Why Natural Capital? Nick Barter, Defra
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1 Why Natural Capital? Nick Barter, Defra 1
2 Natural Capital Committee Contents 1. What is natural capital, what is happening to it and does it matter? 2. What can be done about it? 3. Next steps / final thought. 2
3 Natural Capital Committee Part 1 Natural Capital 3
4 Natural Capital Committee What is natural capital? Natural capital refers to stock of natural assets (such as the forests, rivers, land, minerals and oceans) which provide valuable benefits to people such as clean air, clean water, timber, food and recreation. NC: moves the debate away from the environment vs the economy. It s a system concept the environment is interconnected. 4
5 What is special about natural capital? It forces a sustainability approach GDP? Wealth? 5
6 Natural Capital Committee Our footprint is accelerating 6
7 Natural Capital Committee Unsurprisingly, some NC is in decline 7
8 Natural Capital Committee Although there are success stories too 8
9 Natural Capital Committee Natural capital matters for the economy Erosion of natural capital can be costly. Think floods, air and water quality problems, limited green space availability with health implications, sub-optimal carbon sequestration, sub-optimal fisheries etc. Damage to homes and factories cuts growth, e.g, from flood damage; Completely degrading a natural asset (e.g, Canadian Cod) cuts growth; Degrading the environment increases systemic risks lower resilience of natural systems and hence economy to shocks (US dust bowl, pollinators, climate change). 9
10 and it matters for wellbeing It impacts on wellbeing (life satisfaction) too. Main factors influencing life satisfaction are:?? 10
11 studies suggest we particularly care about: Personal: physical health; mental health Economic: income; education; employment Social: family and community life; environment (evidence of strong links between health and the environment) 11
12 Natural Capital Committee Part 2 Natural Capital Committee Advice 12
13 Natural Capital Committee The Natural Capital Committee s advice We recommend that the Government endorses our proposal to develop a 25 year plan.. to be the first generation to improve our natural environment. 13
14 In effect, the NCC s advice is to: Take a natural capital approach to sustainability, and to measure, value and account for natural capital and use that as the basis to manage it better (improve decision making). Develop a 25 year plan based around the above building blocks, and invest in the environment where appropriate using innovative funding mechanisms. 14
15 Natural Capital Committee This is not about putting a price on nature to sell it off We need to take account of its full value. All decision making involves trade-offs and if we are ignorant of the true value of nature we all too easily place a value of zero on it. Hence it has historically been over-consumed and underinvested in. Its about valuation, not pricing. While recognising that the values are likely to be at the low end as we cannot robustly value everything. 15
16 Measurement and valuation can change behaviour Measurement, valuation and accounting tell us what is going on and whether it matters. UK National Accounts Defra and the ONS incorporating NC. Woodland: The combined annual value of carbon sequestration and recreation of UK woodland is 15 x greater than the annual timber value. Decisions made based on the value of timber alone are likely to be very different to those where the full range of benefits are of concern. 16
17 Has ignoring the value of NC worked before? Would the Aral Sea disaster have happened with good decision making frameworks? From the world s 4 th largest lake supporting 40k fishermen in the 60s to a polluted desert in 50 years. 17
18 NCC: think innovatively to improve the environment Wealth fund proportion of the revenues from the extraction of hydrocarbons could be set aside to invest in natural capital. Corporate natural capital accounting NCC piloted a framework with National Trust, United Utilities, Crown Estate, and Lafarge. Crowdfunding local projects. Plastic bag charge encourage good environmental use of the proceeds. Payment for Ecosystem Services. 18
19 Natural Capital Committee Part 3 Next Steps / Final Thought 19
20 The Government s policy We set up the Natural Capital Committee to put hard economic numbers on the value of our environment, and we will extend its life to at least the end of the next Parliament. We will work with it to develop a 25 Year Plan to restore the UK s biodiversity, and to ensure that both public and private investment in the environment is directed where we need it most. 20
21 Next steps The NCC chair and members to be appointed shortly, so that the NCC is in place by the turn of the year. NCC will work with Defra to write the 25 year environment plan. The plan will take a natural capital system approach. The plan will include empowering people, businesses and the third sector to protect and improve the environment, taking into account the use of data, tools, new technologies and techniques. 21
22 The UK is a world leader on NC ONS/Defra incorporating NC into the national accounts. Great progress. NCC framework for incorporating NC into corporate accounts ( CNCA ), and main global organisation developing knowledge and standards on corporate NC accounting is here in the UK the NC Coalition. We have perhaps the only NCC in the world, directly reporting into the centre of Gov t on NC the envy of the world. World Forum on NC. Wildlife Trusts, RSPB, WWF, National Trust all interested in NC. London s Mayor s office and Surrey etc publishing reports on natural capital. BIC Summit this week on NC. 22
23 Thank you 23
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