The Natural Capital Committee: putting natural capital at the heart of economic thinking
Defra’s Zoe Hodgson explains the need to properly value natural capital in order to allocate resources efficiently, and the role of the newly formed Natural Capital Committee.
“Too many of the benefits we derive from nature are not properly valued. The value of natural capital is not fully captured in the prices customers pay, in the operations of our markets or in the accounts of government or business. When nature is undervalued, bad choices can be made.
“We will put natural capital at the centre of economic thinking and at the heart of the way the way we measure economic progress nationally. We will include natural capital within the UK Environmental Accounts. We will establish an independent Natural Capital Committee to advise the Government on the state of natural capital in England.”
Natural Environment White Paper
One of the high profile announcements in the Natural Environment White Paper, The Natural Choice: Securing the Value of Nature, was the creation of the independent Natural Capital Committee. The Committee reports to the Economic Affairs Committee (chaired by the Chancellor of the Exchequer) and aims to provide independent expert advice on the state of English natural capital.
What is Natural Capital?
“Natural capital can be defined as the stock of our physical natural assets (such as soil, forests, water and biodiversity) which provide flows of services that benefit people (such as pollinating crops, natural hazard protection, climate regulation or the mental health benefits of a walk in the park). Natural capital is valuable to our economy. Some marketable products such as timber have a financial value that has been known for centuries. In other cases (eg the role of bees in pollinating crops), we are only just beginning to understand their financial value.”
Natural Environment White Paper
Natural capital is one of four ‘capitals’ which are typically recognised in economics; the others are produced capital (like cars), human capital (like skilled workers) and social capital (like strong relationships between neighbours). The final output of our economy and the wellbeing of society are based on all four capitals.
Examples of natural capital are all around us, from urban parks to fields in the countryside, from fish stocks to bees. For inhabitants and visitors, it might seem as if England’s natural capital, its parks, countryside and lakes, are beyond price, but in reality natural capital is not being properly valued. In economic terms, the market is failing to allocate resources efficiently. Decisions, like where to build housing or whether land is more valuable as a park or as a car park, are made without the full set of information and values. The Government is hoping to resolve these problems through a variety of approaches. One is the Ecosystem Markets Task Force, which advises business on the services which flow from our natural capital. Another is the Natural Capital Committee, which directly advises the Government.
What the Committee will do
The Natural Capital Committee’s remit, as defined in the white paper, is to:
- Provide advice on when, where and how natural assets are being used unsustainably
- Advise the Government on how it should prioritise action to protect and improve natural capital, so that public and private activity is focused where it will have greatest impact on improving wellbeing in our society
- Advise the Government on research priorities to improve future advice and decisions on protecting and enhancing natural capital
The Committee met for the first time on 23 May, and is currently agreeing how it will begin to tackle its remit.
Who is on the Committee?
The Chair of the Committee, Dieter Helm, was announced in March. Dieter is a highly influential economist, professor at the University of Oxford and a fellow of New College, Oxford. He has published widely on environmental and economic issues, and has just completed a study of climate change policy to be published by Yale University Press in autumn 2012. He has been involved in the development of environmental policy in Britain and Europe since the mid 1980s, and has served as Chairman of the Defra economic advisory panel for a number of years.
Following Dieter’s recruitment, Defra announced the first five members of the Committee. They are all highly skilled and influential experts, genuine leaders in their field with backgrounds ranging from economics to environmental policy, international politics and ecology.
- Ian Bateman: Ian is Director of the Centre for Social and Economic Research on the Global Environment (CSERGE) at the University of East Anglia. He served as Head of Economics for the UK National Ecosystem Assessment and is a Member of the Defra Science Advisory Council.
- Giles Atkinson: Giles is a Reader in Environmental Policy, and Head of Environmental Economics and Policy Cluster at the Geography and Environment Department of the London School of Economics & Political Science. He is also an associate of the Grantham Research Institute on Climate Change and the Environment. Giles was a contributing author on the National Ecosystem Assessment (NEA), and has also served as a consultant to the World Bank.
- Kerry ten Kate: Kerry is the Director of the Business and Biodiversity Offsets Programme (BBOP) at Forest Trends, and has worked for Kew and the United Nations. Kerry is also currently working on the Defra sponsored Valuing Nature Network, which is supporting the work of the Ecosystem Markets Task Force.
- Robin Smale: Robin is the Director and Founder of Vivid Economics Ltd. He has lead a diverse range of projects across the public and private sectors, including analysing the potential role for a Green Investment Bank in the UK.
- Rosemary Hails. Rosie has a MBE for services to Environmental Research, has served as lead author on diseases and pests section of the National Ecosystem Assessment, and is chair of the Natural Capital Initiative. Rosie is a section head at the NERC Centre for Ecology & Hydrology, and a senior research associate of Oxford University.
- Natural Capital Committee: full details and updates
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