The Environment Strategy for Scotland: Delivering the Environment Strategy Outcome on Scotland's Economy - Evidence Base & Policy Levers

4. Section B: Our approach

4.1 Theory of Change

Following on from the review of existing policy levers and evidence base, a Theory of Change (ToC) approach was undertaken to map out the key intermediate outcomes on the pathway to a net zero, nature positive, circular economy (i.e. the overarching ‘economy’ outcome), and to identify how existing policy levers could go further, or new policy levers could be adopted, to steer the economy of Scotland onto a more direct path to achieving these goals.

A ToC is a framework that outlines how particular interventions or initiatives are expected to bring about desired outcomes, and usually consists of a visual representation of the ultimate aim, intermediate short, medium or long-term outcomes, specific activities or interventions, and the underlying assumptions of how activities and outcomes are connected.

A ToC framework is a useful tool rather than an exact science. Its value lies primarily in representing complex systems filled with important details and assumptions, and mapping these out in a systematic and explicit manner. However, a ToC is only as good as the assumptions it makes, and different theories of change can be produced prescribing different solutions for the same problem – for example, as a result of different evidence or value and belief systems. This is especially true when working in the inherently political field of environmental and social policy.

As part of this project, we produced two different ToCs, one for achieving a net zero economy and one for achieving a nature positive economy. Net zero and nature positive are treated as two distinct goals, albeit many of the actions and intermediate outcomes are closely related. We describe some of the synergies and contradictions below. In drafting the ToCs, we also drew on circular economy literature, although we considered circular economy as a means to achieving environmental and social aims, rather than an end in its own right. For this reason, insights related to circular economy form part of the two overarching ToCs on net zero and nature positive, as opposed to being incorporated within their own ToC.

Overall, the approach we took to drafting the ToCs was that of a broad review and synthesis, which took the work and evidence from Section A, and incorporated major national and international studies of need and best practice in the net zero and nature positive fields of study. The goal was to enable the project to move from a review and assessment of existing levers, to a set of recommendations for future levers and adaptation of levers, which are set out in Section C. The ToC work therefore forms part of the bridge between these two sections.

Given the huge scope of the task, the ToCs set out a general map for achieving a given mission, rather than one chosen path. As set out below, a broad range of national and international literature was reviewed to list out many intermediate outcomes and a great variety of policy levers that can be used to achieve them. The result is what we believe to be a comprehensive menu of policy choices that can be further judged against relevant criteria – for example, distributional considerations and existing evidence of efficacy.

4.1.1 Format

The ToCs were drawn up in Miro, an online collaboration platform suitable for producing and sharing large flowcharts and diagrams. Due to the scope and complexity of the systems represented, the ToCs require a large format; the figures in this report only show a high-level, schematic representation of the ToCs. For the full diagrams, see Appendix 2 and 4.

4.1.2 Theories of Change and our recommendations

As mentioned, the subsequent recommendations set out in Section C of this paper draw on the ToCs, as well as the Section A work and a wider review of current SG policy and national and international literature. The Section C recommendations go beyond the broad ToCs and prioritise specific policy levers. The selection of recommendations: reflect the ‘art of the possible’ in terms of being within the areas of devolved policy responsibility for the SG; follow on from Section A analysis in terms of being based around identified areas of sufficiency / insufficiency; incorporate a wider literature review of national and international best practice, including the views of the SG and Working Group experts; and finally incorporate the New Economics Foundation’s own policy judgements that form part of our core mission for ‘cutting carbon emissions, boosting nature, and creating good jobs’.

4.2 Policy Levers

To support the development of the ToCs, we created a new list of policy levers – domains which included 33 distinct policy levers grouped in 6 overarching categories as shown in Table 1 below. This list includes both areas of devolved and areas of reserved powers, and draws on the review of relevant net zero, nature positive and circular economy literature, a survey of levers completed by SG policy teams, and our own extensive work in public policy. The full list of policy levers is shown separately in Appendix 1.

The list overlaps directly with the policy-lever domains set out in Section A, but rationalises that list in order to systematically group sub-levers for the purposes of formally and diagrammatically mapping them within a ToC structure. Whereas the Section A analysis starts by reviewing known policies against the three missions (net zero, nature positive, circular economy), the ToC analysis takes those levers and organises them into groups which can then be systematically applied to sectors of the economy.

4.3 Net zero ToC

To map short, medium and long-term outcomes, the net zero ToC chiefly draws on Scotland-specific CCC reports, the SG’s updated Climate Change Plan and other policy documents, NEF’s own research, and additional sources including the UKG Carbon Budget Delivery Plan. Following the scope of the project, the focus of the ToC is on Scotland’s territorial emissions only (Scotland’s overseas footprint is the focus of a separate Environment Strategy outcome: ‘We are responsible global citizens with a sustainable international footprint’).

The ToC is structured by economic sector as defined in Scottish Government policy and the CCC reports. The diagram includes specific short, medium and long-term outcomes on the path to net zero, structured under key overarching outcomes as set out in Table 2 below which are matched with plausible policy levers as outlined in relevant literature.

See Appendix 2 for the full ToC diagram.

4.4 Nature positive ToC

The Nature Positive ToC draws on a selection of authoritative national and international literature and key reports including The Future Of Nature And Business (World Economic Forum),[393] The Dasgupta Review,[394] Biodiversity, natural capital and the economy (OECD),[395] and Stockholm+50: Unlocking a Better Future (Stockholm Environment Institute).[396] A supporting research project by the James Hutton Institute, Driving the Transition to a Nature Positive Economy: A Synthesis of Policy Levers for Governments[397] supplements this report by presenting a rapid review of policy levers recommended in the international literature, and examples of best practice in the use of these levers.

The ToC provides an overview of the findings and recommendations from the literature and plots out the key outcomes and levers in a synthesis diagram. The full set of outcomes from each of the source reports is shown separately in Appendix 3. As it was more challenging to assess the impact on biodiversity of individual levers (compared with the greater volume of existing evidence on the emissions impact of certain policies for net zero), the nature positive ToC should be considered more of a road-map of outcomes and levers required for this mission rather than an assessment of causal impact of those levers. Table 3 below outlines some of the key outcomes from the Nature Positive ToC.

See Appendix 4 for the full ToC diagram.

4.5 Overlap

For the purpose of developing ToCs, net zero and nature positive were considered as distinct goals, with different pathways, policy levers and measurement frameworks required to monitor progress, but there are some levers and outcomes that are common to both. Both missions relate to the fundamentals of our relationship with the natural environment, and achieving them will require a whole system transformation across all areas of the economy.

As such, we identified that there are number of synergies and conflicts on the path to a net zero, nature positive economy, with the key ones set out in Table 4 below.

As can be inferred from the above summary of the ToC process and from the full ToC diagrams, applying the breadth of levers to the range of sectors, and across the temporal ranges for outcomes (short, medium, long-term) leads to a high degree of multiplicative complexity for mapping levers to outcomes.

The goal of Section C, as set out in the following pages, was therefore to attempt to distil the ToC findings to enable meaningful recommendations for policy levers that could build on the sufficiency and efficacy gaps as set out in Section A.