Preventing forest fires – Marc Palahí explains why economic transformation is the only long-term solution

Published in Handelszeitung, 6 February 2025

Huge forest fires have been blazing in California this year. Marc Palahí, Scientist and Chief Nature Officer at Lombard Odier Investment Managers (LOIM), explains why, and outlines how this is related to our economic system.

I’d like to talk about the fires in California, which have caused devastation on a vast scale. But can you tell us first about your own expertise? You are Chief Nature Officer at Lombard Odier Investment Managers. That’s an unusual title at a bank – how did you get it?

I am a scientist and spent 25 years working in the scientific field before joining Lombard Odier. My scientific work was always at the interface between business, ecology, biodiversity and climate change. I was head of the European Forest Institute in Bonn for ten years, and my main aim was to develop a science-based operating framework – moving away from an extractive economy founded on fossil commodities, towards a new economic model with a circular approach and that is based on biology.

Our approach is different. We want to invest in nature to reshape the economy, not to make up for its shortcomings

What does the role of Chief Nature Officer involve?

I provide arguments and scientific facts on how we can shift investments in such a way that they become positive for nature. And I make a scientific case that such investments can provide good returns. Let me give you an example: one of the first strategies we are targeting this year deals with implementing nature-friendly solutions to rethink the way we produce food.

One of our areas of focus will be coffee. We are providing capital to ensure we can make the transition from coffee monocultures that cause CO₂ emissions and harm biodiversity, to a new form of coffee cultivation using biological rather than synthetic chemical inputs.

There is a whole series of investment companies that invest in emissions certificates and biodiversity credits, for example. That has been the fashionable way of investing in nature. Our approach is different. We want to invest in nature to reshape the economy, not to make up for its shortcomings.

What do you mean when you say, “making up for the shortcomings of the economy?”

Let me give you an example: if a company that procures chocolate from Ghana and Côte d’Ivoire buys emissions certificates, that doesn’t help fix the problems that cocoa farms are facing, including their lack of resilience. So we need to invest in the farms.

We need to create an entirely new economy that is resistant to climate change and also contributes through its activities to stemming climate change by switching transitioning from fossil fuels to renewable energy

You’ve mentioned that you used to head up the European Forest Institute. The forest fires in California have been all over the headlines in recent weeks. What can be done from an economic perspective to prevent disasters like this?

Major forest fires like these are the result of winds, structural drought and poor urban planning. The economy is already paying the price. We need to create an entirely new economy that is resistant to climate change – and also contributes to stemming climate change – by transitioning from fossil fuels to renewable energy. This change needs to take place across all sectors. It’s not just a matter of changing energy systems; it’s also about switching from concrete and steel to biological materials, and from synthetic agriculture – using artificial fertilisers and pesticides – to a form that is regenerative.

This is a paradigm shift, a change in the way we think about building our cities – using green infrastructure, not grey. It’s not about fixing any one industry in particular. It’s about rethinking our entire economy as it relates to nature, and about understanding the ecology of our planet.

Read also: Building a Circular Bioeconomy to address the growing risk of wildfires

What is the short-term solution to prevent this situation from happening again next year?

When it comes to problems like forest fires, the best short-term solution is the long-term one. One of the problems we’ve seen in places like California, Spain, Italy and Portugal is that we have been investing mainly in fighting fires, not preventing fires.

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If you invest too much in fighting fires you create an even bigger problem, because you can then be very effective at stopping low-intensity fires. But by suppressing these small fires, large amounts of combustible material accumulate in unmanaged landscapes. Then when you have a bad year, like this year, with strong winds and a severe drought, the fires are unstoppable.

We have reached a turning point in our economic system where there are no more quick fixes. We need structural change

So there’s no quick and easy solution?

No. You know, the problem is that we are caught in a vicious circle: the quick solution for California will be to increase the budget for firefighting next year – but that’s not going to fix the problem. Maybe the authorities will be able to stop fires next year, but the problem will keep constantly getting worse.

We have reached a turning point in our economic system where there are no more quick fixes. We need structural change.