The GLOBE Natural Capital Initiative

The 2010 International Year of Biodiversity culminated in the successful conference of the UN Convention on Biological Diversity in Nagoya. Keen to keep up international commitment, the UN has declared 2011 the start of a decade dedicated to biodiversity. So what’s next for biodiversity?

One idea, much discussed at Nagoya, is the need to improve valuation of natural capital in decision-making.

The value of natural capital

Natural capital refers the economic and social value derived from the services ecosystems provide. For example, coastal wetlands provide a number of environmental services from food production and flood prevention to habitat for rare species to recreation. Part of the value of natural capital could the cost to the economy, if that service no longer existed naturally, for example if lost wetlands have to be replaced by manmade flood defences.

There are four categories of ecosystems service, as outlined by the Millennium Ecosystem Assessment:

• Provisioning services – from products such as fuel or food;
• Regulating services – the benefits of natural processes such as water purification or air quality;
• Cultural services – non-material benefits from the natural environment such as education and well-being;
• Supporting services – functions that are necessary for the production of other ecosystem services, such as soil formation and nutrient cycling.

It is estimated that in 2007 the total value of natural resources to the UK economy was over £15bn. Despite this, the Millennium Ecosystem Assessment and The Economics of Ecosystems and Biodiversity report, published in 2010, both argue that we are in danger of not recognising the value of these services to economic prosperity and societal wellbeing and as such our global ecosystems are in decline.

Our current systems often fail to adequately capture natural value in policy-making processes. For example, present decisions based on a cost benefit analysis might value the monetary benefit of felled timber from forests, but it do not so frequently capture the cost of depleting important ecosystem services, such as carbon sequestration from the atmosphere or erosion control.

A global solution

The Global Legislators Organisation (GLOBE) Natural Capital Initiative launched at Nagoya aims to address this problem.

GLOBE believes that the solution to better ecosystem service valuation is a three pronged approach:

• Improved scientific assessment of trends of natural capital;
• Better understanding of economic valuation of natural capital;
• Greater political leadership.

Although the latter depends on improved scientific evidence and economic analysis, GLOBE believes more can be done now to use the pre-existing tools and techniques available to policy makers. GLOBE, speaking to the world’s governments and politicians in Nagoya, published a Natural Capital Action Plan to enhance political leadership from international governments.

The Action Plan sets out a clear set of policy asks that aim to ‘set the world on a path to a more sustainable future’. These asks include:

• A dedicated ministerial position within the main financial department with responsibility for overseeing the country’s natural wealth
• An interministerial committee overseeing natural capital with an accompanying independent advisory body.
• A national natural capital account that measures the countries natural wealth and an accompanying report to outline how policy decisions have valued ecosystems services.
• Departmental inventories of natural capital related to their policy areas and an increased role for national audit offices to oversee the efficient and effective use of natural resources by government departments.
• Agreed metrics on ecosystem services for all major investment decisions and governments should encourage uptake of this methodology by business and local authorities.

Best practice

GLOBE is also keen to emphasise the economic and social benefits of protecting ecosystem services.

The UN estimates that the battle to avert ecosystem collapse could generate a $5 trillion industry. GLOBE highlights a number of case studies in an accompanying report that demonstrates how environmental management can be integrated with major public policy areas, such as economic growth, job creation, energy and food security, and natural resource management.

For example, rezoning of the Australian Great Barrier reef in 2004 to prevent resource extraction in one third of the park has led to an abundance in fish populations, coral recovery and a decline in invasive species across the whole of the reef.  This has resulted in subsequent economic benefits through increased tourism and an improved fishing industry.

In Denmark, the restoration of drained farm land back to natural park in the Skjern Valley region has led to economic and social benefits through increased fish stock levels, a return in bird populations, improved water quality and increased outdoor recreation.  The total cost of the restoration programme, much of which was funded by the Danish Government, was approximately $42 million, while the total benefits have been estimated at $83 million.

The Mexican government is leading the way in adopting a large scale payment for ecosystem services (PES) programme. The programme sees large scale non-agricultural water users pay for hydrological services; the money is then invested in forest owners to incentivise the protection of natural forests. In 2008, the programme paid close to $8.4 million to landowners, individuals, and communities, protecting around 324,000 ha of land. There is also evidence to suggest that payments have led to poverty alleviation in forest regions.

What is the UK doing about it?

Protecting the environment and enhancing biodiversity is one of Defra’s top three priorities, as outlined in the Department’s Structural Reform Plan. 

A key commitment under this priority is the publication of a White Paper on the natural environment by spring 2011. This paper will set out an ambitious statement outlining the government’s vision for the natural environment, backed up with practical action to deliver that ambition. It represents an opportunity to change the way we think about and manage the natural environment, seeing it as a system and valuing the services it gives us.

Defra is also already working to produce an analysis of the changing state of the UK’s natural asset base (the National Ecosystems Assessment). The assessment (expected in the Spring of 2011) will provide the first comprehensive analysis of the UK’s natural environment in terms of the benefits it provides to society and continuing economic prosperity

In addition, Defra’s Natural Value Programme is working with policy makers across government and businesses to increase uptake and improve tools and techniques to value ecosystem services.

Natural capital – what can you do?

For advice on taking an ecosystem services approach: What nature can do for you: a practical introduction to making the most of natural services, assets and resources in policy and decision making provides a guide for policy makers on an ecosystems approach.

Further reading

• GLOBE Natural Capital Action Plan: report (pdf)
• GLOBE Natural Capital Action Plan: case studies (pdf)
• Ecosystems services: information from Defra
• UK National Ecosystem Assessment
• Millennium Ecosystem Assessment