Attributing value to natural capital

Pioneering is a complex but highly satisfying exercise. From the very beginning, The Red Sea Development Company (TRSDC) envisioned a project that would change everything. We sought to go beyond the current understanding of what it means to be sustainable, choosing to follow a regenerative approach, representing a paradigmatic transformation of how we think about tourism, the economy, success, and return on investment. An entire new understanding of “development.” We don’t just design buildings or infrastructure. We design for the human, ecosystems, and planetary health, blending with nature so that our destination and guests become part of nature once again.

Now, the UN has announced the adoption of a new framework to estimate value, the System of Environmental-Economic Accounting—Ecosystem Accounting (SEEA EA). It marks a significant step away from the obsolete GDP-only driven approach that has dominated globally since WWII. It aims to ensure that natural capital is recognized in economic reporting and truly factored into strategic decision-making. The world is now heading in the same direction we chose to pursue when we first conceived The Red Sea Project.

The key is, as it always was, nature. The value of natural capital is the essential variable to consider when designing new business models that redefine success. Natural capital depletion poses a significant challenge to achieving poverty reduction and sustainable development objectives. At TRSDC, we believe that the best way to protect and enhance nature is by becoming part of nature. To get there, we need to reconceive our understanding of value.

Far too often, mass tourism worldwide has become a source of unsustainability, harming local populations and the environment. It is perhaps the best example of uneconomic growth – a short-term-profit business model that grows at the expense of our most important asset: nature. Unfortunately, it is also the reflection and consequence of how virtually all our industries operate. I can only agree with UN Secretary-General Antonio Guterres when he insists on the need for this new way of thinking so that we “no longer heedlessly allow environmental destruction and degradation to be considered economic progress.”

The new framework introduced by the UN recognizes that ecosystems deliver essential services that generate benefits for people. Indeed, our researchers at The Red Sea Development Company, AMAALA and partner organisations prove every day how green and blue natural habitats provide carbon sequestration capacity, reduce air pollution, protect coastlines, sustain biodiversity, and increase general system resilience and public health. More importantly, nurtured ecosystems contribute to mitigate and adapt to the effects of climate change and ecological crises, including fewer chances for future pandemics.

Not only do we concur with the UN’s paradigm-changing approach, but we embrace it and take it one step further. Otherwise, we wouldn’t call our project “pioneering.” Beyond protecting, our goal is to enhance our destination’s natural capital by applying a regenerative approach and principles to increase our net conservation value by 30% by 2040. We create living systems and regenerative solutions to become a seed of life for nature to thrive, and we look to reduce or even eliminate existing pressures on the environment.

While more than 34 countries are now applying the UN SEEA EA framework on an experimental basis, we will continue developing the first large-scale application of its core principles. Our project is both an innovative approach to development and an unprecedented practical research exercise. We are doing things in ways never attempted before, and we are looking forward to sharing our learnings and successes with the rest of the world. Such is the nature of pioneering.