The Financial Value of Montana’s Natural Beauty

Steve Connole fishes in the Missouri River near Helena. (AP Photo, Matt Volz)
Steve Connole fishes in the Missouri River near Helena. (AP Photo, Matt Volz)

Montana is known for its natural abundance. Our state is home to incredible wildlife, our hills contain rich mineral deposits and our waters flow all the way to the Atlantic and Pacific Oceans. This natural abundance also upholds Montana’s vibrant business economy – timber and ore provide the raw materials for lumber and mining, fish and wildlife sustain our sport economy, healthy soil and ample precipitation make farming and ranching possible, and our rivers, parks and forests bring as many as 12.6 million tourists to our state. One might go so far as to say that Montana’s economy hinges upon nature.

But Montana’s natural bounty – and business economy – is not immune to the global threats of climate change, biodiversity loss, land degradation, pollution and invasive species. As the World Economic Forum stated in its 2020 report, “Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy,” more than half of global GDP, or roughly $44 trillion, is moderately or highly dependent on nature and its services, and therefore exposed to risks from nature loss.

In Montana, these risks include wildfire, drought, hot weather and species loss. In 2021, nearly 1 million acres of land burned due to rampant wildfire, affecting air quality, tourism, health and wildlife. By midsummer, more than 90% of the state was already experiencing abnormally dry to extreme drought conditions with a prediction for the situation to worsen through August – again affecting agricultural producers and others reliant on water.

As a result of these dependencies on nature, forward-looking business and government leaders across the globe are increasingly calibrating their companies’ and agencies’ environmental dependencies in the same monetary metrics as other economic decisions. Called “natural capital accounting,” this movement seeks to address the growing environmental challenges businesses face by identifying, assessing, and disclosing the financial materiality of nature-related risks to business, financial institutions, asset owners, regulators and governments.

In describing the concept, Capitals Coalition CEO Mark Gough said, “Whether we’re talking about intellectual capital, manufactured capital, and the natural… social, human, all of these have the same fundamental basis. You look at them as a resource that if you invest in, you get a return. You don’t invest in them, you lose the capital, and it stops providing you the benefits that it was [providing] before. So, fundamentally underpinning it all [natural capital valuations] is a very simple concept really, that we should invest in the things that we value.”

Like financial capital, natural capital can present both opportunity and threat. Understanding a business’s economic impacts and dependencies on nature is critical to planning for a vibrant future. Calibrating environmental impacts and dependencies in monetary terms allows companies to align their long-term strategic interests with environmental dependencies. Companies are changing the way they work with suppliers to ensure a dependable stream of raw material inputs. For example, a dairy company that relies on independent farmers for milk pays a premium to those farmers who proactively protect soil and water health.

Natural Capital Valuations

Resources that provide essential benefits to businesses and society are often referred to as “natural capital,” and the functions nature provides are termed “ecosystem services.” Natural capital includes both tangible goods, such as timber and mineral deposits, as well as services, such as absorption of rain waters by soil, storage of flood waters by wetlands, sequestration of carbon in forests, crop pollination by insects, and dilution and assimilation of wastes by rivers. Natural capital accounting tackles both impacts and dependencies, with impacts generally referring to how a company’s business operations affect the natural environment (e.g., through air or water pollution, negative impacts on soil, biodiversity, etc.), and dependencies referencing the resources and natural functions a company relies on to run its business (e.g., raw materials and a healthy atmosphere).

For some, the very idea of measuring nature as a type of capital is problematic. Does such an approach commodify nature? Will assessing an economic value on natural assets undermine their intrinsic value, turning the natural world into a subsidiary of the corporate economy? How can one value an asset where its true value is apparent only when it is part of a coherent whole, such as the role of soil and water in rivers and fisheries?

Here we argue that providing even an imperfect valuation of nature is preferred to regarding its goods and services as free. The inherent economic invisibility of nature has contributed to its ongoing degradation, and making environmental impacts transparent is a way to reverse this decline. This philosophy is consistent with the well-known business mantra, “If you can’t measure it, you can’t manage it.” When companies understand the financial impact of environmental dependencies, they can invest in innovative strategies that not only reduce risk but also protect natural resources, mitigate climate impact and deliver returns in unexpected ways.

The Natural Capital Protocol

A variety of tools and approaches for economic valuations of nature exist. This article briefly reviews one of the major tools, the Natural Capital Protocol and offers insights for Montana businesses and government agencies.

The first stage of the protocol – getting started – addresses why companies are undertaking the valuation effort, with reasons often including risk management, cost savings, and/or marketplace responsiveness. Providing an economic assessment of natural capital places environmental impacts on a level playing field with other business decisions, elevating a topic like water quality or soil health to the same level as other raw materials and costs. In addition, communicating these impacts and dependencies on nature in economic terms makes it harder for senior management to ignore their importance.

The second stage – scoping – outlines the specific objectives, boundaries and materiality assessments of the key environmental impacts. Here, the goal is to identify where natural capital assessments are likely to yield new insights. For example, if the valuation process is likely to merely reinforce or confirm insights the company has already, such as knowing carbon impacts, then doing a financial measure of those impacts might not be worthwhile. Alternatively, using a materiality screen can help identify high impact areas where the valuation will provide new insights.

The third stage – measuring and valuing – is where companies collect data and assign valuation coefficients that quantify how much one unit of a given impact or dependency costs in monetary terms. In the case of carbon, valuation coefficients are fairly well-developed; the World Bank and others help price carbon as a way to scale up greenhouse gas mitigation efforts. However, figuring out how much a liter of clean water is worth depends on many hyperlocal considerations, including drought and precipitation patterns, nearby water pollution, water access and so on. Here, businesses should remember to not let perfect be the enemy of the good. In fact, the exercise of identifying natural capital impacts and dependencies alone can reveal useful insights, even without coming to a specific numeric assignment.

The final stage – applying – is adopting the valuations to decision-making. Because natural capital assessments are based on financial metrics, they can help companies prioritize the impacts and dependencies that are most important. For example, an audit on a particular product reveals that of two different sources of the same raw material, one releases fewer greenhouse gas emissions, while the other uses less water. Putting these impacts in financial terms makes it easier for busy executives and decision-makers to choose a course of action. These economic assessments can also quantitatively evaluate “what if” scenarios, which can reveal previously unknown insights. What would happen if a company replaced oil and gas as key raw materials with renewables? By running these scenarios, decision-makers gain critical insights into how different actions will impact the financial performance of their company.


Though the concept of putting a dollar value on nature may be controversial, the valuation of natural capital brings clarity to the very essence of business survival. Without assessing natural capital impacts and taking specific actions today to mitigate them, there is the real possibility that Montana businesses – and businesses around the world – will not survive a future where climate change and biodiversity loss are worse than they are today.

As one expert notes, “[Businesses] can’t continue as we do today, because if we keep our consumption patterns and business models running in the same way, it’s just a matter of time until we have destroyed the planet, and that means until we have destroyed society, and that means until we have destroyed business.”