Earth system data will shape markets

Liberate Systems exists to identify and develop the operational ingredients of a sustainable everyday economy. We look for signals about major areas of needed innovation, to identify the questions and the technical capacities that need further exploration, to achieve these breakthroughs.

Nearly all areas of human activity are lacking adequate embedded desision-related insights about the health and stability of Earth system functions, relative to products, services, and living conditions. This creates risks, operational inefficiencies, and costs, that race through whole economies and undermine human security and wellbeing.

It is not enough to “price in” risk estimates through insurance products; it is not enough to wait for major banks to decide that polluting practices are unlikely to sustain revenues long-term. Neither of these ways of “pricing in” risk is functioning organically or without political interference; policy choices are driving what is possible, both in terms of access to data and in terms of market size and related revenues.

One way to understand this is to look at food:

Both prices and production practices are heavily dependent on public policy choices, including the use of subsidies.
Even where subsidies are available to make it easier for farmers to afford insurance, private insurers are often unwilling to provide coverage in areas prone to extreme climate risk.
Only government-backed insurance is available for many producers, and that is in wealthier countries with reliable government revenues.
The volatility inherent in food prices—due to both farm products and fuels being traded commodities—obscures the fact that policy choices have been made that discount environmental risk and effectively ask consumers and producers to carry the cost.
The most vulnerable people across the value chain have little means of predicting catastrophic cost or managing it when it hits.
Financial incentives tend to allow large financial and corporate actors to capitalize on the vulnerability of smaller producers, again obscuring the numerous costly market failures.

We live in a world where harvest failure in one region can be offset by a surge in production from somewhere else, and yet we are already seeing this system fail. First, the practice means poor communities, including those that produce food for others, see hunger spreading. Second, climate-related risks and impacts, interacting with a background of worsening long-term environmental breakdown, are making it harder for most regions to surge production.

When harvests fail across multiple ‘breadbasket regions’, we are unlikely to be able to offset that loss as a global community. That means there will be hunger shocks on an unprecedented scale, and markets, which are already failing to produce real remedies for lost value, could unravel entirely, as trust is lost on all sides.

Urban centers depend entirely on natural landscapes, the integrity and resilience of which is provided by millions of years of evolution. When market incentives undermine the health and resilience of ecosystems and watersheds, or exacerbate global heating and climate disruption, the result is rising cost and risk for everyone. Photo: Florian Schmid.

This is just one area where lack of adequate Earth system data is already creating grave inefficiencies. The Food System Economics Commission finds that unsustainable practices and their impacts, including environmental, disaster-related, and human health costs, add up to $15.428 trillion per year. Only the U.S. and China have economies that size or larger. This is value destruction we cannot afford—on the local, national, or global levels.

Cities and regions need working infrastructure to maximize the returns on investment for all investors, from those of freelancers to small and medium-sized enterprises, to municipalities and state or federal subsidies. As value is lost from unpriced market failures, all investments become less efficient. Infrastructure ages, without upgrading; services are sidelined for crisis management; rebuilding replaces innovation, costing more and delivering less in return.

Communities that cannot afford to maintain and upgrade infrastructure lose ground economically. Fewer people and businesses show up looking for a rewarding experience, and investment declines and collapses.

Though we live in an age of multilayered, interacting crises, doom and gloom do not need to dominate our perspective or experience. The outlook for local and regional sustainable development, including new investment, expanded job opportunity, even in the face of the AI boom, can be improved if Earth system data is used to help everyone get ahead of the risk and crisis-spending curve.

This starts with infrastructure, including data systems and data services. That does not, however, mean costly, energy-abusing data centers should be a local priority. Instead, data systems need to get more efficient and lightweight; even AI-based data platforms need to find ways to streamline their use of energy, materials, land, and water, and to operate away from population centers, conservation areas, watersheds, and farmlands.

The vast majority of the chemical and biological processes that lead to their existence are beyond the reach of human industry. We need fresh water, pollinators, adjacent ecosystems, reliable winters and snowpack, precipitation patterns, and natural floodwater management systems, including forests, to ensure agricultural practices are optimal and productive. Land use, including in urban areas, must account for the value of ecological integrity. Photo: Jan Kraus.

The logistics of that land use challenge are a subject for another day, but Earth system data will be crucial to helping everyone decide how best to manage that challenge. This is where we need to focus in terms of local investment, resources, business model innovation, and mainstream practice.

Small and medium-sized enterprises (SMEs) can develop data flow management services, integrating and aggregating, or disaggregating and downscaling data, to provide useful decision insights to everyone in a local economy.

Some of these SMEs might specialize in hard infrastructure or agricultural practices.
Others might focus on Nature loss and related health and resilience questions, measuring biodiversity, ecosystem integrity, the viability of green infrastructure, and the human health benefits of urban tree cover.
Still others might provide services that allow for uptake of new sustainable practices and leveraging of incentives and impact investment.
Local banks could also step in with targeted services that play one or more of these roles and allow the larger institution or peer group to get a better view of the emerging landscape of economic opportunity.

When policy specialists talk about ‘infrastructure as an asset’, they are hinting at the need for this kind of intermediary service, which can document measurable benefits of better practices or manage financial assets that line up with those metrics. Municipalities can form and fund incubators that support development of this kind of sustainable innovation ecosystem, to allow spontaneous but structured discovery of valuable solutions.

The question for everyone, across value chains and industries, and in the policy realm and everyday business, is threefold: Where is the Earth system data we do not yet have ways to use? How can we access and apply it to our needs and priorities? What opportunity comes with applying Earth system data, not only in our own operations, but as part of an everyday economy that does so organically, in locally relevant ways?