Why Michael Gove musn't regard our planet as just 'natural capital'

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The term ‘natural capital' was cited a number of times in the UK government’s 25-year environment plan. Yet measuring the value of our environmental resources in purely economic terms is both short sighted and dangerous, argues BEN KITE

The problem with this logic is that the environment as a whole is priceless - because nothing else can exist without it.

The government’s 25-year environment plan, published earlier this year, addresses many pressing environmental issues, including the need to protect UK 'natural assets'. 

The plan states that "the UK intends to use a ‘natural capital’ approach as a tool to help us make key choices and long-term decisions". 

However, while the plan invokes the phrase ‘natural capital’ no less than 90 times, it exhibits a problematic lack of transparency around what a ‘natural capital’ approach to environmental protection means in practice. 

Environment vs economy 

Furthermore, the plan fails to address widespread concerns regarding the viability of this approach in itself. 

Happily, the prime minister’s speech launching the plan acknowledged the false dichotomy between the environment and the economy, correctly rejecting what Tony Juniper called the "apparent choice between looking after nature on the one hand or growing our economy on the other".

However, while this is a positive step, it fails to recognise the relative importance of the environment as compared to the economy. 

The language of ‘capital’ and ‘assets’ as used to refer to nature, and modern ‘natural capital’ approaches to environmental protection, imply that it is possible to value natural phenomena in purely financial terms. 

Defining natural capital

This creates an entirely topsy-turvy approach in which the economy is viewed as more important than the environment, whereas in reality, the opposite is true.

So what is ‘natural capital’? The environment plan defines natural capital as "the sum of our ecosystems, species, freshwater, land, soils, minerals, our air and our seas... elements of nature that either directly or indirectly bring value to people and the country at large". 

The definition encompasses everything necessary for human life to exist and for it to be worth living. In fact, the phrase has been used by ecologists for many years. 

It originally referred to the whole, intrinsic, and frequently unmeasurable value of ecological features, and has been incredibly useful for ecologists – such as Ecological Planning and Research ( EPR) – working at the interface between environmental protection and infrastructure development.  

Measuring environmental assets

Because all development necessarily involves changing the environmental baseline of an area in some way, an ecologist’s job is to determine which environmental features have some significant ecological value that needs to be preserved through this change, and what opportunities there may be for improving the value of other features, in conjunction with the impending change in land use.

Contrary to popular opinion, development does not need to be harmful to the environment, and can be made to be beneficial.  

The problem with this logic is that the environment as a whole is priceless - because nothing else can exist without it.

Priorities are often established by placing ecological features on a sliding scale of perceived value, with ‘constant natural assets’ at the lower end of the value scale and ‘critical natural capital’ at the higher end of the value scale. 

The former typically refers to common or abundant things and things that can be re-created in short timescales, while the latter refers to rare assets, or those which simply cannot be replaced in a meaningful human lifespan – such as ancient woodland or grassland. 

Embedding this thinking into environmental assessment can be effective in ensuring that ecologists prioritise the retention of things that cannot be replaced if lost, allowing the environment to remain resilient to future changes, and reducing the likelihood that outcomes will be irreversible if decisions are later determined to have been misguided. 

Monetising nature

However, more recently we have seen the term ‘natural capital’ more selectively repurposed to refer solely to the monetary value of ‘ecosystem goods and services’– these being the ‘free’ things we get from nature that contribute to the economy. 

This could be cleaner air or water, food, pharmaceuticals, fibres, improved physical and mental health, pollination of crops, flood attenuation, carbon sequestration or energy. 

All of these things have a monetary value that, in theory, society would have to pay for if nature wasn’t already providing them for free. 

To give an example of this finance-based modern ‘natural capital’ approach, the environment plan states that, "[I]f we look at England’s woods and forests... as a national asset, using a natural capital approach, the value of the services they deliver is an estimated £2.3bn".

Economic vs ecological priorities

Proponents of measuring natural capital in financial terms make the persuasive argument that doing so will help ecological assets to have greater weight when compared against things with more obvious commercial or economic value. 

It will also help to influence decision-makers, who tend to place more importance on economic priorities than ecological or other intangible or unmeasurable priorities. 

Indeed, as the plan states: "When we give the environment its due regard as a natural asset – indeed a key contributor – to the overall economy, we will be more likely to give it the value it deserves to protect and enhance it."

However, quantifying nature in this manner – while it may have useful applications –is inherently problematic. The government’s use of the phrase ’natural capital’, in the tradition of valuing environmental characteristics in terms of economics, implies that the economy is the umbrella under which all other concerns must be considered. 

Unsound economic rationale

This wider valuation of natural habitats and other forms of ’natural capital’ in financial terms - e.g. the food value of land or the cost of cleaning the air if trees weren’t doing so - is ultimately looking at the world through the wrong end of the telescope. 

The problem with this logic, specifically, is that the environment as a whole is priceless, because nothing else - including the economy, development and infrastructure - can exist without it, so intellectually dismantling a priceless system into component parts that are then each assigned a finite value, and then selling those parts off, isn’t sound economic rationale.  

Furthermore, this can effectively enable the piecemeal degradation of the environment. For example, assets at the ‘critical natural capital’ end of the value spectrum, although they may be ‘expensive’ when quantified in purely financial terms, ultimately still become saleable when seen through this metric. 

They could therefore potentially be dispensed with, once a sufficiently lucrative alternative comes into view. 

Offsetting biodiversity

Breaking down the environment into a series of component parts in this way enables developers and local authorities to quantify the ‘value’ of a natural ‘asset’, and to compensate for the destruction of it with the creation of another environmental ‘asset’ deemed to be of equal value or higher. 

However, poorly planned habitat replacement or ‘biodiversity offsetting’ can often fail to compensate adequately for the destruction of ecologically rich habitats, particularly when seen in spatial and temporal context. 

Planting a new area of woodland of equivalent size to that being lost may not, for example, provide all the functions that the original habitat had in the landscape, such as - for example - providing a corridor for wildlife between two other areas of adjoining habitat, or helping to support a population of a more wide-ranging species that utilises the original area.  

It is also unlikely - however carefully the new habitat is replicated - that the compensatory habitat will be anything other than an artificial facsimile; lacking some of the species, diversity and complexity that the original habitat area contained.  

Mitigation hierarchy

Even when completed well, biodiversity offsetting can never accurately replace the value of the original ‘asset’. 

This is why the so-called ‘mitigation hierarchy’ of ecology dictates that ecologists should prioritise impact avoidance first, then mitigation (impact reduction), then compensation, in that order.  

Compensating for the destruction of habitats or ‘assets’ by determining their monetary value - even if this is measured indirectly using a biodiversity offsetting ‘metric’ - and replacing them with new ‘assets’ of equal ‘value’ should never therefore be a default option, but always a last resort. 

There is a danger that the modern take on the ‘natural capital’ approach, which allows for the financial valuation and comparison of ‘assets’, overlooks this crucial thinking. 

Intangible value of nature

In our finance-driven culture, this approach of assessing natural ‘assets’ in terms of financial worth may prove effective as a tool for persuading decision-makers of the environment’s value. 

However, diminishing the wonder and complexity of the natural world into a mere sum of pounds and pence, even when carried out using the proxy measures of biodiversity offsetting ‘metrics’, can never be a true reflection of its real value.  

We must therefore ensure that this approach is used with caution. One scientific paper refers to a laughable situation in which a project for works to a major culvert attempted to quantify the ‘value’ of the trout that would be lost, by going to the supermarket and ascertaining the going rate for a trout.

Clearly, this approach quantified only the food value of trout and failed to take into account its wider and less easily measured values, such as suppressing insect pests that breed in waterways; cycling nitrogen and phosphorous; sport, amenity and other angling related boosts to the economy; human health, and so on.

This is not to mention the trout’s inherent value as a part of our natural world, and its related intangible values, such as beauty

True hierarchy of importance

Additionally, we must recognise that the implication of this modern ‘natural capital’ approach – that the environment can be valued accurately in economic terms because it is a simply collection of commodities that sit within the free market economy – is false.  

This perception needs to be reversed to reveal the true hierarchy of importance; rather than accepting that environmental assets are simply ingredients in a cake - the economy - that can be added or removed - bought, sold or replaced - our perception of the environment needs to shift to seeing it as the kitchen itself in which the cake is being made.  

No environment, no economy. No kitchen, no cake.

This Author

Ben Kite is the managing director of ecological consultancy EPR, where he leads the team in providing survey and assessment services for planned infrastructure and housing developments. Ben is a chartered ecologist and experienced expert witness.