Scottish natural capital: ecosystem service accounts 2019

4. Introduction

Nature provides the basic goods and services that make human life possible: the food we eat, the water we drink and the plant materials we use for fuel, building materials and medicine. The natural world also provides less visible services such as climate regulation, the natural flood defences provided by forests, removal of air pollutants by vegetation, and the pollination of crops by insects. Then there is the inspiration we take from wildlife and the natural environment. 

This article includes natural capital assets, the flows of services and the values of those services. These terms help us to think logically about what aspects of the natural world we are measuring and how they impact on people. 

Natural capital assets are the things that persist long-term such as a mountain or a fish population. From those assets people receive a flow of services such as recreational hikes on the mountain and fish captured for consumption. Finally, we can value the benefit to society of those services by estimating what the hikers spent to enable them to walk over the mountain or the profit to the fishermen of bringing the fish into the market. Applying this logic consistently across assets and services enables us to start building accounts of the value provided by nature. 

The benefits we receive from nature are predominantly hidden, partial or missing from the nation’s balance sheet. However, by recognising nature as a form of capital and developing accounts of natural capital’s contribution to the economy and our well-being, decision-makers can better include the environment in future policy planning.

The development of natural capital accounts has been flagged by the Natural Capital Committee and the UK National Ecosystem Assessment as a fundamental activity that is necessary if natural capital is to be mainstreamed in decision-making. 

There has also been strong international momentum to develop natural capital accounts. The UN System of Environmental-Economic Accounting (SEEA) is the main source of technical guidance and sharing of experiences, the principles of which these accounts are built upon. The World Bank’s wealth accounting WAVES project is looking to implement ecosystem accounting in a range of partner countries. In 2010 at Nagoya, 193 countries agreed to a strategic target to incorporate the values of biodiversity into national accounting and reporting systems by 2020 (subsequently referred to in the Sustainable Development Goals).

In 2011, the Department for Environment, Food and Rural Affairs (Defra) committed to working with the Office for National Statistics (ONS) to measure the value of UK natural capital (see Natural Environment White Paper, June 2011). Since then, the ONS has collaborated with Defra to develop innovative methods to measure this strand of economic statistics, with an objective of including UK natural capital estimates in the UK Environmental Accounts by 2020.

Natural capital accounts include stock accounts of specific habitats and flow accounts of services. Both physical (non-monetary) accounts and monetary valuations are presented as a time series to monitor change over time. Monetary valuations of natural capital begin to reveal the value of benefits provided by nature.

Where available, estimates are presented between the period 1997 to 2017 and all monetary valuations are given in 2017 prices deflated using the HM Treasury June 2018 GDP deflators. Valuations were developed under the principle of comparability with the 1997 to 2015 UK Ecosystem Service Accounts and consistency between individual ecosystem services. It is recognised that the UK accounts remain experimental and future UK publications will be subject to methodological improvements over time. Ecosystem service valuations offer comparative analysis across services whereas physical flows provide information about the changes over time independent of price changes.

The services are presented by type, which include provisioning, regulatory and cultural. Types of service are defined at the beginning of each section. 

All estimates are experimental and are subject to adjustment and improvement as the natural capital accounts are developed. A number of ecosystem services are not being measured in this article so the monetary accounts should therefore be interpreted as a partial or minimum value of Scottish natural capital.