Scottish Natural Capital Accounts: 2021

3. Provisioning services

ONS

Provisioning ecosystem services create products that include food, water, and materials. These are produced by nature, extracted, and then consumed by society. Provisioning services are largely based on existing market prices. This means that the asset values of these services are subject to changes in market conditions, such as price changes. These price changes can often distort how natural assets are valued, and therefore a wider view of our interrelated economy must be taken to understand asset value behaviour. Utilising the provisioning services of a natural asset may impact its ability to provide regulating or cultural ecosystem services.

Provisioning services currently included in the Scottish ecosystem accounts are:

• Agricultural biomass
• Fish capture
• Timber
• Water abstraction
• Minerals
• Fossil fuels
• Renewable energy

Index of provisioning services physical flow (index 2003=100), Scotland, 2003 to 2019

Source: Office for National Statistics, Scottish Government, European Commission: Scientific, Technical and Economic Committee for Fisheries, Forest Research and Scottish Water

Annual value of provisioning services (£ million, 2019 prices), Scotland, 2017

Source: Office for National Statistics

Aggregate annual value of provisioning services (£ million, 2019 prices), UK, 2008 to 2017

Source: Office for National Statistics and Scottish Government

Agricultural biomass

Agricultural biomass refers to the value of crops, fodder and grazing which support Scottish agricultural production. The food eaten by farmed animals is included in this analysis, however the farmed animals themselves are not. It is assumed that farmed animals are produced assets, rather than natural assets.

As illustrated in Figure 4, the volume of agricultural biomass in Scotland in 2019 is 16 million tonnes, decreasing by 7% from 17.2 million tonnes in 2003. Scottish agricultural biomass peaked in 2004 at 17.3 million tonnes. However, total Scottish agricultural biomass increased by 4% from 2018 to 2019.

Arable biomass, which includes the production of wheat and barley, has increased by 21% from 2018 to equal 3.2 million tonnes in 2019. Production of spring and winter barley, wheat and oats have all increased from 2018 to 2019, by 11%, 49%, 38% and 8%, respectively. Oilseed rape production has decreased by 2% in the same time period. Horticulture, which includes vegetables, fruits, and potatoes, has grown by 5% to equal 1.6 million tonnes in 2019.

Agricultural biomass production, Scotland, 2003 to 2019

Source: Office for National Statistics and Scottish Government

Grazed biomass and feedstocks continue to account for most of the Scottish agricultural biomass production. As reported in the provisional results of the Agricultural Census 2020 (Scotland), the number of cattle in Scotland continues to fall, dropping by 1% to 1.71 million from 2019 to 2020. This explains the fall in grazed biomass. In 2019, feedstocks make up 53% of total tonnage, grazed biomass is equal to 17%, arable production is equal 20% and horticulture is equal to 10%. For comparison, in 2018, feedstocks, grazed biomass, arable production, and horticulture equalled 48%, 25%, 17%, 10%, respectively.

Previous Scottish natural capital accounts have provided resource rent annual valuations using the residual value approach. This is the surplus value to the agricultural industry after all costs have been considered. Estimated at an aggregate scale, it may include non-agricultural aspects of farm businesses. As part of our development, we will look at alternative measures of capturing food production value. Using the industry residual value, the annual value equalled £562 million in 2019. The highest industry residual value occurred in 2004 at £626 million and the lowest residual value occurred in 2009 at £66 million. Farm rent remains consistent across the time series, with its 2019 value at £222 million.

Fish capture

We have been working to improve our fisheries statistics and more work is needed. We rely on a range of external sources, which all involve known uncertainties.

For instance, Norway and Faroese landings are excluded from this analysis. The economic data are based on UK fleet data, which we also apply to foreign vessels that may face different costs and prices. In addition, UK boundaries do not perfectly align with the geographical areas of fish capture statistics. For more detail on how fish capture in UK waters is estimated, see the Marine Management Organisation Exclusive Economic Zone Analysis and associated publications.

Aquaculture or farmed fish, like farmed livestock, have been removed from estimates as farmed fish are viewed as a produced asset and not a natural asset. For more information on the method please see the methodology section.

Tonnes of fish capture, UK waters, 2015 to 2018

Source: Office for National Statistics, Scientific, Technical and Economic Committee for Fisheries, Seafish, Marine and Management Organisation

Notes:

1. Rest of UK includes UK crown dependencies

Scottish waters have represented most of the fish capture from UK waters since 2015. Fish capture from Scottish waters has risen by 21% from 2015 to 2018, driving much of the 10% increase in overall fish capture from UK waters.

Top fish capture species by tonnage, UK waters, 2018

Source: Office for National Statistics, Scientific, Technical and Economic Committee for Fisheries, Seafish, Marine and Management Organisation

Of the 328 different fish species caught in UK waters in 2018, 157 (48%) were found in Scottish waters. Making up 51% of overall catch tonnage in 2018, the two most caught species in UK waters (by tonnage) were herring (82%) and mackerel (98%), which were largely caught in Scottish waters.

The value of fish capture is calculated using net profit per tonne (landed) estimates, provided by Seafish, for different marine species. Across the period 2015 to 2018 an average of 94% of the fish capture by tonnage had profit data.

Net profit from fish capture £ millions (2019 prices), UK waters, 2015 to 2018

Source: Office for National Statistics, Scientific, Technical and Economic Committee for Fisheries, Seafish, Marine and Management Organisation

Notes:

1. Rest of UK includes UK crown dependencies.

The net profit of mackerel fell 3% between 2017 and 2018 and herring fell by 19%. Other predominantly Scottish stocks fell over this period, such as fish and chip shop classics: cod and haddock fell by 27% and 25%, respectively.

Scottish waters represent even more of the UK by net profit than by tonnage as fish stocks are on average more profitable per tonne in Scotland. Mackerel, which is by far the UK’s most profitable fish stock, almost entirely comes from Scottish waters. The contribution of Scottish waters toward overall net profit has grown year on year from 75% in 2015 to 84% in 2018. The value of Scottish fish capture provisioning services was £243 million in 2018, with an asset value of £7.2 billion.

Timber

The total volume of timber production in Scotland has increased by 53% from 1999 to 2019. In 2019, around two thirds of Scottish timber were produced by the private sector, increasing from around half of timber production 20 years before. Across the time series, most of the timber production is softwood from coniferous trees, which generally grow faster than hardwood species.

An individual hectare of forest plantation that exclusively produce timber may not provide continuously provide a full range of additional ecosystem services. Once trees are felled, they cease to, for example, capture pollutants from the air. Following replanting the provision of carbon sequestration will be lower than for older growth as it recovers. Some of the fellings will store carbon longer term in, for instance, building materials; while other carbon may be released into the atmosphere when wood is burned for heat or energy generation. This leads to some spatial complexity at a granular level in the measurement of ecosystem services from plantation woodland. However on a national scale – as the age structure of the overall forest moves on – we assume these issues are rebalanced.

Timber production in Scotland, thousand cubic metres of overbark, 1976 to 2019

Source: Forest Research

Notes:

1. Public refers to Forestry and Land Scotland.

Softwood production peaked in 2018 at 9,188 metres of overbark (m³) but has since dropped by 16% to 7,719m³ in 2019. Hardwood production has increased in recent years. In 2019, hardwood production was at its highest level since 1991.

Relative to the rest of the UK, Scotland’s timber production has increased significantly in recent decades. Scotland represented 60% of UK timber production in 2019, from 52% in 1999 and 33% in 1989. Scottish forests make up 46% of the woodland area in the UK.

Timber production (thousand cubic metres overbark), UK, 1976 to 2019

Source: Forest Research

The timber provisioning service valuation has increased by 253% over the last decade, from £69 million in 2009 to £244 million in 2019. The increase in the annual valuation has been driven by a 21% increase in production and a 191% increase in stumpage price for the same period. The stumpage price is the price paid per standing tree for the right to harvest timber from a given area.

Timber provisioning annual value, £ million 2019 prices, Scotland, 1985 to 2019

Source: Office for National Statistics and Forest Research

Scotland’s forestry strategy states that between 2030 and 2050 there will be a decline in softwood availability, mainly due to the uneven age structure of the forest estate following high levels of planting prior to the 1990s. Scotland contributed 81% of the UK’s new planting in 2019. Of the 68,000 hectares of new planting in Scotland between 2010 and 2019, 42% of this new planting were softwood (conifers) and 58% was hardwood (broadleaved).

Current and historic planting data informs forecasts of timber production, which we use to estimate the value of the timber provisioning service in the future. In 2019 the asset value of Scottish timber was £7 billion, contributing 60% towards the total UK value of £11.7 billion.

Water abstraction

Water abstraction for public water supply between 2002 and 2019 has decreased by 25%, from 912 million to 683 million cubic metres, primarily due to a reduction in demand caused by less leakage. Of water abstracted, on average 96% became treated water.

Treated water produced million cubic metres, Scotland, 2002 to 2019

Source: Scottish Water

Over the past 18 years, Scottish water has reduced leakages by 60% from 413 million to 166 million cubic metres. In 2002, around 45% of water was lost to leakages compared to 24% in 2019.

According to a Scottish Environment Protection Agency report, climate change is likely to bring more uncertainty, with a projected decrease in summer rainfall. NatureScot research shows that the number of extreme drought events across the country could increase from an average of one every 20 years to one every 3 years. This may exert pressure in areas that have not yet experienced water scarcity.

We derive monetary estimates of the water abstraction provisioning service from industry level data on the collection, treatment, and distribution of water for domestic and industrial needs. This valuation fluctuates year on year but was estimated to be £206 million in 2017, which is 6% of the UK annual value.

Minerals

Mineral extraction in Scotland, largely consisting of construction mineral aggregates, increased by 3% between 2018 and 2019. Mineral production peaked in 2007 with 39.4 million tonnes extracted. By 2019, this had declined by 10 million tonnes.

Construction minerals are used for housing and infrastructure. The largest extraction declines were seen in 2008 and 2009, dropping 11.7% and 12.5%, respectively. New house building in Scotland declined by 18.9% and 24.7% across the same period. Since 2013, construction mineral production and new house builds have generally increased each year. This analysis excludes imports, exports, and movement of materials from within the UK.

Construction mineral extraction and new house building, Scotland, 1997 to 2019

Source: British Geological Survey and Scottish Government

Notes:

1. Construction minerals include sand and gravel, slate, igneous rock, limestone and dolomite, and sandstone.

2. A dwelling is regarded as ‘started’ on the date that work begins on its foundations, not on the date when site preparations begin.

Using the resource rent approach (see Methodology guide), the annual value of mineral provisioning fluctuated between 1998 and 2017. There are costs incurred for making use of natural resources, and in 1999 and 2010 these estimated costs outweighed income from the extraction of minerals. In 2017, the annual value increased to £77 million.

Annual value of mineral extraction (£ millions, 2019 prices), Scotland, 1998 to 2017

Source: Office for National Statistics

Unstable valuations of the mineral production abiotic provisioning service, along with years of negative gross operating surplus for the minerals industry in the UK National Accounts, do not lend well to valuation comparisons between the UK and Scotland. Data inputs and methods will be reviewed in future accounts.

Fossil fuels

The production of fossil fuels between 1999 and 2019 has decreased by 59%. Coal, representing the minority of fossil fuels, has decreased by 95%. Crude oil and natural gas liquids (NGL) production has dropped by 61% and natural gas has declined by 52%. In recent years, the production of oil has been increasing. Crude oil and NGL production increased by 2% from 2018 to 2019, putting it at its highest level since 2012.

Fossil fuel production, million tonnes of oil equivalent, Scotland, 1998 to 2019

Source: Scottish Government and Department for Business, Energy, and Industrial Strategy

Scottish production of crude oil and NGL peaked in 1999 with 136.9 million tonnes of oil equivalent, before declining to its lowest level in 2014 to 41 million tonnes of oil equivalent. Scotland produced 95% of the UK’s crude oil and NGL, 70% of the UK’s natural gas and 18% of the UK’s coal production in 2019.

Whilst the general trend shows lasting production shifts, the annual value of fossil fuel abiotic provisioning fluctuates year on year, driven largely by oil and gas price changes. The Brent crude oil price was on average 6% lower in 2019 compared to 2018.

Fossil fuels' annual value, £ million 2019 prices, Scotland, 1998 to 2019 and Gas/Oil prices, £/toe, 2019 prices, 1998 to 2019

Source: Office for National Statistics

The Scottish fossil fuels provisioning service annual value was £4.4 billion in 2017, representing 94% of the UK value.

This is a resource rent approach, which estimates the surplus remaining to the extractor after all costs and normal returns are considered. This is closely related to profitability. The details of the methodology used to estimate the value of fossil fuels can be found in the methods section.

Resource rent is different from an intrinsic measure of value, such as the wholesale price determined by the market or the value it provides to the economy in terms of economic output (that is, gross value added). Resource rent does not value government receipts, employment, supply chain activity or energy security as benefits.

Renewable electricity generation

Scotland’s renewable electricity generation has increased by 14% between 2018 and 2019. By the fourth quarter of 2020, Scotland produced 97.4% of its electricity demand from renewable energy sources, falling just short of the 100% by 2020 renewable electricity target.

In 2003, Scotland generated 3,351 gigawatt hours (GWh) of electricity from renewable sources. This has increased to 28,236 GWh in 2019, which is a 743% increase, or eight times larger. Scottish hydroelectricity was by far the largest producer of renewable energy in 2003, with 2,902 gigawatt hours generated. Since 2010 wind generation has become the largest source of renewable energy.

Scotland’s renewable electricity generation in 2019 accounted for 34% of the UK’s generation from renewables. All sources of renewable electricity generation grew from 2018 to 2019, with wind showing an increase of 16%. Although a small source of renewable generation, wave and tidal had a 50% increase over this period.

Electricity generation from renewables (Gigawatt hours), Scotland, 2008 to 2019

Source: Scottish Government and Department for Business, Energy, and Industrial Strategy

Notes:

1. Electricity generation from renewables excludes landfill and sewage gas, other bioenergy, anaerobic digestion and biomass and waste.

2. Generation from "other sites" is not included. “Other sites” are sites that have not been attributed to a region so that data related to individual companies are not disclosed.

In 2019, of all Scottish electricity generation, 70% was produced from renewables. The total electricity generation from all sources in Scotland has seen a decrease of 9% between 2003 and 2019, with generation from non-renewables decreasing by 68%. There is now no electricity generation from coal in Scotland and power generation from oil, gas, and nuclear has fallen by 17%, 51% and 32% respectively, from 2003 to 2019.

Electricity production generation from renewable and non-renewable sources (gigawatt hours), Scotland, 2004 to 2019

Source: Department for Business, Energy, and Industrial Strategy

Notes:

1. Renewables include wind, hydro, solar PV, and wave and tidal.

2. Non-renewable includes coal, oil, gas, nuclear, other thermal, hydro, pumped storage, and non-biodegradable waste combustion.

3. Non-renewable generation only includes generation from Major Power Producers (MPPs).

4. Renewable generation from "other sites" is not included. “Other sites” are sites that have not been attributed to a region so that data related to individual companies are not disclosed.

Hydroelectricity generation is sensitive to changes in precipitation as flowing water is needed to spin turbines which generate electricity. In 2010 hydropower generation declined significantly due to the comparative lack of rainfall.

Average rainfall and hydroelectricity generation, Scotland, 2008 to 2019

Source: Department for Business, Energy, and Industrial Strategy

Load factors are a measure of generation efficiency using a ratio of actual to potential total generation capacity. Hydropower load factors dropped from 38.4% to 25.8% between 2009 and 2010. Load factors fluctuate with the weather but can improve with developments in the efficiency of renewable technologies. In 2019 offshore wind had the highest load factor but until recently old standing hydroelectricity plants have had the highest load factor of renewables.

Load factors of renewable energy technologies (percentage), Scotland, 2019

Source: Department for Business, Energy, and Industrial Strategy

Scotland’s contribution to UK renewable energy provisioning decreased from 79% in 2003 to 34% in 2019. This is because hydropower, which is largely in Scotland, was historically the largest renewable electricity generation source in the UK. Although its generation has remained stable, with other renewables growth it now represents a minority of UK renewable generation.

Percentage contribution of renewable energy provisioning by country, UK, 2003 to 2019

Source: Department for Business, Energy, and Industrial Strategy