Natural Capital What does it mean for me? Bruce Horton. Lunchtime Lync June 2017

Transcription

1 Natural Capital What does it mean for me? Bruce Horton Lunchtime Lync June 2017

2 1. What is natural capital? 2. Is it important? 3. How can we apply it? 4. Some examples 5. Open discussion

3 Strategic Technical Consulting Focus on clients risks and opportunities Changing demand patterns Regulatory standards Affordability Resilience Brexit Ageing infrastructure Energy & carbon Natural capital Resource efficiency Ecosystem services

4 Policy and regulation Water sector policy, (energy sector policy), advice environmental regulatory liaison Strategic planning and risk management Risk and opportunity assessment, data analysis Strategy development and investment planning for carbon & resource management, service resilience and cost reduction Environmental management and corporate responsibility Business process development, communication and training Sustainability appraisal, strategic environmental Appraisal methods assessment and decision-support Economic appraisal / CBA / multi-criteria analysis Water-cycle and catchment planning Environmental accounting Modelling, regulatory challenge, outcome-based solutions, monitoring & pilot studies Carbon and water footprinting, ecosystem services valuation, life cycle analysis Research Stakeholder engagement Resilience planning Resource efficiency Renewables Vulnerability assessment to extreme weather and climate change impacts, investment planning Energy, water and materials efficiency Integrated resource efficiency modelling Sustainable construction Renewables feasibility and appraisal of incentives

5 1. What is natural capital? 2. Is it important? 3. How can we apply it? 4. Some examples 5. Open discussion

6 Natural Capital The elements of nature that directly and indirectly produce value or benefits to people, including ecosystems, species, freshwater, land, minerals, the air and oceans, as well as natural processes and functions. Natural Capital Committee (2014)

7 Water Natural Areas Biodiversity Analyses show high value of Ecosystem Services (MEA, TEEB) Ecosystem Services Business What capacity is there to keep producing them in the future? Use familiar concept/ language of capitals Capture all strategic natural resource issues NATURAL CAPITAL The stock of renewable and q non-renewable natural resources 0 (e.g. plants, animals, air, water, soils, minerals) that combine to yield a flow of benefits to people

8 Natural Capital Concept Inputs from other capital Natural capital stock Ecological communities Soils Freshwaters Land Ecosystem Service Flows Natural capital benefits Food Fibre (e.g. timber) Energy Fresh water Clean air Minerals Atmosphere Subsoil assets Oceans Climate regulation Recreation Amenity Biodiversity/ conservation

9 Types of capital Natural capital supports all other capitals Provides essential resources that support a healthy planet Underpins thriving societies and prosperous economies

10 1. What is natural capital? 2. Is it important? 3. How can we apply it? 4. Some examples 5. Open discussion

11 Benefits of understanding natural capital Aligns with strategic business objectives Provide our customers with clean, safe drinking water and to recycle their wastewater safely to the environment Identify and create value Reduce costs Consistent with policy drivers

12 the first generation to leave the natural environment of England in a better state Natural capital is in decline Costs to economy (flooding, soil quality, pollinators, air pollution, outdoor recreation & health) Understanding of NC helps organisations identify their reliance and impacts on natural environment

13 Natural Capital catchment based approaches should be encouraged by OFWAT in the Periodic Review in Water companies are key players in influencing natural capital within water catchments and the investments they are required to make as part of the Review process should help progress the overall objectives of the 25 Year Environment Plan Local authorities and major infrastructure providers should ensure that natural capital is protected and improved Natural Capital Committee (2017)

14 Ofwat should encourage the sustainable use of natural capital by water companies that is, our natural assets such as rivers and groundwater by encouraging water companies to have appropriate regard to the wider costs and benefits to the economy, society and the environment.

15 Water companies to commit to assessing the Natural Capital they depend on, with the intent to grow it and to integrate it into decision-making. Expects companies to have developed Natural Capital Accounts by the start of the investment period ( ), and would like to see a commitment to grow this capital through the five-year investment window.

16 Natural capital approaches and assessments now being applied in the water industry

17 Global multi-stakeholder collaboration that brings together leading global initiatives and organizations to harmonize approaches to natural capital

18 Innovative stormwater management strategies Increase potential development yield Create tangible amenities for residents Reduce operating costs Contribute to broader placemaking

19 1. What is natural capital? 2. Is it important? 3. How can we apply it? 4. Some examples 5. Open discussion

20 National Natural Capital Accounting Government objective to have national natural capital accounts by 2020 Defra & ONS (Office for National Statistics) are building up evidence base of the value of different ecosystems (Woodland, National Parks), and services (recreation, air quality regulation) Urban account in progress Key benefits: Recreation Noise and heat regulation Flood hazard regulation Air quality regulation Health The ONS should further develop national natural capital accounts... in particular to cover more renewable natural assets... Natural Capital Committee (2017)

21 Why Natural Capital Accounting? Share Within the organisation With customers/ society With funders/ investors Accounting for natural capital Save Identify risks Improve efficiency Return Long term sustainability Beyond financial profit

22 Accounting for natural capital assets Conventional physical assets Natural capital assets Benefits to the company (revenue streams) Benefits at a single, local, scale Depreciate in value over finite lifetime Exclusively owned and controlled by the organisation for entirety of useful life Benefits to the company and wider society Benefits at multiple scales (local, regional, global) Without intervention, value may decline or remain stable Value may appreciate over an infinite lifetime Often only partially 'owned' or controlled (e.g. certain use rights) for a defined period of time

23 Natural Capital Accounting Tools The government should actively promote corporate natural capital valuation, accounting and reporting Natural Capital Committee (2017)

24 Natural Capital Accounting Tools for Business Many CSR/KPI/physical data approaches, e.g. GRI guidelines Environmental Profit and Loss the balance of environmental impacts across a value chain Corporate natural capital accounting Designed for land assets: where an organisation has management responsibility for natural capital within a spatial boundary Large-scale studies for the Public Forest Estate in England and Duchy of Cornwall (2016) Urban examples: Beam parkland, London; London Borough of Barnet

25 Why use the Natural Capital Protocol?

26 Corporate natural capital accounting 1. What do we have? Stocks of natural assets 2. What does it produce? Flows of services 3. What is that worth? Natural capital benefits 4. What does it cost to maintain these benefits? Natural capital maintenance

27 Natural capital accounting A simple approach Assets Maintenance Costs (Liability) Trend (qualitative)

28 Role of economic valuation Economic valuations reflect the relative importance or worth of natural capital to people in a particular context It is not putting a price on nature a moral judgement the cheapest Economics = the highest net benefit

29 Economic valuation Strengths: commensurate unit (money) allows tradeoffs between different sources of welfare, etc Weaknesses: difficulty of capturing complexity of environment Values of change against a baseline Only as accurate as underlying science Water Natural Areas from this to this Biodiversity q 0 q 1 Non-Market Goods (Q) How much does individual s wellbeing change?

30 Do we have evidence? Attention & focus (Largo-Wright et al., 2011; Bergman et al., 2008; Pretty et al. 2003) Time in hospital & use of pain killers (NHS, 2014; Public Health England, 2014; Mishra et al., 2012; Kaplan & Kalan 1989) Cardiovascular disease (Kardan et al., 2015; UK Active, 2014; Heran et al., 2011; Coombes et al., 2010) Inactivity & obesity (ARUP, 2014; eftec and CRESR, 2013; Mourato et al., 2010; Nielsen and Hansen, 2007; UK Active, 2014; NPHO, 2013) Stress relief (NHS, 2014; Public Health England, 2014) Physical & mental health benefits Depression & mood (Kardan et al., 2015; White et al., 2013; 2015; Public Health England, 2013; Alcock et al., 2014; 2013) Temperature regulation (Monteiro et al., 2016; Bower et al., 2010; Doick et al., 2014) Environmental Stormwater attenuation (FC, 2012; 2006; Woodland trust, 2012) Air quality (FC, 2012; 2006; BOP, 2013; Woodland trust, 2012) Biodiversity (TCPA, 2012; FC, 2012; Ciria, 2011) Amenity value (Brander et al., 2011; SERC, 2011) Property values (Bark et al., 2016; Mourato et al., 2010; CABE, 2004; 2005) Economic Visitor spend (GHK, 2004; 2007; Regeneris Consulting, 2009; TPL, 2011) Social Local investment (CoNY, 2011; GHK, 2004; 2007; Regeneris Consulting, 2009; TPL, 2011) Crime rates (Troy and Grove, 2008; Branas et al., 2011; Wolfe and Mennis, 2012) Jobs (Mell, 2012; GHK, 2004; 2007; Regeneris Consulting, 2009; Evans, & Shaw, 2004; Neighbourhood satisfaction (Florida et al., 2009; GEN Consulting, 2006)

31 1. What is natural capital? 2. Is it important? 3. How can we apply it? 4. Some examples 5. Open discussion

32 Beam Parkland, London Financial accounting treats Beam Parklands as a liability rather than an asset NCA demonstrates the significant natural capital asset values from Beam Parklands that financial accounting does not capture Results enhance the case for financing management of similar sites and for adding new sites to the Land Trust s portfolio

33 Manchester Mental health illness costs million per year Maintaining parks supports property values of mn Significantly more in social care/health savings

34 New York: The Highline

35 35

36 Option 1: Combined sewer overflow tanks Option 2: Larger Combined sewer overflow tanks to also handle flooding Option 3: SuDS in public spaces Option 4: SuDS in public spaces and private spaces Retrofit SuDS in Islington CIRIA

37 Applying BeST Retrofit Case Study

38 Water UK: Valuing the benefits of storm overflow improvements Set decision making context Identify options Current stock of natural capital Undertake screening Are benefits likely to be (a)significant, and (b) Greater than costs? No to either Detailed benefits assessment Collate results Yes to both Flow of benefits from enhancements to natural capital Take forward decision

39 Adelaide International Airport Heat mitigation potential of irrigation Reduce ambient air temp at airport Enhanced natural capital could create Financial benefits to airport (additional payload/carrying capacity, reduced fuel consumption) Additional economic benefits (amenity, thermal comfort, energy use, etc)

40 Experience of Corporate NC Accounting Natural capital is a positive concept it is about the good things the natural environment gives us and how we maintain them Ece Ozdemiroglu, Director, eftec Capital maintenance is the reason accountancy was born: Have I created value, or just depleted my stock? Michael Izza, Chair Executive, ICAEW This is a new language but the concepts build on what we have been doing for decades; and improvements in evidence and computing mean this is the right time to apply it Sir Harry Studholme, Chair, Forestry Commission This approach allows us to recognise the significant value and importance of natural capital assets not captured in financial accounting Andrew Philipps, Rural Director of Finance, Duchy of Cornwall

41 1. What is natural capital? 2. Is it important? 3. How can we apply it? 4. Some examples 5. Open discussion