DEFRA drives wider adoption of natural capital techniques

Thursday, January 30, 2020

The government has published a series of guidance, tools, datasets and case studies intended to help put an economic value on the natural environment.

The ‘Enabling a Natural Capital Approach’ (ENCA) package was published today, to sit alongside the Treasury’s ‘Green Book’ on the financial appraisal of policies and projects. It should encourage the wider adoption of natural capital techniques across government, though is also suitable for use across the broader public and private sectors.

The central guidance document states that, with a better understanding of the value of natural services such as flood risk abatement, recreation and food, “Decision makers can more easily consider how investment in environmental assets contributes to wider societal aims and trade-offs which affect the quantity or quality of assets. The framework also helps to better understand how policies can have unintended effects on the environment and result in environmental externalities.”

Environment minister Rebecca Pow said the guidance “helps to put the natural environment at the heart of decision-making” and meets a commitment made in the 25-Year Environment Plan. It also responds to a recommendation made a year ago by the Natural Capital Committee.

“This comes at a critical time where the protection of our environment is ever-more important in combating climate change and reversing habitat loss,” she added.

The suite will help support the rollout of the ‘nature recovery network’ envisioned in the Environment Bill.

The natural capital approach has become more commonly used over the past decade, with some organisations such as the Forest Enterprise England conducting their own assessments and making management decisions accordingly. The Office for National Statistics puts the overall value of England’s woodlands at £2.3bn per year, only 10% of which is from timber, the rest coming benefits that would not be considered through a purely financial analysis.

The Crown Estate has piloted the corporate natural capital accounting framework at the Windsor estate, recording the benefits of carbon sequestration, air filtration, amenity and recreation to itself and the wider community.

Matthew Farrow, executive director of the Environmental Industries Commission said, “ENCA will make a huge difference to the ability of businesses and their advisers to assess how their actions and investment decisions can be aligned with protecting and enhancing the natural environment on which we all rely. EIC is delighted to have provided member case studies for ENCA and looks forward to promoting it.”

One among these is a description of how Anglian Water sought to reduce levels of ammonia in the outfall from a sewage treatment works. Rather than taking a more technological approach, it paid Norfolk Rivers Trust to build four attenuation ponds, planted with native aquatics. The vegetation and sunlight helped remove some of the ammonia, delivering a lowest-cost, least-carbon abatement system that was also beneficial to wildlife.

Another case study concerns the management of flooding and coastal erosion around the Medway estuary in Kent, where natural capital was used alongside strategic environmental assessment and a Habitats Regulations assessment. “Its inclusion permitted a wider-looking, sustainability-based assessment, covering economic and social impacts as well as purely environmental ones,” it says.

A further case study explains that a 393-home development in Bicester delivers natural capital benefits worth over £300,000 per year at the very least from the use of sustainable urban drainage systems. It also helped deliver a target of 40% net biodiversity gain.

Professor Ian J. Bateman, director of the Land, Environment, Economics and Policy Institute at the University of Exeter said welcomed how previously fragmented guidance on natural capital had been brought together. “There is a clear need for central government leadership on this. I and other academic colleagues believe DEFRA’s ENCA will provide what is needed.

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