Download Prof David Hill CBE, The Environment Bank

Environmental Markets –
opportunities for business to
protect and value nature
Prof David Hill CBE
Chairman, Environment Bank
English biodiversity loss
• 500 English species extinct in the last 200 years
• Of 3000 species with data, 2000 declining!
• Many farmland birds have declined by up to 90% in 50
years!
• Average English county loses 2 plants per year
• Loss is ‘mainly’ outside SSSIs and Natura 2000
sites, and ‘unprotected’ species
• Much the same story across western Europe
4a. Status of
threatened
species
Priority
species
4ai. Status of priority species
Change in the relative abundance of priority species in the UK, 1970 to 2012
Notes:
Based on 213 species
1. Based on 213 species. Dotted lines show the 95 per cent confidence intervals relative to the 1970
reference year.
2. Bar chart shows the percentage of species increasing or declining over the long-term (1970 to 2012) an
Landscape amnesia
Creeping normalcy
Jared Diamond ‘Collapse’
What have we lost?
Rodger McPhail
Land use change - UK
Area (ha)
From
To
100,000
Conifer forest
50,000ha replanted conifers;
50,000ha ’other’
3,000
Conifer forest
Industrial development
7,000
Forest
Artificial surfaces
14,000
Agricultural land
Artificial surfaces
3,000
Arable land
Mineral extraction sites
2,000
Pasture
Mineral extraction sites
1,000
Pasture
Arable land
1,000
Wetlands
Artificial surfaces
2006-2012 Europe-wide CORINE land cover map – 225,200ha showed change in land cover –
Leicester University
Traditional funding
Aggregate
membership 17
conservation bodies
6.7 million
NGO income
£854m
Latest reports
NGO spending on
biodiversity in
England
£213m
2012/13
Govt. spending on
biodiversity in
England
£384m
2013/14
Biodiversity 2020 Indicators summary
Dec 2014, Defra
Secretary of State comment at
Wildlife & Countryside Link Sept
2015
Countries that are successful in the future
are going to be those with thriving
environments where people want to live and
work and be close to nature
The race for initiatives - UK
• The Economics of Ecosystems and
Biodiversity – TEEB - 2010
• Natural Environment White Paper 2011
• Natural Capital Committee 2015
• Natural capital accounting – National Audit
Office, Office for National Statistics ongoing
TEEB
• “The global economic benefit of biological
diversity, the costs of the loss of biodiversity
and the failure to take protective measures
versus the costs of effective conservation.“
• Answer : $14 trillion; 7% global GDP by 2050
Natural Capital Committee
“Successive natural capital deficits have built up
large natural capital debt and this is proving costly
to our well-being and economy. If economic growth
is to be sustained, natural capital has to be
safeguarded”
But we need restoration first – we are ‘massively
overdrawn at the Bank of Nature’
• About 40% of global GDP intrinsically
relies on natural capital - yet we
don’t value it and we treat the
environment as a charitable exercise
OECD Report 2012 - Outlook to 2050
Per capita GDP Per capita GDP
NOT accounting accounting for
for loss of
loss of natural
natural capital
capital
Brazil
34%
3%
India
120%
9%
UK?
2% ?
-20%?
We need a paradigm shift
1. Intrinsic value alone is not enough
2. Make nature economically visible - proper
accounting of the value of our natural
environment in decisions and policies across
all sectors
3. Need for a new economy to enable
investment into biodiversity, natural capital
and ecosystem services - understanding
massive supply chain risk
Environmental markets
• Internationally there is mounting interest in
environmental markets from credit buyers, regulators,
investors, environmental community
• Emerging recognition of natural resource stewardship
and restoration as a dynamic area for investment – great
opportunity for SME’s
• Transforming biodiversity from a risk and liability problem
into viable profit-generating business opportunity
• Environmental Finance; Ecosystem Marketplace
Value = $5 - 10bn p.a
cultural and societal values society holds for charismatic wildlife (e.g. Golden Eagles) and
will be partly reflected below through recreation, wildlife and health too.
Figure 3: Natural capital assets and types of benefits
3.1.3
In order to identify the most important aspects to measure and monitor, it is necessary to
look at the extent to which the benefits are and can be influenced by decisions affecting the
quantity, quality or location of the underpinning asset. For example, for outdoor recreation,
the location of recreation areas such as woodlands near to people is a key determinant of
Natural Capital Accounting
• Gov’t should lead the development and coordination of
long-term investment in natural capital
• Burdening future generations because we think
protection of and investment in natural capital is too
expensive today, is not a viable model
• Corporate natural capital accounting should be required
on basis of benefits derived from non-renewables to
increase stock of renewables
• Credit based – create a market – SME involvement
• The economic rents from depleting nonrenewables should be saved and invested for
future generations – compensate by increasing
renewable natural capital assets.
• Using natural capital accounting – create natural
capital investment funds from the depletion of
non-renewables via a proper compensation
regime. Dieter Helm 2015.
• Role for development of environmental markets
to establish around natural capital assets and
asset classes - SMEs
Natural Capital Investment
Opportunities
• Woodland planting – 250k ha. Net benefits £500m p.a
• Peatland restoration – 140k ha uplands. Net benefits
£570m over 40 years
• Wetland creation/ES – 100k ha. Benefit-cost ratios 3:1 to
9:1
• Restoring commercial fish stocks. Benefit-cost ratios
>6:1
• Urban greenspace – health treatment savings £2.1bn p.a
• Environmental performance of farming
Government to:
• Require natural capital accounting by corporates
• Incentivize corporates – taxation
• Implement accreditation – standards
• Provide guidance
Corporates purchase ‘natural
capital’ credits for assets –
woodland, peatland, wetland,
grassland and ecosystem
services they provide
• Better corporate reporting
• De-risk the business
• Better investment value
Market developed. Land
brought forward under
conservation covenants.
Ecological networksresilience
Long-term management
income
Ecosystem Markets Taskforce - key
recommendations
• Biodiversity offsetting (compensation) mandatory - securing net gain for nature
through planning and development
• Bio-energy and anaerobic digestion on farms
• Sustainable local woodfuel
• Nature-based certification and labelling
• Water-cycle catchment management integrating nature into water, waste water and
flood management
Biodiversity Compensation
Biodiversity Compensation
“..conservation activities designed to deliver biodiversity benefits in
compensation for losses, in a measurable way”
Voluntary – UK government
trials
• Slow take-up - lack of
urgency
• Inconsistency between LPAs
• Lack of a market
Mandatory - LPAs mandated to
use the metrics
• Rapid market (scale-up) created supply of compensation sites via
landowners, farmers,
conservation bodies, providing
choice
• Consistency across Local Planning
Authorities
• No extra cost - residual land
value
• Market = c.£1.2bn p.a
• Will stimulate SME’s and will
grow the rural economy
• Metrics, trading system, delivery
system - all in place
Compensation through planning
• Compensating for impact in one place with gain in another
• Compensation ‘metrics’ allow for estimation of both loss and gain
• Simply a tool for planners – guarantees no net loss –
accountable, transparent, consistent
• Enables development and delivers biodiversity protection i.e.
sustainable development
• Observes mitigation hierarchy
• Additional & complementary to existing wildlife/landscape
protection
• Planning Authorities now being encouraged to roll-out application
of the metric = creating demand for compensation sites
How does it work?
• LPA requires application of biodiversity compensation metric
• Impact of development assessed
• Developer purchases conservation credits from strategically
located ‘habitat bank’ which yields the credits based on a
Biodiversity Management Plan
• Environment Bank brokers deal - signs legal agreements to
purchase with developer, and to manage with receptor site
land manager
• Money transferred, over time, to the land manager against
specific conservation management delivery
• Monitoring and reporting systems for LPAs
Warwickshire strategic areas
To target restoration and creation of new core areas
Habitat Banking
• Warwickshire
• South Humber
• HS2
Environment Bank - what we are
doing
• Operating brokerage model
• Setting up Habitat Banks
• Building receptor site capacity - Environmental Markets
Exchange
• Applying metrics to impact and receptor sites
• Asset classes - biodiversity, but also for woodland and
peatland carbon, water, other natural capital assets
• Long-term delivery contracts - Conservation Bank
Agreement, Conservation Credit Purchase Agreement;
monitoring, compliance
• First conservation credit sales undertaken - housing
schemes; with pipeline of projects
Grow emerging markets
•
•
•
•
Regulatory framework with metrics
Accreditation of sites eg habitat banks
Tracking of conservation credits and enforcement
Environmentally experienced brokerage system - trading
platform (eg. Environment Bank)
• What next ? An EU-wide Ecosystem Markets Taskforce –
assess innovation opportunities across EU – DG
Research & Innovation or DG ENV with DG GROW
Summary
• Biodiversity, natural capital and ecosystem service loss
continues - will create catastrophic impacts on GDP within 2
generations
• A new economic model is needed to move nature beyond
intrinsic value
• A range of opportunities exist for business/SME investment
with potentially massive market value:
•
•
•
•
Biodiversity compensation
Corporate accounting for natural capital – woodland, peatland,
wetland, restoring fish stocks, urban greenspace
Payment for ecosystem services (PES)
Improving the environmental performance of farming
www.environmentbank.com
Environmental Markets Exchange
https://environmentbank.mmearth.com
We don’t inherit the Earth from our
ancestors, we borrow it from our
children
Maybe we should be renting it instead !