Sustaining and Enhancing Natural Capital and Ecosystem Services
Sustaining and Enhancing Natural Capital and Ecosystem Services Natural capital refers to the stock of natural resources, including water, soils, forests and seas, that provide ecosystem services of benefit to people. These ecosystem services include the provision of food, water, timber and fibre; the regulation of climate and the management of flood risk; opportunities for recreation, tourism and cultural development; and underlying functions such as soil formation and nutrient cycling.
Maintaining natural capital and the flow of ecosystem services - and restoring these where they have been lost or degraded - is essential for human well-being and prosperity. Biodiversity is a significant part of natural capital and provides the basis for many ecosystem services. Critically, biodiversity continues to be lost at an unprecedented rate with corresponding impacts on ecosystem services. The 2005 Millennium Ecosystem Assessment showed that the majority of ecosystem services have been degraded. In 2010, the Economics of Ecosystems & Biodiversity (TEEB) report suggested that many services have been degraded to such an extent that they are nearing critical thresholds or tipping points. In the UK, the National Ecosystem Assessment, completed in 2011, concluded that around 30% of services are currently declining and many others are in a reduced or degraded state. Furthermore, the Lawton Report, Making Space for Nature, found that nature in England is highly fragmented and unable to respond effectively to increasing pressures such as climate and demographic change. Protecting and enhancing natural capital and ecosystem services is now an urgent priority, but there are also opportunities - for businesses and the UK economy - to derive significant economic benefits from actively improving or enhancing natural capital. The Government’s 2011 Natural Environment White Paper emphasised the need to put the value of nature at the heart of decision-making.
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“The natural world, its biodiversity and its ecosystems are critically important to our well-being and economic prosperity, but are consistently undervalued in conventional economic analyses and decision making” The Natural Choice: Securing the Value of Nature (2011)
In practice, protecting and enhancing natural capital and ecosystem services will include promoting three mechanisms in which URS has significant expertise: •• The ecosystems approach to decision-making •• Ecosystem markets for trading ecosystem services •• Natural capital accounting - incorporating natural capital and ecosystem services within corporate and national accounts. These mechanisms present both opportunities and challenges for businesses. On the one hand they may provide a chance to identify new sources of revenue (e.g. receiving payments for improved land management) while on the other they help understand the significance of environmental and social risks associated with policy and investment decisions. Ultimately, they can assist organisations to recognise and respond to the wider social value derived from natural capital and ecosystem services. This brochure introduces the three mechanisms outlined above and URS’ relevant experience and expertise. Our aim is to help clients identify and manage their risks, report on progress and to capitalise on new opportunities to realise both the financial and wider benefits of natural capital and ecosystem services.
NATURAL CAPITAL AND ECOSYSTEM SERVICES
Our expertise in natural capital and ecosystem services ranges from conducting ecological surveys to developing new ecosystem markets. We work with national and local government, businesses and communities so that natural capital and ecosystem services are reflected in policy, planning and investment decisions. Our services include: •• Ecosystem services assessment •• Stakeholder engagement using an ecosystems approach •• Designing Payments for Ecosystem Services (PES) schemes •• Developing frameworks for natural capital accounting •• Policy research, analysis and evaluation •• Biodiversity offsetting •• Ecosystem modelling and mapping •• Habitat creation and restoration •• Green infrastructure planning •• Environmental Impact Assessment •• Ecological management plans •• Ecological surveys
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An Ecosystems Approach to Assessment and Decision-Making Maintaining and restoring ecosystem services is essential for human well-being and sustainable economic growth. The ecosystems approach can be incorporated within decision-making and decision-support processes, including Environmental Impact Assessment, to take account of the values of ecosystem services. The value of natural capital and ecosystem services should, ideally, be reflected in a wide range of decision-making contexts including corporate decision-making and supply chain management; estate management; cost-benefit analysis for infrastructure investment; and the production of spatial and land use plans.
“An ecosystems approach provides a framework for looking at whole ecosystems in decision making, and for valuing the ecosystem services they provide, to ensure that society can maintain a healthy and resilient natural environment now and for future generations” Defra (2013) Guidance for policy and decision makers on using an ecosystems approach and valuing ecosystem services” [online] at https://www.gov.uk/ecosystems-services”
The degradation of the natural environment and its threat to human well-being, has prompted growing action from policy-makers, businesses and communities to protect and enhance natural capital and ecosystem services. Ecosystem service values can also be incorporated within 4
decision support tools including Environmental Impact Assessment (EIA), Strategic Environmental Assessment (SEA) and Sustainability Appraisal (SA). To facilitate the integration of ecosystem services considerations into our impact assessments, URS has developed an in-house tool: ESIVI (Ecosystem Services: Identification, Valuation and Integration). The ESIVI tool provides a fully integrated framework for: •• Identifying relevant ecosystem services •• Assessing the nature and significance of impacts and dependencies of a project on these services •• Identifying opportunities for the project to enhance ecosystem service delivery •• Developing appropriate mitigation measures The tool is flexible and can apply to any type of project regardless of size or location. It also facilitates engagement with other technical specialists and provides a consistent way of evaluating impacts across a range of project options.
PROJECT EXPERIENCE EU Biodiversity Strategy URS is supporting the European Commission in the preparation of both the mid-term and final reports on progress made in implementing the EU 2020 Biodiversity Strategy and the 5th National Reports to the Convention on Biological Diversity (CBD). In particular, URS is developing a framework with partners to monitor progress towards achieving the targets within the Biodiversity Strategy and the international Aichi targets.
Transport infrastructure project, UK URS developed and tested a methodology for assessing and valuing the impacts on ecosystem services from large, linear transport infrastructure. The aim was to compare the findings to a conventional EIA approach, and to generate recommendations for mainstreaming of ecosystem service considerations into the UK Department of Transport’s webbased Transport Appraisal Guidance (webTAG).
Onshore and offshore pipeline, Europe URS is conducting the ESIAs (to IFC Performance Standards) for the offshore section of a gas pipeline from Russia to Bulgaria through the Turkish Exclusive Economic Zone (EEZ) in the Black Sea. Separate ESIAs are being
conducted for each of the landfall sites in Russia and Bulgaria (including the nearshore environments) and for the marine section of the pipeline through the Turkish EEZ. Ecosystem services assessments are being undertaken (using ESIVI) as an integral part of the ESIAs and consider impacts on terrestrial, coastal and marine ecosystem services and their beneficiaries.
Using the ecosystems approach in local planning URS was commissioned to explore how the ecosystems approach could be used to facilitate public dialogue on land use within the Lee Valley Regional Park in the east of England. The research included focus groups with local residents at which they were asked to consider the ecosystem services provided by two sites. Feedback from participants indicated a widespread feeling that the ecosystems approach helped them to think differently about the sites.
Developing guidance on ecosystem services assessment URS is supporting a major oil & gas company in the development of online learning materials and a guidance manual for incorporating ecosystem services within impact assessment. In particular, URS is providing case studies and best practice examples to illustrate the practical implementation of an ecosystems approach within impact assessment.
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Reflecting Value through Ecosystem Markets As our capacity to value ecosystem services improves, a logical next step is to develop ecosystem markets which allow these values to be reflected through incentives and price signals.
Ecosystem markets can take several forms, including: •• Trading systems in which damage in one place is compensated through improvements elsewhere (e.g. cap-and-trade markets for pollution reduction and markets for trading biodiversity offset credits) •• Certification schemes (e.g. eco-labels) •• Payments for ecosystem services (PES) schemes URS is developing particular expertise in biodiversity offsetting and the development of PES schemes.
BIODIVERSITY OFFSETTING While good quality developments may reflect biodiversity within their design, they may result in some biodiversity loss. One way to account for this loss is through biodiversity offsetting whereby a project developer secures compensatory habitat elsewhere. A market-based approach to biodiversity offsetting involves landowners registering sites of biodiversity value to provide offset ‘credits’ which project developers then purchase to offset impacts. URS has significant ecological expertise 6
and can advise both buyers and sellers of biodiversity offset credits. We can assist project developers to calculate their offset requirements and landowners to identify appropriate offset sites and determine their value in terms of offset credits. Our ecologists can also assist in the long-term management and monitoring of offset sites.
PAYMENTS FOR ECOSYSTEM SERVICES Payments for ecosystem services (PES) schemes involve payments to land or natural resource managers in exchange for ecosystem services. Payments are made by the beneficiaries of the ecosystem services, for example, communities and businesses or governments acting on their behalf. Importantly, payments are made for services over-and-above those that would otherwise be provided, therefore ensuring they are ‘additional’. URS has significant experience in relation to PES. We advise both land and natural resource managers who are interested in generating and selling additional ecosystem services, as well as buyers (including government, businesses and communities), who are interested in purchasing ecosystem services.
PROJECT EXPERIENCE Research and guidance on PES URS explored the scope for developing PES schemes in England on behalf of the UK Department for Environment, Food and Rural Affairs (Defra). We identified opportunities in relation to biodiversity, carbon sequestration, cultural services, flood risk management, water quality and water resources. Following our research, we were commissioned to prepare Defra’s Best Practice Guide on establishing PES schemes and undertook further research on the potential role of PES in climate change adaptation.
Developing PES schemes in practice URS was a partner in two Defra-funded PES pilot projects; one to develop a peatland carbon code for encouraging corporate investment in peatland restoration and a second on the potential to incorporate PES within visitor payback schemes for areas providing valuable ecosystem services such as National Parks. We also worked with partners to investigate the scope for developing place-based PES in the English uplands on behalf of Defra and Natural England.
Supporting government policy-making URS provided evidence, analysis and appraisal in support of the Independent Panel on Forestry established to advise the government on the future direction of forestry and woodland policy in England. This included assessing the value of ecosystem services provided by woodlands under various management scenarios, and investigating new forms of finance to encourage investment in forestry. We also worked with partners to support the work of the Ecosystem Markets Task Force through research in relation to PES and other specific areas of potential interest to the Task Force.
Developing the evidence base on PES beneficiaries in England URS has been commissioned by Defra to investigate how wider participation in PES might be encouraged, with a particular focus on two groups of potential beneficiaries: business sectors with dependencies on natural capital/ ecosystem services; and local authorities who might be in a position to procure ecosystem services on behalf of local residents and businesses. In particular, the project involves an in-depth assessment of the scope for engaging three key business sectors in PES on the basis of interviews with key corporate figures.
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Natural Capital Accounting With our environmental, social and economic expertise, URS is well placed to assist both governments and businesses to fully reflect the value of natural capital assets and ecosystem service flows in their accounting systems. Natural capital accounting is gaining increasing attention. The Parties to the Convention on Biological Diversity, for example, have adopted a target that “... by 2020 at the latest, biodiversity values... are being incorporated into national accounting, as appropriate, and reporting systems” (Aichi Target 2), while the EU Biodiversity Strategy requires EU member states to “... map and assess the state of ecosystems and their services in their national territory by 2014, assess the economic value of such services, and promote the integration of these values into accounting and reporting systems at EU and national level by 2020”.
WHAT IS NATURAL CAPITAL? The UN Statistical Division’s System of EnvironmentalEconomic Accounting (SEEA) will also be augmented by a framework on ‘experimental ecosystem accounting’ while the Wealth Accounting and the Valuation of Ecosystem Services (WAVES) partnership, facilitated by the World Bank, aims to promote the widespread implementation of environmental accounting. In the UK, the government has pledged to “put natural capital at the heart of government accounting” (Natural Environment White Paper, 2011) and has established a Natural Capital Committee to ensure that government has a better informed understanding of the value of natural capital. 8
“Natural capital refers to the stocks of natural assets which include geology, soil, air, water and all living things. It is from this natural capital that humans derive a wide range of services, often called ecosystem services, which make human life possible“ World Forum on Natural Capital (2013)
PROJECT EXPERIENCE URS is working with National Grid to identify and value the ecosystem services generated across a portfolio of sites. URS has developed a methodology and templates to identify and quantify the stock of natural capital present on sites owned and managed by National Grid and a tool to value the current and potential future provision of ecosystem services under alternative management regimes. Ultimately, the project should help decision-makers from across National Grid to make better investment decisions and to secure social, environmental, and economic returns from its non-operational estate.
The first phase of the project involved a literature review of the different methods for calculating TFP and for preparing environmental accounts, including the identification of environmental indicators relevant to an environment-adjusted measure of TFP. The various approaches were evaluated and a preferred approach was selected based on its fit with the UK National Accounts, the available data and the intended purpose of the measure. The second phase involved estimating an environment-adjusted measure of TFP using two alternative techniques (Growth Accounting and Data Envelope Analysis) to compare the outcomes under different approaches and then also comparing these to a conventional measure of TFP.
Methodology for an environmentally-adjusted measure of Total Factor Productivity for the UK
Piloting the measurement of social and environmental returns from woodland creation
URS worked with Europe Economics on behalf of the UK government to develop a methodology for estimating the total factor productivity (TFP) of the UK economy, taking into account the impact of natural resource drawdown and other environmental effects.
URS was appointed by the Forestry Commission to develop a comprehensive and robust framework that can be used by corporate investors in woodland creation to report the environmental and social benefits associated with their investments.
The study considered the methodology, data and indicators that could be used alongside, or as adjustments to, conventional productivity indicators. The objective was to track the effectiveness of environmental policies in contributing to productivity growth and to identify the potential impacts of productivity-enhancing policies on the environment.
This pilot framework is being used to inform the future development of the Woodland Carbon Code (WCC), a voluntary forest carbon standard set up by the Forestry Commission to promote forestr y investments in Britain.
Realising nature’s value
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URS KEY FACTS •• Global environmental and engineering consultancy •• Bringing local expertise to global issues with over 50,000 employees in nearly 50 countries •• Over 3,000 sustainability and environmental specialists •• Client satisfaction demonstrated by high levels of repeat business •• Pragmatic and innovative solutions with clear business outcomes •• Hundreds of Master Services Agreements with major companies worldwide
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URS global office locations
Wider support for government, businesses and communities As a global provider of fully integrated sustainability, engineering, construction and technical services, URS offers clients a wealth of support in addition to our expertise in natural capital and ecosystem services.
Our environmental and sustainability expertise encompasses key processes including Environmental and Social Impact Assessment and Strategic Environmental Assessment as well as a wide range of specialisms including: •• •• •• •• •• •• ••
Air quality Archaeology Community engagement Contaminated land management Corporate sustainability Ecology Economics and development
•• •• •• •• •• •• •• •• •• •• •• ••
Energy and carbon management Flood risk management Geographical Information Systems Heritage Landscape Noise and acoustics Planning and urban design Sustainable design Transport Waste management Water quality Water resources management
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For more information please contact: Dr Steven Smith Technical Director, Policy and Appraisal Direct: +44 (0)20 7798 5121 Mobile: +44 (0)7773 804 662 steve.smith02@urs.com
Robert Spencer Business Line Director Sustainability, Europe, Middle East, India Direct: +44 (0)1256 315 107 Mobile: +44 (0)7765 242 482 robert.spencer@urs.com
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