many issues around nature conservation, particularly in retail and agriculture. We continue to work with them to move the needle.

The scale of repair to nature is large and the work ahead wont be easy. But Duko is optimistic about what lies ahead.

Its still possible to reverse this trend of natural capital degradation and keep the world economy within planetary boundaries. We have the data now to show how important natural capital is and what the solutions areit can no longer be ignored, says Duko.

McKinsey has a catalytic role to play, Duko adds, because we are in the privileged position of working with leaders across geographies and sectors to help scale the solutions and act now.

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Investing in nature: Building local economies through conservation - McKinsey