Financialization of nature

This position paper by Friends of the Earth International (FoEI) argues against the 'financialization of nature,' which it defines as the process of turning biodiversity and ecosystem functions into financial assets and tradable instruments. FoEI contends that pricing nature leads to the privatization of the commons, marginalizes Indigenous Peoples and local communities, and allows corporations to continue destructive activities through offsetting mechanisms.

• The financialization of nature is described as a stage of neoliberalism that segregates natural elements—such as water, air, and biodiversity—to create new property titles known as 'natural capital.' This process allows corporations to acquire these titles to offset environmental degradation and generate profits through speculation in futures markets, effectively transferring decision-making rights from local communities to financial elites.
• FoEI argues that putting a price on nature is a prerequisite for financialization and is fundamentally flawed. Pricing is viewed as a political act rather than a neutral one, which risks protecting only economically profitable ecosystems, ignoring equity for poor populations, and erasing the spiritual and intrinsic value of biodiversity.
• The concept of 'ecosystem services' is criticized for translating environmental interests into the language of cost-benefit analysis. FoEI claims this shift commoditizes nature functions, promoting a utilitarian mode of thinking that replaces the human responsibility to protect nature regardless of its monetary value.
• Offsetting is identified as a core feature of financialization instruments that FoEI deems 'perverse.' The document argues that biodiversity is irreplaceable and that offsetting creates an artificial divide between nature and the communities that depend on it, often allowing companies to continue polluting in one area by financing conservation elsewhere.
• The document details several financial mechanisms used to commodify nature, including 'Cap and Trade' proposals (like the carbon market under the Kyoto Protocol), 'Biodiversity Banks' (where credits are sold for habitat restoration), and 'Natural Capital Bonds' (such as Green Bonds or the proposed Rainforest Bond).
• FoEI advocates for a 'people's economy' and community-based governance of forests and biodiversity as alternatives to financialization. They emphasize food sovereignty and the protection of the collective rights of Indigenous Peoples and local communities as the only sustainable ways to combat climate change and biodiversity loss.

APA

Friends of the Earth International (2014). Financialization of nature. https://www.foei.org/wp-content/uploads/2014/11/05-foei-position-paper-ENG-lr.pdf

Chicago

Friends of the Earth International. Financialization of nature. 2014. https://www.foei.org/wp-content/uploads/2014/11/05-foei-position-paper-ENG-lr.pdf.

Wikipedia

{{cite press release |author=Friends of the Earth International |title=Financialization of nature |date=November 2014 |url=https://www.foei.org/wp-content/uploads/2014/11/05-foei-position-paper-ENG-lr.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{friendsoftheearthinternational2014financialization, author = {{Friends of the Earth International}}, title = {{Financialization of nature}}, publisher = {Friends of the Earth International}, year = {2014}, month = nov, url = {https://www.foei.org/wp-content/uploads/2014/11/05-foei-position-paper-ENG-lr.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }