WORKWEEK

As has become my wont, I’ll use a quote to help ground our conversation today. Here’s Wendell Berry in his essay, Two Minds:

It is often proposed, nowadays, that if we would only get rid of religion and other leftovers from our primitive past and become enlightened by scientific rationalism, we could invent new values and ethics that are needed to preserve the natural world. The proposal is perfectly reasonable, and perfectly doubtful. It supposes that we could empirically know and rationally understand everything involved, which is exactly the supposition that has underwritten our transgressions against the natural world in the first place.

Yes, this is, on its surface, a rather pessimistic view of human endeavors. But I’ll spin it positively. 

No, we’ll never fully understand or be able to model the complexity of Earth’s climate systems perfectly. We’ll probably never fully understand how trees share resources and information via mycorrhizal networks. We’ll probably never fully understand how salmon find their way back to the pools they first spawned in when it’s time for them to mate (and die). 

But that’s OK! 

While “we can’t empirically know and rationally understand everything involved,” we can understand the natural world better over time. Much better. And I’ll propose this will be a highly valuable process, provided we do so with humility rather than hubris.

Underloved climate tech cost curves

We can’t blame Wendell Berry for not predicting the seismic improvements in DNA sequencing that make understanding Earth’s biodiversity and natural systems more possible. While often discuss the cost curves of technologies like wind and solar power, which exhibited exponential efficiency gains and cost declines for decades, DNA sequencing is an example of another massively important cost curve that is no less salient to climate tech and energy:

Advances in DNA sequencing, the cost of which has declined precipitously (see above), have made identifying and analyzing biodiversity a significantly more tenable exercise for both private and public sector actors. Let’s not understate the significance of the cost declines, which look steep even on a log scale. It’s millions of times cheaper to sequence DNA now than at the turn of the century.

For a practical example of the impact DNA sequencing has on the study of climate challenges and potential solutions, let’s harken back a decade or so to the Deepwater Horizon oil spill in 2010, which became the largest marine oil spill in history after a BP-operated offshore oil rig in the Gulf of Mexico blew up, dumping 60,000 barrels of oil per day into the ocean (at peak spill rates).

While this was a catastrophic environmental disaster (and killed 11 people), on a rosier note, here’s one upshot of the oil spill, as described by Dr. Samantha Joye, a professor in the Department of Marine Sciences at the University of Georgia. The Deepwater Horizon oil spill represented: 

[the] first time sophisticated genomics tools – namely metatranscriptomics and metagenomics – were applied to track an ecosystem’s response to perturbation, revealing [how] the ocean’s microbiome is a robust sentinel of change…

To summarize, this was more than just a case of using genomics to understand how badly the oil spill impacted the ocean ecosystems. It was also an opportunity to watch a product of biodiversity, namely hydrocarbon-degrading bacteria and microbes, at work doing environmental remediation. 

While people understood the role hydrocarbon-degrading bacteria (and fungi) could play in remediating oil spills before 2010, the Deepwater Horizon oil spill provided a more concrete, tech-enabled case study to watch these microbes at work. 

Specifically, various microorganisms produce enzymes that can break the chemical bonds in hydrocarbons in a process known as biodegradation. Alcanivorax borkumensis, a “hydrocarbon-chewing” microbe, was ultimately one of the main actors in cleaning up the Deepwater Horizon spill. Said differently, biodiverse microbes kick humans’ asses when it comes time to remediate oil spills. It isn’t even a contest. 

Let’s take another example relevant to advances in 2023. As plastic (and plastic pollution) has proliferated precipitously over the past decades, humanity has been playing catch up to the implications. 

For one, we’ve realized how pernicious and widespread per- and polyfluoroalkyl substances have become. More commonly known as ‘PFAS,’ or “forever chemicals,” these chemicals are found in hundreds of products, ranging from plastics and fabrics to foams and carpeting. As notes the EPA:

Because of their widespread use and their persistence in the environment, many PFAS are found in the blood of people and animals all over the world and are present at low levels in a variety of food products and in the environment.

This is a problem that has only been around for decades. It’s not one that we’d necessarily expect Earth’s biodiversity to have already devised solutions for. But biodiversity is full of surprises. 

In recent years, several new studies have described novel approaches to breaking down PFAS that don’t otherwise break down in the environment. And some of these approaches are biological; for instance, at UC Riverside, researchers Yulie Me and Josen Jin identified anaerobic soil microbes able to break down some PFAS chemicals.

Suffice to say that, with the help of tech like DNA sequencing, opportunities to harness the unique characteristics of biodiverse bacteria, microorganisms, and fungi abound. As we’ve explored in recent newsletters, biodiversity isn’t all about microbes, nor is it all about remediation efforts. 

A bottom’s up approach to valuing biodiversity

Against this backdrop, it becomes easier to appreciate the value of protecting and better understanding biodiversity. One recurring question that we discussed in our biodiversity panel on Tuesday was (roughly), “What markets are cropping up to direct capital to ecosystem services or biodiversity protection and promotion?”

I understand the desire to see more ‘traditional’ markets for biodiversity. For instance, one could imagine a robust voluntary (or compliance) market for biodiversity credits. These could look like carbon markets, which, as they’ve matured, have begun to offer a ‘real’ financial mechanism to incentivize nascent industries, like carbon removal, that didn’t previously exist. Markets for biodiversity credits could provide a similar lever to incentivize more conversation projects and biodiversity work.

But that isn’t the only way. Companies like Basecamp Research are hard at work sequencing as much biodiversity DNA from across the world as possible. They then partner with companies across industries ranging from pharma to food to help them develop new products. Here’s how the company describes its platform:

BaseDiscovery [is] a platform that will use next-gen DNA analysis and environmental monitoring to connect the dots and improve our understanding of the natural world.

Perhaps even Wendell Berry would be cautiously optimistic about this endeavor. 

Similarly, Funga, whose CEO, Colin Averill, joined our panel on Tuesday, is building a robust database of fungal biodiversity by sequencing DNA from forests across the Southern U.S. In particular, Funga is interested in corroborating and quantifying what decades of academic study have observed, namely that fungal biodiversity promotes forests’ health, resilience, and growth. 

Note that all of this is happening without a market for biodiversity credits or a regulatory framework mandating this work. 

For Funga’s business model, there’s still a carbon play. By working with landowners, they can increase timber value and forests’ CO2-uptake rates by reintroducing fungal biodiversity. But down the line, the value of their datasets will go well beyond carbon markets. 

We often default to a top-down approach when we look at new industries or companies. This approach involves looking for existing markets, sources of capital, and valuation mechanisms that can support the work that companies like Funga and Basecamp Research are doing. 

But that isn’t the only way. There’s also a ‘bottoms up’ approach where you ask, “What new data is available now that wasn’t before, and what potential applications might that unlock?”

The net-net

Here’s my longer-term vision. As sequencing (and AI) helps us better understand biodiversity, its value will become increasingly self-evident. Whether by virtue of royalties from products that stem from biodiversity data sets or other financial mechanisms, the economic case for conserving and restoring biodiverse ecosystems should follow.

Yes, we also likely need more ‘traditional’ financial markets, such as carbon markets or, eventually, markets for biodiversity credits, to support the growth of biodiversity-focused businesses. These markets can be solid beachheads for companies (like Funga) to fund their data work. 

But we shouldn’t hang all our hats on that. Carbon is a very different ‘product’ than biodiversity; it’s a single variable, it’s fungible, and it’s easier (if not easy) to standardize into a creditable product. 

Biodiversity is the sum total of all life on Earth. To bring it back to Berry, we’ll almost certainly lose our way (again) if we put too much onus on distilling the value of that into a commoditized asset.