RICS p r op e rt y JOU RN A L
upfront Environ m e nt
Property professionals should all be invested in natural capital and ecosystem service valuation. Morgan Taylor and Lisa Lange explain why
rom an environmentalist’s perspective, last year’s Autumn Statement was notable for the allocation of £15m in funding for natural flood prevention measures. While this was a rather small gesture, it could, with optimism, be seen as a turning point in the political rhetoric. This money is a metaphorical deposit in the ‘Bank of Natural Capital’, and will go towards ecosystem service provision, something that has not been explicitly allowed for in previous statements. Ecosystem services are the beneficial outcomes of functioning ecosystems – biological communities and their chemical and physical environments, such as rivers, wetlands, woodlands or coastlines – and can be divided into four key categories. bb Cultural: benefits for people’s health, wellbeing and cognitive development as well as the aesthetic value of experiencing nature. bb Provision: products obtained from ecosystems, such as food, fuel, pharmaceuticals or fresh water. bb Support: services such as nutrient cycling, photosynthesis and soil creation. bb Regulation: processes such as carbon cycling, air quality control, water regulation, pollination, natural hazard reduction, pest regulation and, most important now, climate change regulation. These are the manifestation of what is termed natural capital, the stock of renewable and non-renewable resources from which we derive value. Inherently, all financial capital relies on its natural cousin, with the flow of associated services providing us with the water we drink, the food we eat and the air we breathe. But few have heard of the concept, and it has been rare for valuation of natural capital to feature in large-scale economic decision-making, particularly in the planning process. Our indentured ecosystems are essential to our ability to combat climate change and sustain our comfortable 21st-century existence.
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Valuation assessments It is becoming increasingly important for us to consider more than immediate financial returns when making development decisions. One major issue, however, is determining who should foot the bill for ecosystem service provision, because the services are in effect public goods that may benefit many even though no-one in particular is obliged to pay. As an example, this issue is evident when considering major catchment management for rivers that cross national borders: impacts to the riverine ecosystem upstream in one administration could have unforeseen consequences for provisioning downstream in another. Valuing the services at least provides some financial context for management in the wider sense of the service, or in effect, the service provider – the ecosystem itself. Ecosystem service valuation is a relatively new concept, and one steeped in controversy. The idea of placing a value on nature, while useful, poses many risks, and paves the way for all natural capital decisions to be made from a purely financial perspective. Ecosystem service valuation should not only dwell on financial output, but also on often unquantifiable elements such as aesthetic or even spiritual value. Implicitly, the valuation process runs the risk of making a trade-off between a development and ecosystem conservation, particularly where assessment may prioritise a measure such as habitat destruction. It is therefore best handled with care. Ecosystem service valuation still theoretically allows for non-monetised elements to be effectively traded through the provision of compensatory service provision, whereby damage done on site is redressed by measures elsewhere. The government’s biodiversity offsetting pilots of 2012–14 (http://bit.ly/2h3Ufig) and the “no net loss” calculator being used by High Speed 2 (http://bit.ly/1PleqB3) are variations on this approach. There are a variety of tools available for ecosystem valuation, alongside a bewildering amount of literature. What they have in common is that most make a distinction between direct services Image © iStock
such as fish, timber, water and so on and indirect ones including water quality regulation and carbon cycling. Tools for ecosystem valuation can be broadly categorised according to whether they are calculators for payment of ecosystem services or ecosystem service mapping. The former are market-based tools that aim to foster behavioural change; there is great potential, for instance, in creating markets for provisioning services such as nutrient cycles and pollination. However, these direct, incentive-based mechanisms only account for a single service at a time, rather than for the complexity of the entire system. Ecosystem service mapping on the other hand aims to identify and visualise different ecosystem services through spatial analysis using GIS technology. Such mapping exercises can then be used as a basis for decision-making and help identify opportunities for ecosystem service interventions, such as woodland restoration, flood plain management or urban green infrastructure creation. Most ecosystem service mapping tools concentrate on landscape-scale service provision, and can be used to help inform policy, legislation and nationwide approaches to ecosystem management. However, ecosystem service valuation also has potential value for much smaller-scale placemaking. If one can compare the baseline service provision of a site with that of a proposed scheme, it is possible to devise mitigatory or compensatory actions, and – of greater importance to a developer – identify where financial gain can be made from environmental benefits. What is important when applying any valuation model, sometimes referred to as taking the ecosystems approach, is recognising how all businesses depend