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The Vancouver Accord: Real Estate Valuation Meets Sustainability

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By Worldchanging New York blogger, Joshua Wiese:

If New York is the greatest city in the world, it should come as no surprise when its residents are tapped to solve the greatest challenges of our times. Well, two of the city's finest have just been tapped: Dr. Charles McNeill of the United Nations Development Program (UNDP) and Stephen Williams of the Royal Institute of Chartered Surveyors (RICS), who spoke at the Vancouver Valuation Summit in Vancouver, British Columbia at the beginning of March, and participated in weekend talks launching the Vancouver Accord, an agreement to incorporate sustainability measures into how property values are assessed.

The summit itself was a public meeting of property people from around the world to discuss how sustainability affects the value of the world's real estate, which set the stage for private meetings of industry figures to come to some agreement on how to incorporate the notion of sustainability into how they assess property values. These understandings and guidelines will become the Vancouver Accord: "a commitment by valuation standards organizations globally to begin the process to embed sustainability into valuation and appraisals."

New York City Represents

Dr. Charles McNeill, Manager of the Environment Team within the UNDP, also manages the UNDP's Biodiversity Program, which includes the Equator Initiative, an effort to reduce poverty in the Equatorial Belt through community initiatives focused on the protection and wise use of biodiversity. Dr. McNeill's presence in Vancouver was particularly appropriate, as he's been charged with developing UNDP's efforts to stimulate new markets for carbon, as well as markets for ecosystem services.

Dr. McNeill gives occasional talks outlining the major findings of the UNDP's Millennium Ecosystem Assessment, an incredibly comprehensive report on the state of the world's ecosystems and an assessment of the consequences of ecosystem change for human well-being. [And often covered on Worldchanging global. - Ed.] The Millennium Ecosystem Assessment highlights the inextricable links tying the health of our ecosystems and health of our economy together. The report's authors have called the global economy to arms in the struggle to create a sustainable (read livable) planet, pointing to the increased use of economic instruments and market based approaches to manage ecosystem services as essential tools in that struggle.

At the summit's opening plenary, titled "The Imperative for Sustainable Action: A Global View," Dr. McNeill held an on-stage conversation with Paul Clements-Hunt of the UN Environment Program, framing the challenges and action being taken to integrate sustainability into the global economic agenda.

Stephen Williams, a partner in the New York-based valuation advisory practice, Williams-Murdoch, Inc., is a master in the valuation field. He is the immediate past president of RICS and former chair of the Appraiser Qualifications Board in Washington, D.C. As RICS president, Williams' primary focus was to promulgate appraisal standards and qualifications on a global basis. He also spent years working to find the best approach for embedding sustainability into valuation and appraisal, through the RICS Sustainability Workgroup.

Williams opened the summit's official discussion on "Valuation and Sustainability" with a global perspective on possible future models for measuring sustainability both financially and non-financially. "Are 'green' properties with lower carbon footprints, more sought-after and therefore more valuable?" he asked. "Should we measure investment real estate purely on the basis of a monetized return or should we, as investors, look at the 'triple bottom line' of economic, social and environmental benefits?"

Williams noted that "evidence over the past year that major funds, developers and investors are beginning to include these factors in their real estate decision-making in most major markets." He sees this as a major shift in the way real estate investors measure their returns.

Valuation and Sustainability
Done correctly, economic valuation can help us understand the total value or contribution that ecosystem services make to society, and then see how that total value changes as we make more or less sustainable choices. This demonstrates the benefits that ecosystems can generate, and the increased benefits of appropriate management.

Valuation can help decision makers allocate more funding to the protection and restoration of the ecosystem services that provide the foundation for our economy -- until relatively recently, these have been largely unaccounted-for in the typical economic measures. Identifying and quantifying these benefits, we can identify their beneficiaries, and turn to them for additional support for conservation -- be it public will, public or private funds, or other powerful factors.

If the Vancouver Accord is successful in embedding sustainability into valuation and appraisal standards, it will be a powerful tool in making the economy itself more sustainable.

For more information on ecosystem services and valuation, check out the collaborative series of posts by worldchanging bloggers David Zaks, Chad Monfreda, and Hassan Masum. I also recommend "How Much Is An Ecosystem Worth? Assessing the economic value of conservation," and the Ecosystem Marketplace website.

Photos flickr/Dyan Parker

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The following link is also a great resource for anyone interested in the Vancouver Accord and the Valuation Summit that staged it's launch:

Posted by: joshua.wiese on 27 Mar 07



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