Natural capital: economic benefits assessment

Footnotes

1. Scotland's National Strategy for Economic Transformation - gov.scot (www.gov.scot)

2. Interim Principles for Responsible Investment in Natural Capital - gov.scot (www.gov.scot)

3. GFI Finance Gap for UK Nature Report – Press Release: https://www.greenfinanceinstitute.co.uk/wp-content/uploads/2021/10/Press-Release.pdf

4. Note that the finance gap estimated in the GFI study was determined for nature-related outcomes defined based on Defra's 25 Environment Plan rather than those specified in the Scottish Government policy packages. Nevertheless, the value of each nature-related outcome for Scotland estimated in the GFI study was based on the Scottish evidence whenever it was available, including spending commitments announced by the Scottish Government. The GFI study therefore provides useful (broad) estimated ranges for the nature finance gap in Scotland. These can be refined through further more detailed and Scotland specific studies.

5. See the GFI report (2021) for more information on the complete list of sources used to derive spending requirements per nature-related outcome. Where possible, Scotland specific figures were derived. For certain nature-related outcomes, UK-wide or England-specific estimates were extrapolated to derive the spending requirements for each DA. This is an area where future research could improve the estimates.

6. The original GFI model covers three time periods: 2022-2032 (10-year horizon), 2022-2042 (20-year horizon) and 2022-2052 (30-year horizon).

7. Note that the exact source of funding needed to address the finance gap for nature is not explicitly determined in the GFI study. Nevertheless, the existence of a finance gap under current public spending commitments suggests that further private funding needs to be levered. Given pressures on wider public spending it is unlikely that current and future public commitments can meet the funding requirements for nature, so finance from the private sector will be needed.

8. For this outcome, the committed spend exceeded the estimated required spend. To avoid having a negative finance gap, it was replaced with £0.

9. Overview of CivTech 8 challenge on designing biodiversity credits and enabling investment in Scotland's nature found here.

10. Adjusted for NRF funding.

11. The £14.6bn figure is derived by subtracting the modelled investment to address the finance gap over the period 2022-2032 (committed spend in Table 4 + the anticipated reduction in the finance gap via drivers and enabling mechanisms in Table 7) from the total required spending to achieve nature outcomes (GFI upper estimate of £27bn in Table 4). The total finance gap investment considered in this study is £12.5bn (which excludes £3.4bn reduction in the finance gap for marine and coastal activities as these are not covered in the economic model outlined in the next chapter).

12. Note that the 10-year assessment period starts in 2022 and ends in 2032. Hence, at the time of this report's publication, the remaining time to realise the outstanding 48% of the overall finance gap is 8.5, rather than full 10 years.

13. Note that it is also assumed that the reduction in the finance gap cannot exceed the annual market capacity per outcome, meaning that the outstanding finance gap cannot be addressed retrospectively. For example, if the drivers and enabling mechanisms for a given outcome can only be implemented in Year 3, this means that approximately 80% of the finance gap can be feasibly reduced (i.e. the potential finance gap reductions in Year 1 and Year 2 are bygone and cannot be compensated for in the future).

14. The model accounts for £10 million in funding in Year 1 followed by £13.5 million each year over the following four years. In the model it is assumed that funding for the Nature Restoration Fund will continue beyond the initial five-year period to Year 10.

15. Scottish Government, 2022, Understanding the local economic impacts of natural capital investment report: https://www.gov.scot/publications/understanding-local-economic-impacts-natural-capital-investment /

16. It should be noted that the figure for the reduction in the finance gap covers a ten-year period. Due to the introduction of the timing assumptions reflecting the fact that some NC markets (or drivers / enabling factors) will not be implemented instantly (i.e. in year 1), it is realistic to assume that only a portion of the finance gap per activity will be reduced within the next 10 years.

17. Short, medium and long term assumed to be years 1 to 5, years 6-9 and years 10/onwards, aligned with previous funding assumptions. GFI outcome funding is then accordingly mapped onto natural capital interventions.

18. May not sum up to exactly the same total amount due to rounding issues.

19. Scottish Natural Capital Accounts 2022 - gov.scot (www.gov.scot)

20. Natural Capital Asset Index | NatureScot

21. May not sum up to exactly the same total amount due to rounding issues.

22. May not sum up to exactly the same total amount due to rounding issues.

23. May not sum up to exactly the same total amount due to rounding issues.

24. Source of data: Business Register and Employment Survey (2021)

25. Woodland and peatland management and footpath creation assumed to be split equally across time horizon. Woodland creation assumed to start at 400ha/year and increase to 800ha/year, then remain at this level. Peatland restoration assumed to start at 800ha/year and increase to 1250ha/year (target scenarios provided by the Loch Lomond and the Trossachs National Park Authority).

26. Overall regenerative agriculture interventions are assumed to occur in the short and medium term. Regenerative management projects are assumed to be completed within 5 years. Woodland creation and management projects are phased over a 7-year period. Coastal restoration interventions are assumed to occur in the short-term.

27. Projects are assumed to be undertaken in the short-term.

28. Totals may not sum up due to rounding issues.

29. Totals may not sum up due to rounding issues.

30. Totals may not sum up due to rounding issues.

31. Hectare values provided by Loch Lomond and the Trossachs National Park Authority were converted into capital investment (£) using conversion factors in the model.

32. May not sum up due to rounding issues.

33. Capital investment values provided by the Borderlands and converted to hectarage through the model.

34. Capital investment values provided by the City of Edinburgh and converted to hectarage through the model.

35. Office for National Statistics – Business Register and Employment Survey (2021)

36. The three time horizons are 2022-2032 (10-year horizon), 2022-2042 (20-year horizon) and 2022-2052 (30-year horizon).

37. Nature Restoration Fund (NRF) 2022 - Transforming Nature successful projects | NatureScot