Windermere, Lake District

Dr Mark Barnett, principal consultant at APEM, offers an update on natural capital accounting referencing the environmental consultancy's recent work with Natural England to establish baseline quantity and quality of natural capital in coastal and marine areas, as well as its use of remote-sensing to assess potential changes brought about by development.

This article was first written for and shared on Environment Analyst, a market intelligence service for the environmental services sector.


The recent Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services Report (ISPBES) makes it abundantly clear that both the rate of species extinctions and the global decline of the natural world are accelerating at an unprecedented rate.

It also suggested that despite attempts to preserve nature, in order to meet the UN’s Sustainability Goals for 2030, there would have to be a ‘transformative change’.

The onus falls on everyone from planners, developers and business owners, through to governments and regulators – whether this be through building natural capital approaches into decision making or through taking simple actions to protect natural capital.

One thing is certain, the time for apathy is over.

A 2018 report commissioned by The Times estimated that England is losing an area the size of Glasgow every year due to development on greenfield sites. It is not just greenfield sites. The Environment Agency reported that a mere 16% of English rivers were at Good Ecological Status under the Water Framework Directive.

APEM has witnessed first-hand the poor condition of UK rivers through the water quality monitoring and studies it has conducted nationally, including on the Manchester Ship canal.

It’s also been evident in surveys looking to identify high risk sources of pollution in river catchments across England and Wales.

As urban expansion and other infrastructure projects continue to consume green-field and freshwater habitats at an alarming and unsustainable rate, more consideration must be given to the conservation and restoration of our natural resources.

The UK government makes this the objective of its 25-year Environment Plan which states that this generation “[will be] the first to leave the natural environment in a better state than it found it”.

For this to happen, there needs to be continuous, rigorous headway made in building carbon-neutral, sustainable and green developments of all kinds. The key lies in our approach to the issue of ‘natural capital’, when considering every new project.

Current issues

This term has been adopted as a broad-brush virtue signal among those either taking (or purporting to take) a greener approach to infrastructure and housing developments generally. Although not everyone understands how this evaluation translates to real-life projects.

The concept of natural capital has come under criticism from some, as being too vague and ethereal to carry much weight in an argument based on hard-nosed commercial realism. Nothing could be further from the case.

Put simply, natural capital refers to the measurable stock of a whole range of renewable and non-renewable resources presently available in the natural world. This includes a number of natural attributes such as plants, animals, air quality, water quality and composition of soils for example. All of these elements combine to offer a number of benefits to the population. Whether these benefits are social, economic, environmental or even spiritual; natural capital aims to attribute economic value to them in qualitative or quantitative terms.

APEM, alongside Natural England, has been testing ‘indicators’ to create baselines showing the quantity and quality of natural capital within coastal and marine areas.

The environmental consultancy now has the ability to accurately measure and track changes in natural capital through a remote sensing service and dedicated field teams which helps understand potential impacts of projects on the natural environment.

Natural capital is underpinned by ‘Biodiversity Net Gain’; the idea that developments should improve and enhance, rather than damage and destroy the natural world. This term has also come under fire for attempting to attach material, monetary values to natural commodities. Many claim it’s difficult, if not impossible, to attribute a finite value to a magnificent landscape view, a sunset, a trout stream, a peat wetland bird habitat, or a coastal walk for example.

The concerns around this issue are understandable and plausible. However, with no current alternative currency available – what other options are open to us? Are we to say ancient woodland has no value to society? Can we say, hand on heart, that a puffin colony or crested newt habitat is of no importance to this, or future generations?

What price do we put on the song of a skylark?

Admittedly, it seems derisory to value natural priceless phenomena in terms of ‘stocks’ and ‘assets’. The danger remains that without a definitive unit of measurement or value system, there is a risk of devaluing our living planet and plundering nature completely, putting countless species in irreversible danger.

Having established that the notion of attaching value to natural capital is rooted in logic and is a compelling force for good in the preservation of nature, three problems remain:

  • The currency in which assets will be valued;
  • The ownership of the asset and who pays; and
  • Measurement of the asset’s growth in value.

Positive developments

The Natural Capital Committee was set up in 2012 to advise the UK government. In 2017 they produced a ‘How to Do It Guide’ which offers practical guidance on implementing an approach to natural capital in new projects. These guidelines alone have urged industry decision makers to consider biodiversity net gain in their projects. Without any strong regulatory pressure, progress has been relatively slow and sporadic.

Fortunately, the subject is reaching government consciousness. Philip Hammond, in his Spring statement, cited plans in the forthcoming Environment Bill to ‘mandate biodiversity’, effectively introducing mechanisms for penalising developers that fail to take natural capital into consideration.

On a fundamental level, the bill suggests that projects should ensure wildlife habitats are improved and left in an evidently better state than they were pre-development.

The new plans would strongly encourage green improvements, but in the rare circumstances where they are not possible, a levy would have to be paid for habitat creation, restoration or improvement elsewhere; similar to current carbon off-setting.

The suggestion of a levy has brought fresh concerns that large businesses who can afford to pay will simply continue to deliver projects which damage the natural world without investing in infrastructure and technologies which benefit it.

The Natural Capital Committee warned that the creation of a central tariff system could prove to be ‘bureaucratic, costly and distortionary’, suggesting that efforts should be focused on ‘the design of simple principles’.

[Ed. Incidentally the NCC has this week issued its report entitled The Natural Capital Committee’s advice on an environmental baseline census of natural capital stocks: an essential foundation for the government’s 25 Year Environment Plan]

Assessing value

Natural capital provides a holistic view of protecting and improving the living planet through capital ‘stocks’ supporting and supplying ecosystem services and benefits to society. To put the issue into perspective, in the ‘Natural Capital Accounts for public green space in London’ report, the total economic value of services provided by London’s public parks and green spaces was put at £91bn.

The metrics which decide this figure could fill another article entirely. They include the benefits, from how parks positively contribute towards temperature regulation through to the positive effects they have on public mental health.

It’s estimated that Londoners avoid £950m per year in health costs thanks to public parks. This total avoided cost is made up of £580m per year due to people being in better physical health, and £370m per year due to improved mental health.

The argument goes that public parks not only create opportunities for people to exercise, socialise, relax and enjoy being part of their community, but they also play a part in reducing the likelihood of people developing diseases linked to a lack of exercise such as heart disease and diabetes.

The vast number of potential costs and benefits to any project make it difficult to attribute a definitive figure, but fortunately the methods for measurement and valuation are constantly improving.

Rounded approach

A natural capital approach will help make headway in delivering the recommendations of the IPBES report which uncovered alarming statistics. For example, three-quarters of the land-based environment and around 66% of the marine world were found to have already been altered by human actions.

It’s clear that action needs to be taken and natural capital quantification provides one tangible route to achieve sustainability. It provides a line of sight between the natural world and what we all gain from it.  All forms of economic activity are inherently dependent on the living planet in some way.  To ignore this fact in the face of current scientific evidence would be catastrophically short-sighted.

At the heart of natural capital and, APEM’s own approach, lies stakeholder engagement and the tide is beginning to turn in how we value green projects. As natural capital becomes a policy issue, businesses and landowners who either own, benefit from or directly impact natural capital will be forced to undergo a steep learning curve in relation to what they can practically contribute. This will help them not only make better and more sustainable business decisions but will also help with areas such as partnership working.

Hopefully, before regulation forces businesses into action, decision-makers will begin to ask questions about how their organisation is affecting the environment and what adverse effects their actions will have in the future.

Ultimately, businesses will be compelled to realise that their future success and survival relies on the health of the natural world to the same degree as it does on profits and margins.

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APEM are a global environmental consultancy providing independent advice and guidance to support government and environmental regulatory guidelines.