Monday, 19 October 2015

Putting a cash price on the environmental services provided by nature

Last week's talk at the Science Festival by Kenton Rogers of Treeconomics looked at the issue of the 'extrinsic value' of trees:
Futures Forum: Sidmouth Arboretum @ Sidmouth Science Festival >>> "What have trees ever done for us?" >>> launch of valley-wide tree survey >>> Weds 14th October

Earlier in the year at the Arboretum's AGM, Chris Woodruff of the East Devon AONB considered the same notions:
Futures Forum: Sidmouth Arboretum: The Value of Trees

This is part of the bigger picture of putting a value on the natural world:
Futures Forum: Environmental Economics
Futures Forum: Valuing Nature >>> What does nature do for us? >>> "managing and valuing ecosystem services"
Futures Forum: The economics of marine conservation

This paper has just come out courtesy of the Arthur Rank Centre/Rural Information Network:

Monday, 19 October 2015 09:20

Just how much is nature worth?

Just how much is nature worth?
Back in 2011, the government published the UK's first National Ecosystem Assessment. Intended as a ground breaking report, it put a cash price on the environmental services provided by nature. While this concept of pricing ecosystem services and allowing them to be bought and sold has gained recognition, are we obscuring nature’s true value and putting the rural environment at even greater risk? Jessica Sellick investigates.

The UK National Ecosystem Assessment (NEA) arose from findings of the 2005 global Millennium Ecosystem Assessment which not only demonstrated the importance of ecosystem services to human well-being but also showed that at global scales many key services are being degraded and lost. In 2007 the House of Commons Environmental Audit recommended that the Government conduct an assessment so as to identify effective policy responses to ecosystem service degradation in the UK. The resultant UK National Ecosystem Assessment was published in 2011 to provide a comprehensive overview of the state of the natural environment and present a new way of estimating our national wealth. The assessment found 30% of aquatic and terrestrial habitat types and their constituent biodiversity to be declining, with others (including marine fisheries, wild species diversity and some services provided by soils) to be in a reduced or degraded state. The NEA provides figures for the health benefits of living close to green space (£300 per person per year), the value of coastal wetlands in buffering the effects of storms and flooding (£1.5 billion annually), estimates that if fresh water ecosystems in this country were better protected the additional aesthetic value arising from that protection would be valued at £700 million and that if grassland and sites of special scientific interest were better protected, their wildlife value would increase by £40 million.

The NEA informed ‘the Natural Choice: securing the value of nature’, the first White Paper on the natural environment in more than twenty years. The White Paper contains the government’s vision for the natural environment over the next 50 years and seeks to promote an integrated approach to managing the natural environment, particularly at the landscape scale.

In 2012 the Natural Capital Committee (NCC) was established to provide expert, independent advice to Government on the state of England's natural capital. In October 2015 the NCC published updated advice to Government on research priorities so that future policy development can be improved. The government’s response recommends that a 25-year Natural Capital Plan for a healthy natural economy be developed and that the government revises its own economic appraisal (i.e., HM Treasury’s Green Book). The plan will also aim to deliver a range of natural capital-related commitments including: putting in place a new ‘Blue Belt’ to protect precious marine habitats; planting an additional 11 million trees; tackling air and water pollution; and ensuring the value of Areas of Outstanding Natural Beauty (AONBs), National Parks, Sites of Special Scientific Interest (SSSIs) and other environmental designations are protected.

Putting a price (or value) on nature sounds simple – for if it has a price, doesn’t this make government, businesses and communities less likely to destroy it and more likely to protect and conserve it? And with the language of natural capital - ‘delivering greater value’, ‘social value’ and ‘multiple benefits’ - now influencing government and local authority decisions on how public money is invested, assets are managed and ultimately how developments shape our communities. Will this benefit nature or lead to its degradation? I offer four points.

Firstly, attaching a value to nature is not new. Natural resource economists have worked for more than fifty years to better understand the role of natural resources in the economy in order to develop sustainable methods of managing those resources. Across Europe, the Common Agricultural Policy (CAP) is a system of agricultural subsidies and programmes covering farming, environmental measures and rural development. CAP continues to be a major driver of land use and management decisions. New environmental schemes being implemented in 2015 and 2016 will provide funding for farmers and land managers to deliver benefits for wildlife, improve water quality and create woodland.

The Institute for European Environmental Policy - with experts from across Europe - has sought to provide guidance on results-based agri-environment schemes based upon remuneration(i.e., how to calculate appropriate payments to interact with good environmental results). The evidence suggests that results-based schemes are particularly advantageous where management measures are tailored to local, or farm-holding specific, conditions to produce optimal results for biodiversity.

The new CAP agri-environment schemes will be targeted so that farmers can help deliver environmental priorities specifically related to their local area. For example, if one area is home to rare farmland birds, farmers will be reimbursed for enhancing this habitat. If, in another area, agricultural pollution has affected local rivers, farmers will be able to apply for funding to reduce soil erosion and run-off from their fields.

Secondly if we are going to attach a price/value, how can we find meaningful, evidence based figures for delivering environmental benefits? At a basic level you could compare two land uses and see if they were generating (or losing) revenue, as these would already directly costed in pounds. For example: whether it is more viable for a farmer to graze sheep on his/her land or use this land for a country park for tourism and leisure.

You could therefore make an economic argument for having facilities for tourists rather than extensively rearing sheep. But you would also need to monetise the environmental impacts of each land use – calculating environmental degradation from having sheep in the field or putting in infrastructure for tourists.

The Environment Bank is a private company working to broker biodiversity compensation agreements for both developers and landowners. The bank calculates the environmental impact of development proposals using approved Government metrics. Their ecological experts then match a developer’s offset requirements with sites put forward by landowners and conservationists who have conservation credits available to sell in exchange for creating or enhancing habitats to generate biodiversity gain on their land.

The Natural Capital Project, a joint initiative between Stanford, the conservation group WWF and Nature Conservancy, is developing a software system to help people weigh up the value of land in terms of ecosystem services, alongside its value for building houses or other development.

Maps of an area are layered with information such as which parts of the landscape are best for filtering water, where the land is most valuable, where the most carbon can be stored and where the biodiversity is highest.

Such software and maps could help government and local authorities evaluate, for example, the cost of building on land that provides free water filtration if the development would then require the construction of a costly water plant.

Thinking about costing environmental protection in this way – and quality assurance – has been open to debate. In 2014 George Monbiot delivered a lecture on behalf of the Sheffield Political Economy Research Institute. Titled ‘the pricing of everything’, Monbiot discussed how we are effectively pushing the natural world even further into the system that is eating it alive - harnessing economic growth (with its commodification, financialisation, abstraction) as salvation to the natural world.

Thirdly, even if we are able to attach meaningful and evidence based price/value to nature it doesn’t mean we will necessarily conserve it. Professor Bill Adams at the University of Cambridge argues that assigning a quantitative value to nature does not automatically lead to the conservation of biodiversity, and may in fact contribute to species loss and conflict. This is because there will be differences in wealth and power, and trade-offs will need to be made for the ecosystem and those who rely on it.

Fourthly, there are often no markets for the degradation revealed for the NEA such as soil formation and nutrient cycling. And further, while we can develop payment schemes to create market-like structures, the value assigned to ecosystem services depend on market prices, which themselves are subject to change.

A series of debates have opened up around pricing nature and whether we are pushing nature into two artificial camps: conservation or economic development. Quantifying itself is difficult – who can forget the government plan to sell off the forests not only being abandoned due to public opposition but also how the trees had been greatly undervalued.

Jean-Christophe ViĆ©, of the International Union for Conservation of Nature, describes how ‘when you view nature in economic terms you make a fundamental change not just in the world around us, but in ourselves’. With further austerity to come and the countryside under pressure from competing demands perhaps valuing nature will be taken into account by policy and decision makers?

Will we no longer view the benefits we get from the natural world as being ‘free’? Will recognising the monetary value of ecosystem services lead to a more sustainable future? And/or should we abandon the current trajectory of language, software, maps, modelling and financial transactions?

Jessica is a researcher/project manager at Rose Regeneration; an economic development business working with communities, Government and business to help them achieve their full potential. She has undertaken a variety of projects on the natural environment and countryside management. These include: Preparing the Yorkshire Dales Local Food Map (celebrating the distinctiveness of the Dales landscape); considering how the Common Agricultural Policy (CAP) can be reformed to benefit rural communities; preparing successful bids for Local Nature Partnerships and supporting community groups in understanding natural resource management.
Jessica can be contacted by email jessica.sellick@roseregeneration.co.uk or telephone 01522 521211. Website: http://www.roseregeneration.co.uk/ Twitter: @RoseRegen

Just how much is nature worth?

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