Ecosystem Services Valued by NACs
Natural Asset Companies derive value from ecosystem services, which are the direct and indirect contributions of natural systems to human well-being.
These services are typically classified into four categories:
- Provisioning services: Tangible outputs such as fresh water, food, timber, and medicinal resources
- Regulating services: Natural processes that influence climate, air quality, erosion, disease control, and pollination
- Cultural services: Non-material benefits including recreation, spiritual enrichment, aesthetic inspiration, and educational experiences
- Supporting services: Foundational processes like soil formation, nutrient cycling, and habitat provision that enable all other ecosystem functions
NACs recognize these services as productive assets and integrate them into their operational and financial models. Rather than extracting resources, NACs aim to sustain and enhance the long-term value of these services. This represents a fundamental shift from viewing ecosystems as passive conservation zones to treating them as active contributors to economic value.
The ecological value captured by a NAC is monetized not through resource depletion but through measurable long-term ecological performance. For example, a NAC managing a wetland could generate financial value through the sale of verified carbon credits, the reduction of downstream flood damage, or the filtration of water, all tracked through a structured ecological performance framework.
NACs and Agriculture
Agriculture is a critical interface between natural systems and economic production. Traditional agricultural models prioritize high yields and commodity outputs, often supported by public subsidies that unintentionally encourage monoculture farming, intensive chemical use, and over-extraction of water. These practices degrade soil, reduce biodiversity, and increase climate vulnerability.
NACs offer a mechanism to transition agriculture toward regenerative models. Regenerative agriculture emphasizes restoring soil health, increasing biodiversity, enhancing water retention, and building resilience to climate shocks. It is not simply a new set of techniques but a redefinition of farmland as an ecological asset.
Through NAC structures, farmers and landowners may be financially compensated for ecosystem services such as carbon sequestration, erosion control, and habitat maintenance. These payments can come from investors, insurers, or market instruments like carbon offset platforms. By recognizing farmland as a living system that generates measurable ecological value, NACs unlock new sources of capital aligned with sustainable land stewardship.
IEG has developed valuation frameworks that allow the ecological performance of farmland to be assessed in ways similar to other land-based asset classes. This enables investors to evaluate regenerative farmland alongside mineral rights, water rights, or other productive uses of land, expanding the investable universe to include nature-positive agriculture.
Hybrid Projects and Landscape-Level Planning
In many places, natural ecosystems are interwoven with working landscapes and built infrastructure. This complexity creates opportunities for hybrid NAC projects that integrate conservation goals with human land use in a coordinated, large-scale manner.
These landscape-level projects span urban, agricultural, and wild land uses, creating unified strategies to enhance ecological performance and local resilience. For instance, a NAC operating in a coastal region could simultaneously improve stormwater systems, restore tidal marshes, and upgrade agricultural practices to reduce runoff. The result is not only improved biodiversity but also strengthened infrastructure and reduced environmental risk.
The Bay Area provides a working example of this approach. Within one framework, a mix of land types (residential, agricultural, and conservation areas) are managed to support ecosystem health while also delivering social and economic value. NACs serve as a central coordinating body to finance these improvements and track ecological outcomes.
The benefits of hybrid NAC projects can be summarized across three dimensions:
- Ecological: Preservation of biodiversity, increased ecosystem functionality, and improved climate resilience
- Social: Creation of public green spaces, strengthened community involvement, and enhancements to public health
- Economic: Support for sustainable livelihoods, appreciation in land value, and long-term reductions in environmental management costs
These complex projects require collaboration across many parties including private landowners, public agencies, indigenous nations, and community organizations. NACs provide a unified structure to align diverse interests and fund projects that would otherwise lack coordination or market viability.