Including the economic value of well-functioning urban ecosystems in financial decisions: Evidence from a process in Cape Town

Investing in urban natural assets can leverage relatively high economic value in city economies. It is not only the case for highly developed cities, but could also be the case for rapidly developing cities. This is the key message from a case study for the City of Cape Town in South Africa as presented in this paper. It was calculated that the leverage of municipal expenditure on maintaining and enhancing ecosystems is 1.2–2 times higher than the leverage of all municipal expenditure on the City economy. Investing and maintaining a City's natural assets or ecological infrastructure yields economically valuable services that could prove to be an important driver of value addition in a city's economy. It is conservatively estimated that for the City of Cape Town, natural assets yield a flow of ecosystem services valued in the order of R4 billion per annum, within a range between R2 billion and R6 billion per annum. Most of this value for the City of Cape Town is created through the tourism industry, but recreation in parks, open spaces and beaches, as well as specific industries such as film-making, also benefit substantially from the services provided by well-functioning ecosystems. Buffering services to better cope with natural hazards such as coastal surges, flooding and fires in urban contexts are important services from an insurance perspective. As entities focused on service provision and as enablers of economic growth and development, municipalities in rapidly developing urban centrums have the mandate and must create the opportunity to invest adequately in natural assets to maintain a healthy flow of ecosystem services to the benefit of people living in and visiting their cities.