Verdivalue

Verdivalue is a composite valuation concept used in sustainability accounting and investment analysis. It aims to quantify the total value of an asset by combining traditional financial returns with non-financial benefits, particularly environmental and social impacts. The term appears in academic and professional discussions as a way to support decision making that reflects monetary and non-monetary values.

Definition and components: Verdivalue integrates cash flows, monetized ecosystem service values, and social value measures into a single present-value metric. In its common form, Verdivalue equals the sum over time of (CF_t + ES_t + SV_t) discounted at a chosen rate. Here, CF_t are net cash flows, ES_t represent monetized ecosystem services in year t (such as climate regulation, water purification, and biodiversity protection), and SV_t covers social benefits like health, equity, and cultural worth.

Calculation methods: Ecosystem service values (ES_t) are estimated using approaches such as avoided-cost, replacement-cost, market proxies, or stated-preference methods. Social value (SV_t) is monetized through techniques like contingent valuation or alternative social accounting measures. The exact methodology and discount rate can vary by application, jurisdiction, and field.

Applications and limitations: Verdivalue is used by policymakers evaluating green infrastructure, by corporations in sustainability reporting, and by impact investors comparing projects with diverse non-financial outcomes. Limitations include uncertainty in non-market valuations, potential double counting, dependence on discounting assumptions, and the lack of a universal standard.

Relation to other concepts: Verdivalue relates to net present value, natural capital accounting, ecosystem-service valuation, and social return on investment, serving as a broad framework for integrating financial and non-financial performance.