Return on nature credits: the method

0.1Purpose

This document sets out a method for working out the financial return a company can expect when it pays to improve how land is managed in a landscape it depends on. It also tests whether buying nature credits gives a better return than funding the same work directly.

The returns from protecting and restoring nature are documented for whole sectors and countries. There is little public analysis of the return to a single company, and none that measures what nature credits add to it. The method is meant for a company or investor to apply to their own business or client.

The method is worked through for five use cases: a food company buying cocoa, coffee or barley; a sawmill buying logs; and a nuclear plant, a hydropower station or a data centre that depends on water supply from its catchment. This document describes what they share. Each use-case methodology describes how the method applies to its use cases, with every formula and figure needed to rebuild them.

0.2The question

A company depends on nature in one landscape. It may buy a crop or logs from there, or it may depend on water supply from the catchment around its site. How that landscape is managed, and how the climate changes, affects company finances and valuation.

The method answers two questions in turn. First, what financial value does an improvement in nature offer the company and its business model? Second, does buying nature credits give a better return than funding the same work directly?

The answers are given as company value and cash flow, the measures a company uses for capital decisions.

0.3What the method does not do

• It does not forecast prices. Prices are inputs, set by the user.
• It does not put a price on individual nature outcomes, such as tonnes of carbon or numbers of species. The economic return comes from changes in land management that support better nature outcomes. There are two reasons for this. First, the models available measure different things. Some start from a nature outcome, others from a type of land use. So there is no consistent way to measure the separate nature outcomes behind the economic analysis. Second, this method is not a crediting methodology. A crediting methodology has to be set for each project, and that is where the actual nature outcomes are measured. The aim here is to show that certain land management decisions have an overall positive effect on nature and on company finances. Part 8 describes the change in nature.
• It is not an offset scheme. The company pays for a better supply of the ecosystem services its business depends on, such as water supply or the conditions a crop needs to grow. The company does not offset any emissions, and no credits are cancelled.
• It does not calculate the physical results itself. The physical numbers come from published models and studies (Part 2).
• It is not a valuation of any real company or asset. Each company is a model company built from published figures for comparable companies (§4.5).
• It produces one central set of results, not a range of random outcomes. Uncertainty is explored by changing inputs and running the model again.

0.4Scope

The ecosystem services are named as in ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure), a database of how economic activities depend on nature, at encorenature.org.

Each use case runs from 2026 to a set end year, then adds a value for the years after. The end year and the date at which company value is modelled are given in §0.4 of each use-case methodology.

0.5How to read this

This document is the reference for the rules every use case shares. Where a use-case methodology repeats one of those rules, it says the same thing.

1.1Two futures for the same landscape

The model works out two versions of the future for the same landscape. In the first, the company does nothing. We call this future doing nothing. In the second, the company pays for the programme, a change in how land is managed in the landscape it depends on. Examples are planting shade trees among cocoa, growing a forest on a longer rotation, and clearing invasive trees from a catchment. Each future runs through the same chain of steps, from what happens on the ground to what it means for the company's finances. The difference between the two futures is the value of the programme.

Both futures use the same model, with the same data and the same assumptions. The only difference between them is whether the programme happens, so any difference in the results comes from the programme.

Once it has worked out what the programme is worth, the model turns to the second question, which is whether buying credits gives a better return than funding the work yourself. It values the company a third time, as a credit buyer.

1.2What the return is made of

The return has a benefit side and a cost side.

The benefit has three parts. The first two are operating benefits. They change what the company earns from its operations. Each use case has its own version of them, because nature affects each company in a different way. The third is the same everywhere.

• Costs avoided. The programme lowers a cost the company would otherwise pay.
• Sales kept or added. The programme keeps sales the company would otherwise lose, or adds new ones.
• Cheaper borrowing. Lenders and shareholders see a steadier or better supply as less risky, so the cost of capital used to value the company falls. It counts in value created but not in extra cash (§1.3). It is based on judgement, not evidence (§7.2).

The cost has two parts. The first is the programme itself, which is the work, divided among the companies that share it. The second is the costs of running it: MRV and verification, coordination and, where credits are bought, the developer's financing charge (Part 5).

1.3Two ways to express the return

The model reports two returns. Both divide by the same amount, what you commit, which is the company's own programme payments over the horizon, not discounted. They differ in what is divided.

value created         = company value with the programme − company value doing nothing
extra cash            = Σ free cash flow with the programme − Σ free cash flow doing nothing
                        (over the horizon, not discounted)
what you commit       = Σ the company's own programme payments (over the horizon, not discounted)
times what you put in = value created ÷ what you commit   (and extra cash ÷ what you commit)

Value created is company value with the programme, less company value doing nothing, modelled at the same date. Extra cash is free cash flow with the programme, less free cash flow doing nothing, added up over the horizon. Each, divided by what you commit, gives a number of times what you put in.

The two answer different questions.

Extra cash measures the cash the programme produces, after tax and after paying for the programme. It leaves out any change in what the business is worth, so it leaves out cheaper borrowing entirely. It lets you compare a nature programme with any other project that competes for the same budget.

Value created measures what the programme is worth to the company. It includes the operating benefits, the change in working capital and cheaper borrowing. It also includes the value of the years after the horizon, in which the company keeps the benefit.

Either measure can be the larger, and the two can rank the routes differently. Extra cash adds up many years without discounting. Value created discounts, but adds the years after the horizon and the effect on borrowing. In forestry they rank the routes differently at the default settings (§6.4).

Both divide by an amount that is not discounted. A multiple is the value created, or the extra cash, for each USD committed. It is not a yearly rate of return.

1.4Buying credits or funding it yourself

There are two ways to pay for the programme. To fund it yourself, the company pays for the work as the costs fall due and treats it as an expense. To buy credits, the company buys credits from a developer who does the work, and pays for work that is delivered and verified. It records the purchase as an asset and writes it off over a set number of years.

Both routes pay for the same work and get the same physical benefit. So the benefit is the same on both routes. They differ only in cost, timing and the points below.

MRV and verification are not on the list. They are paid on both routes, and any difference in what is paid comes through the payment factor, under risk transfer (§5.5).

The list is tested in every use case. Switching every difference off at once, and setting the developer's rate equal to the company's cost of capital, makes the two routes equal (§7.4). This shows that no difference is missing from the table.

Every later step uses one physical measure of the landscape, with and without the programme.

2.1What the physical model must provide

The method needs, for the landscape and for each year:

• the physical state doing nothing;
• the physical state with the programme fully delivered;
• each of these under each climate scenario the tool offers, where the use case has a climate setting.

The method takes these from a published model or study. It does not work them out itself.

2.2What the programme does on the ground

The programme is the change in land management the company pays for. Its physical effect comes from the source in §2.1, or from a literature review where the source does not cover it. Its cost is in Part 5.

2.3Climate

Where the physical source runs under climate scenarios, the tool offers them as a setting. The scenarios are not ranked, because a scenario that is worse at one site can be better at another. Where the source compares management under observed conditions, the use case makes no claim about climate.

2.4Choosing sites

A site is a real place where the company depends on nature and the programme could change the physical measure. Each use case sets out how the sites were chosen, and applies that rule to every place it modelled. A use case should report every site its rule selects, including those where the result is poor.

3.1The physical measure

Each use case turns its physical measure into one number a year, which drives every later step.

3.2Where the loss shows up in the accounts

A loss curve turns the physical measure into financial value. It says which line of the company's accounts the measure changes, and by how much. The curve is the most important part of each use case, and each use-case methodology sets it out in full.

3.3Protection

The company does not get all of the physical effect. Protection is the share that it gets, in a given year:

protection(y) = ramp(y) × effectiveness
loss with the programme(y) = loss doing nothing(y)
                             − protection(y) × ( loss doing nothing(y) − loss with the work fully delivered(y) )

The ramp is how far the work's effect has built up by year y, from 0 to 1. Work that acts at once has a ramp of 1 from the first year. Work that takes years to establish builds up over that time.

Effectiveness is the share of the planned work that succeeds. It applies to both routes. It scales the physical benefit for everyone, and it also scales what a credit buyer pays (§5.4). A less effective programme lowers the benefit on both routes. It also lowers what a credit buyer pays, so buying credits gains ground as effectiveness falls (§5.4). Effectiveness is a judgement in every use case.

3.4What the buyer is buying

The buyer pays for a change in a landscape it depends on, which shows up in its own accounts as lower costs, more sales or a better product. A credit pays for that change once it is delivered and verified, not for a quantity of crop, logs or water.

The benefit is not shared. Each company that co-funds the work keeps its own benefit. Only the cost is shared (§5.2).

4.1Why a full set of financial statements

The model gives the company a full income statement, balance sheet and cash flow statement. It values the company three times: doing nothing, funding it yourself and buying credits.

The reason is that a nature programme affects a company in separate ways that show up in different parts of the accounts. It changes operating profit. It can change the working capital needed to hold stock. It can change the rate at which the company's future cash is discounted. Whether a payment is an expense or an asset changes when the tax relief arrives. Linked statements record each effect once, in one place. Because the balance sheet must balance, it checks that no effect has been counted twice or left out.

4.2The three futures

How the programme is accounted for is fixed. The user cannot choose it. A valuation built on cash does not depend on how the cash is accounted for, except through tax. So any difference between the two routes comes from the size of the costs, the timing of tax, or one of the differences in §1.4.

4.3Where each effect appears in the accounts

4.4Avoiding a circular calculation

Working capital drives debt, debt drives interest, interest drives cash, and cash drives debt. The model breaks the loop with a one-year lag:

interest(y) = cost of debt × net debt(y − 1)

So this year's interest is charged on last year's debt. The model has no circular references.

4.5The model company

Each use case values a model company: a stylised company set to match real comparable companies on size, margins, working capital, debt, cost of debt and tax. It is built from published figures, not from any one company's accounts. Its full parameters are in each use-case methodology's Appendix B.

4.6Valuation and cost of capital

Company value is what the company is worth to lenders and shareholders: its future cash in today's money. In a given year, it is the value of free cash flow from that year on, including that year's own flow. A single figure, the terminal value, covers all the years after the horizon. In the formulas, FCF is free cash flow, w is the cost of capital and g is the growth rate after the horizon:

value(end year) = ( FCF + FCF × (1 + g) ÷ (w − g) ) ÷ (1 + w)
value(year)     = ( FCF(year) + value(year + 1) ) ÷ (1 + w)

Company value is modelled at the start of a year, so the first year's cash flow counts in it.

The cost of capital differs between the three futures:

doing nothing:       w = base rate
fund it yourself:    w = base rate − cut × protection share
buy credits:         w = base rate − ( cut + credit premiums ) × protection share

The cut is the reduction in the cost of capital for a steadier supply: 0.25 percentage points when the reward from banks and investors setting is at its highest, in every use case. The protection share scales it by how much of the physical effect the programme delivers, so a programme that delivers nothing gets no cut. The credit premiums are small further reductions for buying credits, for a contract that runs for many years and for credits that are independently verified. Which premiums apply, and their size, are set in each use-case methodology.

Where a use case has a reward from banks and investors setting, it scales the cut and the credit premiums together, down to zero. None of these values has a published source (§7.2).

The rules in this Part are the same in every use case. The rates differ, and each use-case methodology gives them.

5.1Programme cost

The programme's cost depends on the area treated:

programme spending(y) = hectares treated × the rate for each kind of spending in year y

Each use case costs its work from published programmes or a literature review, and states the evidence for each rate in its Appendix D. Where the evidence is weak, the rate is labelled a judgement.

5.2Timing and who pays

Co-funders are other parties that share the cost of the programme. Each company pays its share of the cost. The physical benefit is not divided. Each keeps its own (§3.4). How many co-funders a use case assumes, and how they are counted, is set in each use-case methodology.

The routes differ in when the company pays:

• If it funds the work itself, the company pays its share as the costs fall due.
• If it buys credits, the company pays for work that is delivered. Where the work takes years to deliver, the developer pays first and is paid back on delivery (§5.3).

5.3The developer's financing charge

When the company buys credits, the developer pays for the work and is paid back as it delivers. Where payment waits for delivery, the developer borrows to pay for the work before the buyer pays for it, and has to repay that borrowing. The cost of that borrowing is the developer's financing charge, and it is included in the credit price. Without it, buying credits would come with an interest-free loan.

credit purchase(y) = the company's share of (programme spending + MRV), carried from the year
                     it is spent to the year it is paid at the developer's rate
                     × payment factor (§5.4)

In words, each payment is the company's share of the spending and MRV, with interest at the developer's rate to the year it is paid, times the payment factor. Where the work acts at once, the developer does not need to borrow and there is no financing charge. The developer's rate is a judgement in every use case.

5.4Risk transfer

Credit payments follow what is delivered. Funding it yourself commits the spending whatever is delivered. A credit buyer does not pay for credits that never arrive.

payment factor = effectiveness × ( 1 + (1 − effectiveness) × share of risk repriced )

The payment factor is the share of the work a credit buyer pays for. It is the share delivered, raised by a charge for the risk on the rest. The share of risk repriced is 50% in every use case. At an effectiveness of 60%, the factor is 60% × (1 + 40% × 50%) = 72%.

The model understates the value of passing risk to the developer. A model that produces one central set of results counts only the payment avoided on average. Passing on the risk also protects the buyer from results that are worse than average, which a single forecast cannot show. So the figure is a floor.

5.5MRV, verification and coordination

MRV and verification is monitoring, reporting and verifying the work. It is paid on both routes. If the company funds the work itself, it pays its share of MRV and verification as it is spent. If it buys credits, the developer pays for MRV and verification and recovers the cost in the credit price (§5.3). That part of the price is treated like the rest, so it is scaled by the payment factor: at an effectiveness of 60%, a credit buyer pays 72% of the cost. That difference is part of risk transfer (§5.4), so MRV and verification are not a separate advantage of either route.

Coordination is the one-off cost of organising the companies that share the work: USD 0.4m in the first year, in every use case. Only the fund-it-yourself route pays it, and it is not shared. USD 0.4m is a low estimate. Organising several companies to fund one programme needs contracts, governance and reporting, so the real cost is likely to be much higher, and part of it recurs each year. A higher cost would favour buying credits, because only the fund-it-yourself route pays it.

This Part is for a company that wants to apply the method to its own business. It sets out the steps, what each needs, and the sources the use cases relied on.

6.1The steps

Step 1. Choose the location. Choose one landscape and the one thing your business depends on there, such as a crop from a region, logs from a forest or water from a catchment. The company must buy from, or draw on, that landscape. A programme in a landscape you do not depend on brings no return to your company.

Step 2. Find a physical model that gives a yearly measure. You need the physical state each year doing nothing, and with the programme fully delivered (§2.1). Use a published model or study. Only build your own if none exists. The results depend on the quality of this measure.

Step 3. Work out what the physical change does to your accounts. First, reduce the physical model's results to one number for each year. Examples are the shortfall in crop yield, or the share of the water your site needs that the catchment cannot supply (§3.1). Next, work out what happens to your business when that number gets worse. The price of what you buy may rise, you may lose sales because you cannot get enough, or a running cost may go up. For each of these, write down which line of your accounts changes, and by how much for each step in the yearly number. Together, these rules are the loss curve (§3.2). With the programme the yearly number is better, so the loss is smaller. The difference is the operating benefit.

Step 4. Build the model company from your own accounts. Use a full income statement, balance sheet and cash flow statement (Part 4). Take margins, working capital, debt, cost of debt, tax and the base cost of capital from your own figures. The use cases relied on published figures for comparable companies because no real company's accounts were available.

Step 5. Cost the programme. Work out the hectares and the rate for each kind of spending (§5.1). Add MRV, verification and coordination (§5.5). Decide how many co-funders will share the cost (§5.2). Set effectiveness, which is the share of the work you expect to succeed (§3.3).

Step 6. Value both routes. Run the three futures: doing nothing, funding it yourself and buying credits. Price the credits from the developer's side. Take what the work costs, add interest at the developer's rate to the year it is paid, and multiply by the payment factor (§5.3, §5.4). Report value created, extra cash and what you commit on both routes (§1.3).

Step 7. Run the checks. At least these three (§7.4):

• the balance sheet balances in every year;
• switching off every difference between buying credits and funding the work directly makes the two routes give the same result;
• a programme that changes nothing creates no benefit, so its value created is negative.

Step 8. Show which inputs the results depend on. Label every input Sourced, Derived, Judgement or Structural (§7.1). Show the result with cheaper borrowing switched off as well as on, because it is based on judgement. If the programme only pays off with it on, say so.

6.2What you need, and where the use cases found it

6.3How the tool is organised

The tool shows each use case the same way. It reads left to right in four lanes: the landscape and the programme; what happens to the physical supply; what it does to the company; what the company is worth. Each use case has ten steps, and each step shows the figure doing nothing and with the programme. Step 10 compares buying credits with funding it yourself.

Choices are decisions the buyer makes, such as the site and the number of co-funders. Whether to buy credits or fund it yourself is not a choice. The tool always calculates both.

Scenario settings are conditions the buyer does not control. Each use case has five or six, in two groups: the world or market, and how the programme performs. Each is set to one of three levels. Favourable is good for the company, Adverse is bad, and Reference is the central level that the others are compared with. The tool opens with every setting at Reference. Climate scenarios are not ranked (§2.3).

The tool's summary shows both routes side by side: what you commit, what the company is worth doing nothing, value created, extra cash, and times what you put in. Appendix C gives the display rules.

6.4The use cases side by side

The table shows each use case at its reference site, with every setting at Reference. Value created is modelled at the start of 2026, and at the start of 2027 for agriculture (agriculture §0.4).

What drives each result:

• Agriculture. Most of the value created comes from sales kept. When yields fall, part of the shortfall cannot be bought elsewhere, so the buyer loses that crop and the finished goods it would have become. The programme keeps part of those sales. The price contract adds a further benefit. When world prices rise, it fixes a lower price on the crop this landscape supplies. At Nawa the contract accounts for about USD 1.7bn of the USD 8.0bn created, and cheaper borrowing adds little. The input that matters most for the size of the loss doing nothing is how much the crop price rises when supply falls (price elasticity).
• Forestry. The return is small. Funding it yourself creates about USD 0.9m for USD 45m committed, so the value multiple is shown as two amounts. The longer rotation and the extra thinning create the financial value, and they also benefit nature. To make the programme clearly nature positive, it also pays for habitat practices that bring in no revenue, such as prescribed burning. These are pure cost. At Reference, burning alone lowers value created from about USD 1.7m to USD 0.9m when funding it yourself, and from USD 2.0m to USD 1.2m when buying credits. Users can switch these practices off, or add others, in the tool. The result also depends on four judgements about how better logs affect the mill's accounts. The two measures rank the routes differently. Buying credits creates more value, and funding it yourself creates more extra cash.
• Nuclear, hydropower and data centres. At the Santiago data centre, most of the value created on both routes comes from cheaper borrowing, which is based on judgement. Less of it comes from the effect on water supply. Without cheaper borrowing, the site still creates value, but much less.

In all three, buying credits creates more value than funding it yourself. That advantage depends on judgements: the credit premiums, the developer's rate and the share of risk repriced (§7.2). So the method shows which route is likely to be better, but not by how much.

7.1Confidence labels

Every input in every use case has one of four labels.

Part 8 uses a fifth, weaker label, Indicative, for figures that are estimated by reasoning, not calculated.

7.2What every use case depends on

The operating benefits are based mostly on evidence, which differs by use case. Several inputs are judgements in every use case. They decide most of the difference between the two routes.

This is why the method reports both measures. Extra cash leaves cheaper borrowing out entirely.

7.3Sources

Each use-case methodology lists its own sources in its §7.3. The sources for Part 8 are listed at the end of Part 8.

7.4Validation

Each use case is checked on each rebuild. The tests that matter most for the method are the same in all three methodologies.

* Agriculture passes with the price contract switched off. With the contract on, a programme that changes nothing still creates value for cocoa and barley, because the contract improves the price the buyer pays whether or not the programme works (agriculture §3.4 and §7.4).

Each use-case methodology describes its other tests in its §7.4.

7.5Limits that apply to every use case

Ranked by how much each could change the results.

1. Cheaper borrowing has no source. No published figure measures a cost-of-capital benefit from investing in a more resilient supply. It can be most of the value created, as at the Santiago data centre.
2. The advantage of buying credits depends on judgements: the credit premiums, the developer's rate and the share of risk repriced. The method shows which route is likely to be better, but not by how much.
3. Effectiveness has no source in any use case. It scales the benefit and the credit price.
4. Each model company is built from published figures for comparable companies, not a real company's accounts. A company applying the method should use its own (§6.1, step 4).
5. The model produces one central set of results. It understates what passing risk to a developer is worth (§5.4).
6. The nature outcome is described in Part 8 but not calculated. It affects no result.

Each use-case methodology ranks its own limits in its §7.5.

7.6What is not modelled

Each use-case methodology lists what else it leaves out in its §7.6.

8.1What this part covers, and what it does not

Parts 1 to 7 describe a financial method. Nothing in them depends on nature being measured. The financial results come from the physical measure in Part 2.

This part covers the separate question of what the programme does to the landscape itself. It is descriptive. No figure in it is used in the valuation, so changing it does not change any result.

The two are kept separate because a method that priced biodiversity into company value would be claiming a link that does not exist in any of the use cases here. The company's return comes only through its own accounts.

8.2The index

The tool reports ecosystem integrity, from the Ecosystem Integrity Index. The index scores a landscape by how close it is to its natural condition, using three measures, called pillars.

The compositional pillar compares what lives there with the native community that was originally present. It does not simply count what is there now. A species arriving because the land has been disturbed does not raise it, and a native species lost does lower it.

8.3The limiting-factor rule

The index takes the weakest of the three pillars rather than their average. It then lowers the result further where the other two are also poor. A landscape that is productive and well connected but has lost its native community is not a healthy one, and an average would hide that.

index = weakest pillar × ( a + b − a × b )
a, b  = the other two pillars, each from 0 to 1

The bracket is close to 1 when either of the other two pillars is close to intact, and it falls as both fall. Condition and change are worked out from this index (§8.4).

So a programme that lifts a pillar which is not the weakest raises the index score less than it improves the land, because the score follows the weakest pillar. The real improvement may be larger than the score shows. Each use-case methodology says which pillar is weakest at its sites.

8.4How condition and change are described

The tool reports condition and change in words rather than numbers, because the underlying values are estimated by reasoning, not calculated (§8.5).

Condition, on the index value: Heavily modified (below 0.20) · Substantially modified (0.20–0.40) · Partly intact (0.40–0.60) · Largely intact (above 0.60).

Change, on the share of the gap to natural potential that the programme closes: Slight (under 3%) · Modest (3–7%) · Moderate (7–15%) · Marked (15–30%) · Major (above 30%).

Change is a share of the remaining gap, not a percentage of the index value. A percentage of the value would reward degradation, because the same action would score several times higher on a degraded landscape than on an intact one.

8.5What this cannot tell you

• The index is not calculated for any landscape in the tool. The pillar values are estimated by reasoning from the published method and the character of each landscape. Every figure has an Indicative label, which is weaker than Judgement (§7.1).
• The natural baseline is the best-protected areas that exist today, not a pre-industrial state.
• There is no freshwater pillar. Rivers, groundwater, river flows and wetlands are not covered by the index.
• The index says nothing about threatened species or extinction risk.
• The structural and compositional pillars both draw on human-pressure data, so they are not fully independent.
• The index is a measure of ecosystem condition on land. It is not a biodiversity metric.

Sources for Part 8

• Leutner, B. (2025). The Ecosystem Integrity Index: a comprehensive, globally applicable, and unified metric for ecosystem health. Technical whitepaper, The Landbanking Group, Munich, v1.0. Licensed CC BY-SA 4.0.
• Hill, S. L. L., Harrison, M. L. K., Maney, C. et al. (2022). The Ecosystem Integrity Index: a novel measure of terrestrial ecosystem integrity. UNEP-WCMC. doi:10.1101/2022.08.21.504707
• Theobald, D. M., Kennedy, C. M., Oakleaf, J. R. et al. (2025). Global Human Modification v3. Scientific Data. doi:10.1038/s41597-025-04892-2
• Gassert, F., Mazzarello, J. & Hyde, S. (2022). Global 100 m Projections of Biodiversity Intactness for the years 2017–2020. Technical white paper, Impact Observatory.
• Hudson, L. N., Newbold, T., Contu, S. et al. (2014). The PREDICTS database: a global database of how local terrestrial biodiversity responds to human impacts. Ecology and Evolution 4, 4701–4732.
• Copernicus Land Monitoring Service. Gross Dry Matter Productivity. European Union. doi:10.2909/b54be6e3-5962-4e9a-a443-9ff7ea943dfe

Appendix AThe general calculation order

The steps every use case runs, in order. Steps 1 and 3 are particular to each use case and are set out in full in that use-case methodology's Appendix A.

 0.  settings          each scenario setting at Favourable, Reference or Adverse; the buyer's choices
 1.  physical state    for each year: doing nothing, and with the work fully delivered      [case]
 2.  protection(y)     ramp(y) × effectiveness                                              (§3.3)
 3.  loss(y)           the loss curve turns the physical state into lost sales, higher
                       costs or both, doing nothing and with the programme                  [case]
 4.  your share        1 ÷ the number of companies sharing the cost                         (§5.2)
 5.  spending(y)       your share × hectares × the rate for each kind of spending           (§5.1)
 6.  MRV(y)       your share × the MRV cost                                       (§5.5)
 7.  fund it yourself  payment(y) = spending(y) + MRV(y) + coordination (first year)
 8.  buy credits       credit purchase(y) = (spending + MRV), carried to delivery at the
                       developer's rate, × payment factor                                   (§5.3, §5.4)
                       payment factor = effectiveness × (1 + (1 − effectiveness) × 50%)
 9.  statements        for each of the three futures, each year:
                       income statement → interest (one-year lag) → tax → net income
                       funding it yourself: payments are an expense
                       buying credits: purchases are an asset, written off over a set period
                       balance check = 0
10.  free cash flow    operating profit × (1 − tax) + write-off − change in working capital
                       − credit purchases
11.  cost of capital   doing nothing: base rate
                       fund it yourself: base rate − cut × protection share
                       buy credits: base rate − (cut + credit premiums) × protection share  (§4.6)
12.  company value     value at the start of each year, with a terminal value after the horizon
13.  value created     company value with the programme − company value doing nothing, each route
14.  what you commit   Σ payments (step 7) or Σ credit purchases (step 8), not discounted
15.  extra cash        Σ free cash flow with the programme − Σ free cash flow doing nothing
16.  returns           value created ÷ what you commit; extra cash ÷ what you commit

In step 8, "carried to delivery at the developer's rate" means with interest at the developer's rate to the year it is paid.

Appendix BGlossary

Appendix CHow results are shown

How the tool presents results. None of it changes a figure.

• Returns. A return is written as "N.N times what you put in", to one decimal place, only when what you commit is at least USD 1m, the amount is not below zero, and the multiple is between 0.1 and 20. Otherwise the two amounts are given: "USD 0.9m created for USD 45m committed", or "extra cash for" on a card showing extra cash. "0.0 times" is never shown.
• Amounts. "USD" before the number, with m for millions and bn for billions. Two significant figures in sentences.
• Small amounts. An amount below USD 5,000 is shown as "none". An amount from USD 5,000 to USD 50,000 is shown as "less than USD 0.1m".
• Signs. Value created and extra cash are always shown with a plus or minus sign.
• Settings. Shown as Favourable, Reference or Adverse. The tool's summary names the settings that differ from Reference, or shows "all Reference".
• Labels. Figures based on judgement have a Judgement badge. Part 8 figures have an Indicative badge.