The UK Infrastructure Bank offers a once-in-a-generation chance to value natural capital in practice | James Cameron
THIS ARTICLE WAS PUBLISHED ON BUSINESSGREEN.COM ON 8 JUNE 2021 AND ON POLLINATIONGROUP.COM ON 9 JUNE 2021.
The UK government has a once-in-a-generation opportunity to make good on its philosophical commitment to value nature and transform the way in which we measure national economic performance. Designed right, the new UK Infrastructure Bank could lay the foundations of systemic change, enabling us to properly account for both our use of natural resources and the effect of economic activity on the natural assets of the nation. In the recent high profile report by esteemed economist Professor Partha Dasgupta that was commissioned by the government – The Dasgupta Review on the Economics of Biodiversity – the key finding was clear: we must properly reflect the value of nature in our measures of economic success in order to counter the global decline in biodiversity.
Valuing our natural capital in practice is one of the ways that we can adopt a whole-of-government approach to meeting our net zero target and the ambitions set out in the 25 Year Environment Plan post-Brexit. It will further underpin ongoing work to fundamentally change the way we manage land in the UK. Through the Agriculture Act and forthcoming passage of the Environment Bill, we will develop an entirely new system for the use of public funds for public goods. In due course, significant benefits to our working landscapes will be delivered through the new Environmental Land Management scheme. The new frameworks will allow us to find ways to incentivise the restoration of woodlands and old growth forests, actions to revive soil health, the regeneration of peatlands, and the protection of our coastal habitats.
If we want to make a lasting durable connection between this philosophical imperative, the new law that is emerging, and the new institutions that we are creating to channel finance, we need to ensure that the realisation of nature’s value is manifested in real transactions. It must become part of the day-to-day business of financing the economy. That is not to say that we financialise or commoditise nature. We need not use that language nor have that purpose. Indeed, the natural extension of economic valuation of nature is legal recognition of its importance and enforcement of its protection. However, we must be able to value nature so that it is adequately protected from being devalued and in turn degraded as a result. This must be accomplished through law and we will further need institutions specifically designed to honour and respect this new commitment.
The UK Infrastructure Bank is poised to serve as one of these critical institutions to deliver the valuation of nature. The Bank is intended to deliver on the UK’s net zero commitment, operate within the Climate Change Act, and facilitate the deployment of public and private capital to modernise and improve the infrastructure of nation. It will play an essential role in the government’s job creation agenda to build back better post-Covid, catalysing economic opportunity across the nation.
Yet the Bank must not miss this chance to restore our degraded natural infrastructure, the diverse landscapes Britain depends upon for a breadth of environmental services. Much like hard or grey infrastructure, nature can provide flood mitigation, water quality improvement, and recreational and public health benefits. Even in an urban setting, green infrastructure is vital to cool our cities, manage stormwater, and deliver air quality benefits. We must recognise the value of services provided by nature and view our landscapes as infrastructure, providing a foundation for our local economies and communities. It follows therefore, that the National Infrastructure Bank must include in its operating mandate nature-based solutions and nature restoration as investment priorities.
Upholding this ambitious new program of valuing nature will require a vibrant ecosystem of supportive intermediaries, as well as the mobilisation of rapidly changing technology to monitor the services delivered by nature-based solutions. We will need a whole cadre of professionals and service providers to deliver real assistance to those who are going to be encouraged and enabled to use the land in a way that’s more consistent with the proper valuation of natural systems. We must develop necessary support systems to ensure that isolated and small-holder farmers are not left behind in the transition, and investments in natural capital serve to uphold rather than displace rural communities.
The development of new mechanisms to value and reward nature in the UK will require clear standards and data on the appropriate temporal and spatial scales to inform decision-making in the political, legal, and financial sectors. For example, nature can help provide near-term carbon sequestration in support of the reduction of industrial emissions. Yet the delivery of net zero targets will require very clear standards of what is meant by high-integrity claims to reductions delivered by nature. To build confidence in the value of nature-based solutions, robust data drawing on the latest technology in earth observation will be needed to underpin careful monitoring and verification programs. Further, it is important that we set early examples of what we mean by valuing natural capital and showcase how it applies across a range of ecosystems, from forests to seagrass meadows.
Building new, well-regulated market infrastructure around nature can help public funds unlock and crowd in the private sector, eager to make good on ambitious climate and nature commitments. Environmental NGOs and other civil society organisations can further engage in the delivery of natural capital commitments with increased access to capital resources.
Across Britain, a population having experienced lengthy lockdown deeply senses the value of nature to their health and wellbeing. These popular forces will need to be mobilised and organised around new ways to value the world that they live in, enabling Britain’s citizens to take ownership of the future of land management.
In so doing, we will reconnect with the natural systems that we were always a part of and deliver a more resilient future for both landscapes and communities.
