To kick off Guernsey Finance’s 2023 Sustainable Finance Week, financier and environmentalist Ben Goldsmith spoke to a packed-out audience about his love of nature, how to make rewilding an asset class, and the role Guernsey can play.
Read his full speech below.
This is actually only my second trip to Guernsey, but I love this place because it’s at the same time a kind of bastion for free markets and entrepreneurship and dynamism in financial markets.
But it’s also a place of romantics. Every meeting that I have here is with people I know who spent time in Guernsey or who were born here and live here. They start and finish every meeting with a little chit chat about nature. You were out sea bass fishing on Sunday and had a particularly good afternoon on the waves, or a particular part of the island they go to on a Saturday afternoon to spend time in the sun. It’s a place that you come to live in if you weren’t born here, partly because you want to be close to the natural world. It just feels good.
I don’t think we can quite put our finger on why being in nature feels so good. You know that feeling when you get home, and the sun is shining, and you’ve had a busy day? Or the smell of the garden or the smell of the sea or if you go on holiday to the Mediterranean there’s that very distinctive smell of the pine trees and the cicadas and it just feels really good. Scientists unravel little, tiny pieces of the mystery with each passing year. We know for example that hospital patients heal faster if they can just see nature out of the window, they get better quicker. We know that prisoners, if they’re allowed to grow their own potatoes and spend a little bit of time with their hands in the soil, are much less likely to offend. The writer EO Wilson coined the term Biophilia which describes this kind of innate love that we all have for nature. And if we walk in the forest, we know now that the trees produce volatile organic compounds and when we breathe them in, they lower our heart rate and our blood pressure, they make us feel happy. You know, we’ve all had a miserable time and gone for a walk and just felt better afterwards. And we don’t fully understand why the trees communicate with us in that way. We don’t have any idea as to the complexity of it all. What it’s all about. But then again, if 10 years ago, I’d said that the trees in the forest are communicating with each other on an ongoing basis via a great woodwide web, a mycorrhizal network of fungi in the soil, and they don’t just pass electronic pulses, but they pass chemical pulses and even pass nutrition to each other. There are tree stumps without a single leaf that are kept alive by their neighbors. We would have said it was completely mad. Well, that’s now accepted science.
There’s a mystery in our connection with nature which has been somewhat lost on us until we really need it, until we’re bereaved or we’re ill or we have some existential moment. And then we suddenly find that nature is a lot more important than we thought to us. I was at an event the other night where the King spoke and he only said one thing really, he said the knowledge of the world’s remaining indigenous people may represent humanity’s last best hope. And what he’s referring to is that 80% of the world’s remaining intact ecosystems are in the stewardship of indigenous people. And that’s no coincidence. It’s because continuous harmony with nature is at the absolute heart of their spiritual and their practical lives. It’s appalling to them the idea of messing up nature and so I think he’s right. And I think that’s the shift we need to make in our societies. We need to recalibrate that relationship with nature such that it becomes more central, and it’s there. This Biophilia that EO Wilson talks about is not absent, it’s perhaps dormant. Think of your most snazzy London friend with a fast car, they’ll pay twice the price for an apartment which overlooks the park. It’s still there in some way, it just needs bringing to the surface and part of that is just a mindset shift.
I had a very interesting lunch today with members of the States of Guernsey team and we talked about the seawall, which serves no useful purpose, and it was built by the Nazis and it’s not protecting anyone from anything. It’s in fact separating the dune ecosystem from the ocean. It’s just there, obsolete because it’s always been there according to people who are alive today. And the discussion about removing it was very controversial. In the end, it wasn’t removed. And the same is true all over the world. You fly into Gatwick, and you see that great patchwork quilt of green fields, they’re very bright green and you think my god, it’s so wild and natural. The reality is that life, colour, birdsong have been drained from the English landscape over a generation by poor farming practices, and so on. And in fact, we’ve lost touch with what nature really is, you know, those artificially straightened canals that we love to walk along in the south of England. Well, they’re artificially straightened canals, they’re meant to be multi braided, meandering, periodically flooding, wild rivers, and it doesn’t take much to restore that. Often the reason why dams aren’t removed, and rivers aren’t rewiggled and sea walls aren’t removed is because of a simple lack of understanding or lack of connection. We go to the highlands of Scotland, I once went with a Swedish ecologist and a group of others and he said to the guide, you do understand you’re showing me one of the most ecologically degraded landscapes I’ve ever seen. This was a great Caledonian Wildwood not so long ago, what the hell happened here? If this was in Morocco, we’d be rushing to offer them financial assistance to help put it back together. And that reality is we think it’s wild. We’ve lost touch with what nature is, I think a mindset shift needs to take place, but not just a romantic one, a practical one. The infrastructure decisions we take, the economic decisions we take, need to go with the grain of nature rather than against it.
I went to a project quite recently, near me in Somerset called the Steart marshes and this is a 12,000-acre floodplain reconnection scheme. This is a coastal salt marsh, it’s immense, it’s to the horizon in all directions when you’re in the middle of it. And the freshwater coming down from the sunset levels meets the sea water that comes in and the water does a kind of dance. There’s different habitats at different times of year and huge flocks of wading birds, and an enormous amount of money saved for British taxpayers because they no longer have to maintain concrete infrastructure. And the incidence of flooding has gone down dramatically, such that South Koreans and Dutch and Americans and Brazilians fly in for a tour of the Steart marshes because it’s Britain’s, and certainly Europe’s and possibly the world’s largest and most successful flood alleviation scheme. But it’s also a huge rewilding project. Nature knows how to do this stuff. Solutions that run with the grain of nature are often cheaper, more durable, they work. And by the way, I Chair the Conservative Environment Network, bit of an embarrassing day to be in that position. The local Tory MP describes the landscape as Disney for ducks and hasn’t visited once in the eight years since it was put together, so a major mindset shift is needed through government, through society.
I live in a part of South Somerset known as Selwood. It’s where my heart is. It’s my home. It’s where I’m raising my kids. It’s a landscape that is woefully unproductive. The most productive 20% of Britain produces 85% of the food we produce, in mostly East Anglia. The least productive 20-25% produces less than 1%, generously maybe 2% of the food. So, it’s not relevant in terms of food production, to the extent that Selwood was still a wood pasture in the middle of Queen Victoria’s reign, it took the arrival of steam machinery before people bothered to clear the scrub and the trees and to create that patchwork quilt that they created elsewhere. It’s heavy clay, the machines can’t go on it for nine months of the year, you can barely go on it yourself nine months of the year. It’s thick clay and a group of us neighbors have started to resurrect the old Selwood Forest. Sell is a derivative of the word salary, which is another word for Willow. It was a wet willowy forest to the east of Somerset. And now on an area of almost 3000 acres, six of us, a third-generation beef farmer, a guy with a holiday lets retreat business, and me the newbie. You have to be third generation to be anything but a newbie, it’s probably worse here in Guernsey.
The magic that we are witnessing just by restoring natural processes and removing human impediments is like nothing I’ve ever seen. It’s only been three and a half years since we started doing this. We now have 30 farmers in the area, exploring the idea of a 12,000 acre wet wood pasture restoration project, which we’re now seeking government support for. But what it really has just involved is putting back natural processes. Nature recovers incredibly fast. When you consider the problems that we need to deal with as a society, this is one of the cheapest ones because we’re drawn to it, because it’s a living thing, it’s alive. You see the grass and weeds coming through the cracks in the pavement. It wants to shine everywhere. It’s incredibly alive. And so when you just take your foot off it’s throat, nature bursts back very quickly.
So all we’ve done in our landscape is remove the cannibalisation, we rewiggled the rivers and ripped up the field drains and let water behave as it wants to. We’ve removed fencing and we’ve dramatically reduced grazing pressure. We’ve got the same number of cows now per acre that they would have had in the 1850s. In other words, enough, such that scrub and small trees and wildflowers are starting to break through the grass and the field shapes are starting to look like ghost field shapes, they’re dissolving into the landscape and it’s starting to feel a bit like a partner. We’ve broken open holes in the hedges, and you can see after three years the wood pasture reemerging. The natural processes relate to keystone species, and there is a point to all of this by the way, I know this is a finance conference, but the keystone species of my part of Somerset are fourfold. One is the cattle. We forget that in Western European and in Britain that were wild cattle for a long, long time and in some parts of Europe we had wild bison. They graze and they browse, and they trample, and they create these wonderful semi open mosaic woodland environments which are different and much richer than the closed canopy woodlands that we’ve become used to today. So, they’re an incredibly important part of the ecosystem. And in a farm landscape, like Selwood where a lot of the farmers want to continue farming, it’s a perfect set up. They have their cows, but they have fewer of them, and they have the old-fashioned horned variety.
The second is beavers. We have beavers back in the landscape now. Beavers are a keystone because they build dams along little creeks and streams and by doing that, they hold water in the landscape and create these amazing little ribbon wetlands. We now have glowworms on dark nights hanging above the ribbon wetlands that the beavers have created. The third are pigs or wild pigs who are the gardeners of the ecosystem in Western Europe and Britain, they turn the soil and the bare patches and they kind of paint color into the landscape because that’s where all the wildflowers grow the following spring. And the fourth is deer control. They’re not going to get wolves back, but there is a man with a handlebar mustache called Derek who shoots a lot of deer, and deer control is important. The result has been completely amazing. Completely magical and has captivated people for miles around. We have walkers, we have cyclists, we have local school groups. We have an unbelievable upwelling of life taking place. And the interesting thing is, it looks like it makes a lot more economic sense than what people were doing previously. Now if you imagine that new environmental land management scheme that the English government has introduced, which is called public money for public good, on the face of the Agriculture Act 2020. Think of it as an icebreaker, which is plowing through the ice and effectively creating a whole new incentive for nature recovery in these kinds of landscapes, landscapes in which farmers have been heavily dependent on handouts from the state for at least 50 years. They will now no longer get handouts as a transition period; they’ll get payments for public goods. So, if they’re helping to mitigate flooding and helping to sequester carbon, helping to restore vibrant landscapes and restore biodiversity, they’ll now be paid under the new government scheme to do that.
What’s interesting from a Guernsey perspective is that there is a flotilla of private markets traveling in the wake of that environmental land management scheme. Markets which I think in time will come to dwarf the publicly funded scheme. The design of the publicly funded scheme was overseen by Michael Gove, who is a very clever man who understands markets and understands the importance of public money not crowding out private finance. So, he’s created the icebreaker, but he’s left it wide open for this flotilla to move along in it’s wake. So, we started hearing from people, we started hearing from a water company, Severn Trent Water. How do we ensure a steadier cleaner supply of drinking water for our X million customers? Well if we invest in rewilding at the sensitive parts of the catchment, we’ll get much steadier supplies of water and it will be cleaner water. And so, Severn Trent have invented a market base in which farmers in our part of the river catchment are being paid to restore wetlands, build ponds and to restore a kind of sponge effect to the landscape. In fact, there are now 12 such markets up and down the UK all funded by water companies. But there are others that are popping up and there is now a tangible market for rewilding from the water companies just wanting better water. And then we were approached by a Somerset council who were concerned about repeated flash flooding every winter in Bradford on Avon and Frome. A lot of these cities get deluge and cost taxpayers, and it costs the council a fortune cleaning up people’s living rooms and building concrete walls. And they said look, we can reduce flooding by just keeping the water in situ for a few hours or days every time it rains heavily. Which means creating new weapons. Nature designed the land such that it behaves like a sponge. When it rains, the sponge absorbs water and the water is released slowly throughout the year. Beavers helped a lot in that process. That’s where they’re a keystone species. If you strip nature from the land and put in field drains and straighten the rivers and drain the wetlands and drain the ponds and kill the beavers and cover the landscape in sheep, when it rains the water is in people’s living rooms within three hours and then three weeks later, while they’re cleaning their flooded homes, they get told there’s a hosepipe ban because there’s no more water. We’ve simply robbed the landscape of the ability to store water. And so restoring that sponge effect is beneficial not just to the water companies but also to the local council for reducing flooding. So now there is a vibrant scheme in which environmental agency and councils and insurers are coming together to pay landowners to rewild sensitive parts of the catchment to reduce flooding.
Then you’ve got voluntary markets. This conference is carbon neutral but what does that mean? It means as a corporation, we measure our carbon emissions and then we figure out a plan for reducing those carbon emissions over a period of time. But along the way, we’ll offset so that we can say we’re net zero now. There are obviously issues around this and ones to figure out both on the supply side and the demand side, how the market should look, and there is a voluntary carbon market integrity initiative, which is a global, very well-funded initiative, which is working on all of that. And all new markets are full of cowboys and difficulties and controversies, but they get ironed out over time. And this is a marketplace that really works. Think of Pakistan, think of the problems associated with the loss of mangroves in Pakistan. The mangroves are absolutely vital to some of the most vulnerable communities in the Global South. In coastal areas with mangroves intact, there were 90% fewer deaths in 2004 when the tsunami hit, it’s a buffer against storm surges. It’s where the sand is generated on which the tourism industry depends. In some parts of the world, 90% of the fish that we eat spend the first part of their lifecycle in the roots of mangroves. These are invaluable. And once you start to price in the value of these mangroves, stacking those different things they do for us, the mangrove looks a lot more valuable alive than dead, even if you can put a shrimp farm there for five years. And when people say well, in the context of voluntary carbon, philosophically, how do I value that? How do we value something that is inherently priceless? Nature should be beyond markets or should be beyond valuing. How do you value the love you feel for your parents or your children or something? But it’s nonsense because we’re already valuing nature in every decision we take. We just value it at zero. So, all one’s doing is recognising the tangible and quantifiable economic value of that mangrove. And voluntary carbon is one such revenue stream because there is a price of carbon, it’s becoming increasingly standardised. Conferences like this one, companies, they want to be carbon neutral, they want to offset those emissions, which they can’t get to straight away. Or those emissions that they’ll never get to, every industry is going to have some emissions and it’s very difficult to get to zero on a gross basis. So that’s another very powerful market. And Mark Carney says it’ll be $100 billion a year market worldwide by 2027.
The whole of Scotland is changing. Suddenly carbon money comes along, and Microsoft wants large scale Caledonian wildwood restoration for its carbon program and boom, these estates are like dominoes one after the other. They’re suddenly culling deer and reintroducing pine martens, it’s a game changer in Scotland, voluntary carbon. And in its wake, voluntary biodiversity offsetting. GlaxoSmithKline have said they will be nature positive. That’s a commitment. They’ve made a corporate commitment. These big companies want to create a net positive impact on nature. And they could go so far within their business. They can have regenerative supply chains and they can have wildflower roofs on their factories, and they can have permeable parking lots, they can’t get there without offsets, they need to do large scale restoration. So, Pakistan has just seen $14 million of investment through voluntary carbon and biodiversity markets. And it’s restoring an area of something like 100,000 hectares of vital mangroves all along the Sindh coast, all around Karachi. It’s unbelievable. The scale of it is enormous. This would never have been funded by the government, it’s bankrupt. All governments are struggling with near or total bankruptcy. Philanthropy is generous and mighty and has an important role to play but it’s not mighty enough to do it. The only thing that can do it is financial markets. So, there is this flotilla of markets that are emerging.
If you think where solar was in 2005, my wacky bearded Uncle Teddy in his 80s putting something incredibly expensive on his roof which didn’t work, people being ripped off, people making crazy returns. Everyone’s saying it’s a pipe dream. Well, today’s solar is a very standard market, a very standard asset class, you’ll find it in any real asset portfolio. There’s never been the rollout of any kind of infrastructure to the same amount of investment as we’re now witnessing in solar. Five or 600 billion a year just in solar. So, these markets start out wobbly and difficult and prickly and they struggle with issues of standardisation and issues of morality and issues of things like greenwashing and so on and then they mature, and they become real. If you think of forestry. Before the 1970s forestry was not an asset class. My father was a pioneer in forestry. At one stage he was the largest single owner of forest assets in North America. I’m told they discovered that these big conglomerates were depreciating the forest assets according to accounting practice at the time, assets which grow at four or 5% a year and hence he made his fortune, and thank goodness for that. And then he didn’t do much with it, swapped it for a stake in Newmont Mining. And then there were tax breaks in the 1970s in England and Scotland and so on. Forestry, whilst it’s not done very well from an environmental perspective, forestry plantations are not woodlands. You’ve seen those great artless blocks of single species, single age monocultures, which are thankfully now going out of fashion. It’s an asset class, it’s a very normal asset class. What we need to do is we need to make rewilding in its broadest possible definition an asset class. It’s not so hard, they’re rewilding mangroves along the Pakistan coast and it’s an asset class into which real investors, ANZ Bank, are investing and real buyers are buying the services provided by those mangroves. It’s an asset class.
An estate in Scotland is now an asset for which you can reasonably expect to generate an income, a predictable 30-year income from voluntary carbon alone. Look at the buyers for land in Scotland now. And that throws up political issues, of course the Scottish people are frightened about investment firms from Guernsey buying up their land, but that’s all manageable. All early markets have this issue. We’re still debating where we should and shouldn’t put solar panels. And we’ll, as a society, come up with the answers and the market will evolve. But we need to turn rewilding into an asset class. I just want to finish with one short story, and that is that there was a mini ice age between 1650 and 1850, the Thames used to freeze. There was a circus on the Thames River most winters. The last time it froze was 1848. Global temperatures they believe dropped between two and three degrees in the space of half a century between 1600 and 1650 and they stayed there. It was a mini ice age. It brought an enormous amount of suffering in some parts of the world. They now believe the reason for that mini ice age was because of the European genocide and because of the utter destruction we wreaked upon the people of Central, North and South America, and 50 million Native Americans were reduced to one or 2 million, most of them by the diseases we brought, many of them by the sword. It was a calamity for those people. The agricultural land was abandoned, and you had this dramatic vegetation pulse of the forest of New England just went boom on land that have been cultivated for 1000s of years. The Amazon basin was farmlands and was all just reclaimed in a second by tropical jungle, and the amount of carbon drawn out the atmosphere by that moment in history triggered a global cooling. What it shows us is that if we restore nature, and not just trees, if we restore coastal salt marshes, if we restore sea grasses and Caledonian forests and wet wood pastures and tropical rainforests and mangroves, if we restore the functionality of nature, on top of all the things it does for us, it also will be our main ally in fixing this climate problem, because decarbonising is not going to be enough. There’s too much carbon already there. We need to suck it down, fast, out the atmosphere and the way we’ll do that is by building nature back into all our lives. And I think that requires an economic shift of the kind that you’re all positioned to deliver and an emotional shift, which I think, you live in Guernsey so you kind of know exactly what I’m talking about.
