Transforming Markets: The Rise of Earth-positive Economics

Markets thrive on information. Trusted and standardized intelligence informs confident positions that build value.

Economic theory is based on data. It tracks actions and reactions together with the price economic actors are willing to pay for inputs and outputs. Scarcity is a fundamental tenet of economic theory and, when paired with supply and demand, creates the building blocks of productive economies. Economic actors in both the public and private sector engage in decisions based on scarcity, supply and demand every day.

Many of our most vital economic sectors such as construction, agriculture, food and beverage, technology, and transportation, rely on scarce inputs that come from our natural world; water, energy, land, oceans.

Therefore, it is fair to ask: why didn’t we integrate data on climate and nature into the fundamentals of economics at the outset? After all, traditional metrics such as GDP require inputs and outputs, much of these driven by a reliance on the natural world.

Calls from economists for a different approach to economic reviews are nothing new – where Lord Stern first stressed the economic impact of climate change, Partha Dasgupta widened the view to incorporate biodiversity.

There is no shortage of data to support their position: the total value of the world’s forests is estimated at US$150 trillion. Meanwhile, projections show that global electricity demand from data centers is set to more than double by 2030, whilst also driving up consumption of water to 1200 billion litres annually.

Are we in a crisis of economics?

We are certainly at a time of opportunity. We know that navigating unpredictable market conditions successfully depends on having access to information and data that will act as a compass, charting the course forward. So, shouldn’t we expand our economic fundamentals and factor in environmental datasets to reset our definition of value?

Data protects your bottom line

Building on a strong existing tradition of environmental economics, CDP is exploring a concept we call “Earth-positive economics”.

Economic value – now and in the future – cannot ignore the environment the economies of the world operate within. Ignoring the state of climate and nature ignores fundamental impacts on supply and demand which underpin value and pricing. This is simplifying a complicated matrix of influences. Perhaps it is oversimplifying. That is not an apology. We need more simplification to incorporate environmental factors into business as usual. This approach is needed to quantify both economic risk and opportunity. Crucially, data underpins that approach. Globally comparable environmental data provides the missing market signals, guiding us to see where earth-related impacts create or erode value. That is Earth-positive economics.

Growth has dominated economic decision making. To protect growth now and into the future, considering the sustainability of today’s growth into the decades ahead is good economic planning. It allows for a fuller picture to take economic, business and governmental decisions. A clear and relevant example plays out in growth industries such as artificial intelligence (AI) and semiconductors. These sectors place serious demands on energy and water resources. In this example, it would be foolish to ignore the availability, price and sustainability of these inputs in a business case for all economic actors involved in the sector.

IEA (2025), Data center electricity consumption by region, Base Case, 2020-2030, IEA, Paris, Licence: CC BY 4.0

Through reviewing this data, regulators, for example, are able to set maximum thresholds for resource use in their jurisdiction – such as limits on water withdrawals or land conversion. This is not a tax on growth. It is a reasonable incorporation of Earth-positive economics into the ecosystem. Without managing economic inputs such as water and energy, future growth will be impaired across the whole of the economy. Scarce resources linked to the natural world are important inputs that need to be accurately measured, managed and priced. By defining these boundaries, data reduces ambiguity, supports consistent policy, and signals to investors and businesses enduring growth opportunities.

To safeguard long-term competitiveness, growth and job creation, it makes sense to track the supply and demand of critical natural inputs flowing from the biosphere into the economy. The evidence points to a structural imbalance ahead: demand for essentials such as water, land, and ocean resources is on course to outpace supply. The OECD reports that annual drought losses in Europe could amount to EUR 40 billion a year, should global warming reach 3°C, resulting in severe impacts to agriculture, energy and public water supply. Monitoring these inputs through robust data is what will ultimately allow markets to price them correctly, reduce volatility, and guide efficient capital allocation.

Unlike many traditional inputs, natural resources are inherently place-based – fertile land or freshwater reserves cannot easily be shifted across borders. Have you ever seen a shipping container filled with water? Or soil? It is not economically viable for them to be part of global trade flows. This geographic constraint makes transparent data and forward-looking signals even more important for companies and investors seeking resilience in their value chains. Continuing the AI industry example, the boom in AI has geographical impacts on energy availability.

In areas with a high concentration of data centers, they account for an outsized share of electricity demand. In the United States, six states already see data centers consuming more than 10% of total power, with Virginia the highest at around 25%.

IEA (2025), Energy and AI, IEA, Paris, Licence: CC BY 4.0 and OMDIA (2025), Data Center Building and Investment Intelligence Service - Omdia.

Without critical environmental information, companies and policymakers are unable to see unknown risks or opportunities. Robust and standardized data on climate and nature impacts have become essential to projecting costs of economic inputs and processes that in turn underpin investment decisions.

The boardroom metrics needed to run a business are changing. They have already changed in many industries reliant on natural inputs or which are geographically embedded. Leading companies in the food and beverage industry need to take into account water and land scarcity impacts on their products today. Manufacturers with factories located in physical risk locations throughout the world are considering which may become stranded assets on their balance sheets. Insurance offerings are adapting to provide less or more expensive options where projected risks from climate change are highest. Through an economic lens, earth positive awareness allows for accurate assessment of input and running costs essential to good governance.

The argument for more comprehensive measures of progress to complement GDP is growing worldwide. In his seminal work Wealth, Inclusive Growth and Sustainability, Shunsuke Managi of Kyushu University outlined how sustainability indicators can guide both policy and business toward long-term value creation.

The impact of this data – or lack of – is being acutely felt in global supply chains, where decisions – big or small – can have multibillion-dollar ripple effects. With tariff uncertainty forcing businesses to reassess their suppliers, even the smallest change can heavily affect sustainability targets and therefore reputation, licence to operate and investment.

Earth as an investment vehicle

Earth-positive economics recognizes that environmental health is not a constraint on prosperity, but a precondition for it. Just as producing financial accounts and projections has been the bedrock of economic decision making in the past, surfacing sustainability information through disclosure is the tool for sustainable decision making in the future. The concept places sustainability at the heart of value creation and far from being at the expense of growth, acts as a catalyst for it. Many in the public and private sector are already making great strides on identifying the opportunity resulting from taking earth positive data into account.

CDP’s recent analysis – The Disclosure Dividend – shows that two-thirds (64%) of companies globally identified commercial opportunities from environmental action. 12% of these companies had already unlocked US$1.3 trillion in opportunity value over the past year. Specifically incorporating nature impacts from corporate action is on the rise. Over the last year there has been a 200% rise in global companies disclosing data on forests and a 100% rise in water disclosures. This increase has been driven by supply chain owners and investors increasing their demand for this data to incorporate into procurement and capital allocation decisions, as well as the rise in policy trends encouraging nature data disclosure and the rise of TNFD adoption.

A new era

The time for thinking environmental action is a barrier to growth is over.

Earth-positive economics offers a more holistic and comprehensive view of risks, dependencies and opportunities – filling critical intelligence gaps across the value chain – that influence business and drive performance. Economic performance, ranging from national prosperity to the profit margins of small businesses, requires us to adopt this mindset.

In the run up to Climate Week 2025 in New York and COP30 in Brazil, there is no better time to be considering climate and nature factually and forcefully as the economic inputs that they are.

There is much more thinking to be done. Together we can shape the economics of the future through data and analysis. Earth-positive economics is just good economics. Simple.