Marine Protected Areas in inshore waters: guidance for undertaking Socio-Economic Impact Assessments (SEIA)

Annex 2. Natural capital assessment toolkit

Guidance on applying a natural capital approach

Within a proposed site, there will be many natural capital assets delivering a wide range of ecosystem services. The possible benefits and costs to ecosystem services will depend upon the effect that proposed measures have on the extent and condition of natural capital assets over the lifetime of an MPA.

When developing a methodological approach to assess the natural capital impacts of a proposal, it may be useful to first consult a collection of resources, supplementary to the HM Treasury Green Book^[20], titled Enabling a Natural Capital Approach (ENCA)^[21]. The ENCA resources contain services and asset databooks which include data sources, tools and studies – including economic valuation evidence – related to natural capital assessments. ENCA also provides a guidance document which summarises the natural capital approach and how to apply it. These resources are updated periodically and are intended to reduce search costs when screening for relevant evidence.

It is recommended that a four step approach, as is outlined in Green Book and ENCA guidance, is adopted for natural capital assessment. These steps are explained in more detail below. Further information can be found within the Green Book and ENCA resources, including an excel template to assist with the analysis^[22].

Step 1: Understanding the environmental context of the proposal:

The first step of the assessment requires the development of a baseline which should attempt to detail the extent and condition of the natural capital assets that currently exist in a proposed site and which are expected to be affected by the proposals, directly or indirectly. The extent and condition of these assets is unlikely to remain in a fixed state over time. As such, the baseline should not assume that natural capital assets and associated ecosystem flows will remain at their current level under a 'do nothing' scenario. Instead, it should consider how these assets will likely evolve over the time period of analysis under a 'do nothing' scenario.

A natural capital baseline should, where sufficient evidence exists, include:

• The extent and condition of natural capital assets within the proposed site, which are expected to be affected by the proposals, directly or indirectly, and how these will likely change under a 'do nothing' scenario
• A description of the ecosystem services that are provided by these assets
• An estimate of the flows of ecosystem services, in physical and monetary terms where possible, both now and in the future, under a 'do nothing' scenario

Step 2: Consider biophysical impacts of MPA on natural capital assets:

This step involves comparing the expected effect of the proposals on the extent and condition of natural capital assets against the baseline scenario. Condition metrics can be used to show the changes in the quality and state of natural capital assets over time. It is important to consider additional factors such as:

• The geographical extent and location of these effects
• Whether these effects are risks or opportunities
• The time frame these effects will occur over
• Expert opinion may be needed at this stage

Resources:

European Commission. (2018). Mapping and Assessment of Ecosystems and their Services: An analytical framework for ecosystem condition. Luxembourg: Publications office of the European Union. Available at: https://ec.europa.eu/environment/nature/knowledge/ecosystem_assessment/pdf/5th%20MAES%20report.pdf (Accessed: 11 October 2021).

The Feature Activity Sensitivity Tool (FeAST) developed by NatureScot may be a useful starting point when beginning to consider environmental effects. FeAST is a web based tool that allows users to investigate the sensitivity of various marine features to pressures as a result of human activities:

Feature Activity Sensitivity Tool (FeAST) | NatureScot

Step 3: Consider the welfare implications:

The next step is to estimate the likely effects that changes in the extent and condition of natural capital assets will have on ecosystem services and the benefits they provide. Consideration of direct and indirect effects should be made. Effects will likely occur across different classes of ecosystem service (e.g., provisioning, regulating etc.) and care should therefore be taken to avoid double counting where there is overlap.

Specific effects to consider are:

• The effects of proposals on ecosystem services and associated benefits to society, estimated in physical and monetary terms, where possible. If it is not possible, an explanation of why should be included, alongside an evidence-based qualitative assessment
• The scale of population likely affected
• The robustness of any valuation estimates

There are several methods that are available for the economic valuation of natural capital. For provisioning services, market prices for goods and services can be used to measure the underlying value of an environmental asset. For regulating, supporting and cultural services, these tend to be harder to measure and non-market valuation techniques are often required. Where possible, a monetary valuation is preferred over physical units as a common metric allows for an easier comparison of relevant costs and benefits. Table 1 provides examples of methods that can be used to value natural capital assets.

In some cases, it may be possible to use value transfer approaches which utilise secondary valuation evidence and apply it to a new context. This will require expert judgement to determine if relevant secondary evidence is available and can be appropriately applied. Where no market prices exist and relevant secondary valuation evidence is not available, primary valuation may be required. This would involve primary data collection and/or modelling, and should be undertaken when it is proportionate and appropriate to do so (e.g., when analysis depends significantly on the magnitude of environmental effects). More detailed information on economic valuation techniques can be found within the Green Book and ENCA resources.

Examples:

Chae, D., Wattage, P. and Pascoe, S. (2012). "Recreational benefits from a marine protected area: A travel cost analysis of Lundy", Tourism Management, 33(4), pp. 971-977.

Kenter, J.O. et al. (2013). "The value of potential marine protected areas in the UK to divers and sea anglers." UNEP-WCMC, Cambridge, UK

Rees, S. et al. (2015). "The socio-economic effects of a Marine Protected Area on the ecosystem service of leisure and recreation", Marine Policy, 62, pp. 144-152.

Step 4: Consider uncertainties and optimise outcomes:

As any assessment on the effects of MPA proposals on natural capital will contain uncertainty, the final step requires considering this and attempting to minimise or mitigate where possible. The levels of confidence in all estimates provided in the analysis should be clearly stated. Furthermore, critical factors within the proposals that could have a major influence on natural capital effects should be highlighted, as well as measures that might be used to mitigate risks and maximise opportunities.