Despite growing recognition that healthy, functioning ecosystems are fundamental to achieving food, water and nutrition security, poverty reduction, and sustainable development, the values provided by nature are not widely integrated into policy and investment decisions. Mechanisms that facilitate this integration and resources for nature protection and restoration are a critical component of effective human development programs.

As part of the People, Planet, Prosperity Project (3Ps), the Asian Development Bank (ADB) worked with the Stanford University’s Natural Capital Project to co-develop natural capital approaches in ADB member countries to directly inform policy and investment decisions and help secure each country’s natural capital in support of their development goals. Natural capital approaches make explicit nature’s benefits to people so that they can be incorporated into decisions and motivate investments in ecosystems, improving the well-being of both people and nature. These approaches were piloted in five Asia Pacific countries – Armenia, the People’s Republic of China, the Cook Islands, the Philippines and Sri Lanka – involving multilateral development bank leaders, local government partners, and local experts to inform specific, priority policy or finance decisions.

The pilot countries, supported by the project teams, are further developing technical and policy capacity across their governments and other relevant institutions for implementing natural capital approaches in future work. This three-part Natural Capital webinar series is part of the effort to share lessons learned across these countries and beyond, with the goal of scaling up these approaches around the world. ADB is planning to institutionalize natural capital assessments as crucial, upstream work to inform downstream planning, policy, and investments. ADB is further developing operational support and finance opportunities for mainstreaming natural capital approaches within member countries.

Philippines 

The pilot study focused on the Sto. Tomas Watershed in Zambales, where it applied the InVEST model suite to measure the supply of critical ecosystem services by forests and agroforestry areas, riparian zones, and lahar-affected lands of the watershed. Different valuation techniques were then applied to monetize key eco-services such as water provisioning, sediment retention, and carbon sequestration derived from the watershed. The work in the Santo Tomas Watershed provided valuable insights, yet additional watersheds are needed to validate the methodology and finalize the blueprint. The Department of Environment and Natural Resources (DENR) has already identified other priority watersheds (e.g., Palawig watershed in Region 2) where the improvement of the integrated watershed management could be used to test and finalize the blueprint. 

Sri Lanka 

The Sri Lanka pilot aimed to enhance watershed investment programs through natural capital approaches, supporting both water and energy security and sustainable livelihoods. By modeling ecosystem services and conducting an optimization analysis, the pilot focused on understanding optimal upstream land use in the Mahaweli watershed, in order to reduce soil loss and resulting sedimentation in downstream reservoirs, dams, and irrigation canals. This effort supports potential future investments in sustainable land use, and policy and financial mechanisms like green bonds and carbon credits. The team also engaged local partners from government, academic institutions, and multilateral development banks in training and capacity development activities, laying the groundwork for long-term mainstreaming of natural capital approaches in the country.