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A Sample
Eco-Asset Ranking Strategy
Faced with a plenitude of choices in the ecological asset
arena, with assets arising in all environmental media including
energy and eco-business (and even between these media), it
seems appropriate to devise a scheme whereby the various products
can be ranked or rated. How else can developers or investors
make informed decisions between the choices that are presented?
The most fundamental criteria for prioritizing ecological
assets reflect the value these products bring in the marketplace.
Quantifiable value is not the only basis for ranking eco-assets,
as their indirect, qualitative value is often valuable in
ways that add significantly to the business bottom line.
Below is a set of criteria by which eco-asset ratings (hence
rankings) can be achieved. These criteria include both quantitative
vs. qualitative measures. If the user determines to employ
these criteria in comparing on type of asset opportunity versus
another, a simple weighting scale can help achieve realization
of relative asset value.
|
Eco-Asset
Value Ranking Criteria
|
|
Asset
Characteristics
|
Explanation
|
Weighting
(1-5 scale)
|
| Reduced costs |
Reductions due to capital or O&M cost
savings; govt. subsidies, tax incentives, etc. |
|
| Increased earnings |
Net bottom line contributions stemming from
asset appreciation, sale or trade; from improved mainstream
product sales; from govt. and/or nonprofit payment programs
|
|
| Strategic corporate value |
Indirect value associated with corporate
positioning, product branding, customer loyalty, agency
/ NGO relationship building, etc. |
|
| Societal importance |
Indirect value associated with mid- to long-term
contributions to sustainability and economic productivity
|
|
| Nonutilitarian eco-value |
Indirect value stemming from improved ecosystem
structure, function and productivity |
|
| Cost to acquire |
Net costs of asset acquisition or development
|
|
| Endorsement |
Is the asset endorsed by agencies, NGOs
or other opinion leaders?
|
|
| Verification |
Has the asset achieved third-party oversight
and verification? |
|
| Certification |
Has the asset achieved formal agency certification?
|
|
| Long term management |
Costs associated with monitoring, insurance,
stock replacement, reporting, etc. |
|
| Permanence (covenants) |
Is the asset protected against future land
use changes or other human-caused actions compromising
ecosystem service PERC? |
|
| Fungibility, liquidity |
Is the asset saleable, tradable or other
transferable to another third party? |
|
|
total score
|
|
The following scenario illustrates the usefulness of ranking
criteria in making decisions about eco-asset development and/or
investment opportunities:
Situation: Selecting from a menu of eco-asset offerings
that includes:
- international greenhouse gas offsets
- domestic renewable energy certificates
- domestic greenhouse gas sequestration units
- domestic habitat restoration units
|
Criteria
|
Asset
Options / Weighting
|
|
Offshore
GHG Offsets
|
RECs
|
U.S.
CO2
Storage
|
Habitat
Repair
|
| Reduced costs |
2
|
0
|
1
|
0
|
| Increased earnings |
2
|
0
|
2
|
0
|
| Strategic corporate value |
3
|
4
|
3
|
4
|
| Societal importance |
4
|
4
|
4
|
3
|
| Nonutilitarian eco-value |
3
|
3
|
1
|
4
|
| Cost to acquire |
0
|
3
|
3
|
4
|
| Endorsement |
3
|
4
|
3
|
4
|
| Verification |
1
|
3
|
3
|
2
|
| Certification |
1
|
3
|
3
|
2
|
| Long term management |
1
|
3
|
1
|
2
|
| Permanence (covenants) |
2
|
4
|
3
|
4
|
| Fungibility, liquidity |
3
|
1
|
3
|
1
|
|
total score
|
25
|
32
|
30
|
30
|
Although subjective, having some comparison of relative asset
value is better than having none. By employing various
weighting techniques (team averaging, statistical tests,
etc.) the above criteria can be quickly used to compare
& contrast asset development / investment options.
Total scores can then be reviewed for reasonableness
and go-ahead decisions more easily made.
Back to "The
Science of Eco-asset Management" - Science
1 : Science 2
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