Justine Powell | The Caribbean’s most undervalued asset
Justine Powell, Vice President of Investment Management at Sygnus Capital Limited
One of the most interesting parts of managing a portfolio is seeing what people choose to value. Every week, investors devote significant time and resources to understanding assets that can be measured, modelled and monetised. Buildings, infrastructure, equipment and cash flows are dissected and debated, as investment decisions hinge on small changes in assumptions.
Across the region, billions are allocated based on what assets are worth today and what they may be worth tomorrow. Yet one of the Caribbean’s most important infrastructure assets rarely appears in these conversations. It is not owned by any company, does not sit on balance sheets, and is often only noticed when it is already degraded.
If this were a highway, port, airport, or power plant, the consequences would be obvious and the response immediate. But it is not. The Caribbean’s most undervalued infrastructure asset is nature.
Few would dispute the importance of coral reefs, mangroves, and watersheds to life and livelihoods across the region. Mangroves reduce storm surge impacts, coral reefs act as natural breakwaters, and watersheds regulate water supply and reduce flood risk. These ecosystems also underpin tourism, fisheries, and broader economic activity.
Yet they are still largely treated as environmental concerns rather than productive infrastructure. That distinction matters. When we fail to recognise nature as infrastructure, we systematically underinvest in its maintenance.
Across the Caribbean, governments and investors are already spending heavily on resilience. Roads are being redesigned, ports upgraded, energy systems modernised and seawalls constructed. These investments are necessary, but they also expose a gap in how resilience is defined.
We would never allow a major highway to deteriorate without maintenance and ignore the economic consequences. Yet a similar pattern occurs with reefs, wetlands and watersheds. Their decline is gradual, their value underestimated, and the cost becomes visible only after a disaster.
Unlike traditional infrastructure, failures in natural systems are not always immediately visible. A damaged road is obvious. A degraded watershed is not, until water becomes scarce, treatment costs rise, or agricultural output falls.
Damaged coral reefs may appear environmental, but their decline increases coastal erosion, weakens tourism competitiveness and raises storm-related losses. Over time, these effects show up in insurance claims, public finances and investment returns.
In this sense, nature is not just an environmental issue. It is increasingly a financial one. Markets are effective at pricing assets that generate revenue, but far less effective at pricing assets that prevent losses. This helps explain why natural capital remains undervalued. Its value lies in avoided costs and reduced risk, benefits that are real but harder to measure.
Over the past decade, climate risk has become more visible in financial decision-making. Hurricanes, floods and droughts are now routinely assessed. However, these risks are amplified when natural systems are weakened.
A hurricane hitting a coastline protected by mangroves and reefs does not produce the same outcome as one striking a degraded shoreline. The event may be identical, but the losses are not. This raises a key question: are we accurately pricing environmental degradation into long-term risk?
History suggests markets struggle with slow-moving risks. The global financial crisis showed how vulnerabilities can build unnoticed until they become systemic. Environmental degradation in the Caribbean shares similar traits: gradual, interconnected and increasingly material.
For institutional investors, this has clear implications. Pension funds, insurers and asset managers are exposed to ecosystems whether they recognise it or not. Coastal real estate, tourism, agriculture and infrastructure all depend on environmental stability.
If capital is truly long-term, ecosystem health cannot be peripheral; it must be central to assessing resilience. For development finance institutions, resilience cannot rely solely on engineered solutions. Natural and built infrastructure must be strengthened together.
For businesses, environmental stewardship is increasingly linked to continuity, risk management and long-term value creation. The Caribbean has often responded to environmental shocks after they occur. The opportunity now is to become more proactive, recognising that protecting natural systems is also about safeguarding economic competitiveness.
Yesterday was World Environment Day and we are reminded to rethink what we define as infrastructure. We would never allow a major highway to deteriorate without maintenance and ignore the economic consequences. Yet we allow similar degradation of natural systems whose economic role is just as critical.
When mangroves protect coastlines, reefs reduce storm damage, or watersheds secure water supply, they are performing infrastructure functions no less important than roads or ports.
The question is not whether nature has economic value. The evidence is clear that it does. The real question is whether our investment systems, policies and decisions have fully caught up.
As investors, we are trained to identify undervalued assets. The Caribbean’s natural capital may be among the most undervalued of all, not because its importance is unknown, but because its value has not yet been fully accounted for. Recognising nature as infrastructure is the foundation for investing in resilience before the cost of inaction becomes unavoidable.
Justine Powell is the Vice President of Investment Management at Sygnus Capital Limited. Sygnus Capital Limited is the leading alternative investment manager in the Caribbean with over US$700 million in assets under management.
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