Box 2: Value and ROI in resilience investment

Is it possible to calculate how much an investment in resilience might be worth? A common approach is to attempt to measure the return on investment (ROI). Traditionally, ROI has been calculated in narrow financial terms. Determining the value of resilience, however, requires a broader set of measures. This is because a resilience investment can generate not only a financial return but also forms of capital that are less easily measured—such as built, social, and natural capital—which together create value that enhances human well- being and promotes long-term prosperity.

Resilience science has done much to promote the understanding that a return on an investment can be measured in more than monetary terms. While human well-being has long been described as dependent on these three forms of capital (the built, the social, and the natural), research has increasingly shown that natural capital forms the foundation for human existence. The biosphere provides the life-support systems—from climate regulation to fertile soils and clean water—upon which economies and societies depend.

Conventional economic measures, like Gross Domestic Product (GDP), mask this reality. GDP overstates the economic value created by a country because it ignores the costs incurred by natural capital. For example, natural resources are systematically under-priced, driven by insecure property rights, and the market routinely fails to account for externalities like pollution and the presence of subsidies that encourage overconsumption. This leads to rapid resource depletion and weakens long-term resilience.

Another measure, which economists now frequently use to assess investments, is net present value (NPV), although there are disagreements about how benefits are discounted. While built capital is often discounted like other financial assets, many argue that discount rates for natural capital should be close to zero, because ecosystems provide irreplaceable services over long timescales. This has profound implications for resilience: if declining natural capital reduces the capacity to withstand shocks, investments that safeguard ecosystems generate dividends that endure across generations.

Seen from this perspective, resilience investment primarily generates value by protecting natural resources, functions, and states. They also restore value where environmental degradation has occurred and, in some cases, create new value by enabling transformative shifts to more sustainable and just social-ecological systems. Framing ROI through this wider lens helps clarify why resilience investments are not simply ways to lower costs but essential strategies for sustaining prosperity for future generations.