In October, environment secretary Liz Truss gave a speech at DEFRA in which she valued the total ‘natural capital’ of the UK, its soil, forests, rivers and wildlife, at £1.6tn. The government is keen to quantify the advantages the country obtains from nature, such as pollination of crops by bees, the carbon storage and amenity value of woodland, etc. This process treats the constituents of the environment as ‘natural capital’, with an associated price tag.

Liz Truss stated that she would be asking the NCC (Natural Capital Committee, an advisory body to the government) to work out practical guidelines for the valuation of nature, which could be used in real-life situations. The aim was to embed the process into all sorts of decisions made by businesses and members of the public, including the siting of housing developments and the purchasing of products.

The concept of Natural Capital


The concept of putting a value of natural resources is now increasingly prevalent in government circles. Professor Dieter Helm, the recently appointed chair of the NCC, has written an interesting book, entitled ‘Natural Capital: Valuing the Planet’ on this topic. In it he argues that conservation efforts in the past have not been successful as they might have been, because they have tended to be considered as ‘emotional’ and ‘romantic’, so have been often ignored when financial decisions have been made. Valuing natural assets is most easily done in the case of oil, mineral, or timber reserves, where there is a current price. However, more intangible benefits, such as trees absorbing pollutants, or the presence of a particular species of butterfly, are harder to quantify. Proponents of natural capital suggest that such attempts should be made, and then used by both government and businesses in making their decisions.

Is the Natural Capital Agenda worthwhile?


Critics of the natural capital concept believe that although it may have limited uses in comparing one action to another, the overall concept is flawed, since it is measuring things that are essentially immeasurable. One person may consider their local wood ‘priceless’, while another who has no interest in the natural world would consider that its only value was that of the timber within it, along with any verifiable removal of pollutants, etc. How do you really measure ‘amenity value’ or ‘shared social value’ or ‘health benefit’? One civil servant could come up with a monetary answer for the value of a particular wood, but by having different (and arguably just as reasonable) initial assumptions and numerical inputs, another could come up with an entirely different number. By using different assumptions and inputs, the figure of £1.6tn for all of the UK’s ‘natural capital’ could doubtless be made to come out as £0.6tn or £2.6tn, or virtually any enormous sum of money.

The suspicion must remain that ‘natural capital’ will be a useful tool for the government or local authorities to push forward projects they favour, while blocking those they do not. Small adjustments in the input values for nebulous and intangible concepts can always be made, in order to make sure the desired answer is produced for any given project. Thus a spurious sense of objectivity could be given to decisions taken for purely short-term political reasons.

However, ‘natural capital’ calculations are set to become more important for both the governmental and private sector, influencing the outcome of many projects. They will have an increasing bearing on planning decisions in the future, so they are not a factor that developers can afford to ignore. In the future, professional advice on ‘natural capital’ may well be required in order to advance projects through the planning system.



Useful References


DEFRA website, ‘Open environment speech by Elizabeth Truss’. 15th October 2015. https://www.gov.uk/government/speeches/open-environment-speech-by-elizabeth-truss
Helm, D. ‘Natural Capital: Valuing the Planet,’ 2015. Yale University Press: New Haven, CT. http://www.amazon.co.uk/Natural-Capital-Valuing-Dieter-Helm/dp/0300210981
Source citation: Edie website, ‘Britain’s forests, soil and rivers worth £1.6tn, says Environment Secretary’, 15th October 2015.

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