Bruce Howard, organiser of the upcoming Natural Capital Investment Conference, provides a perspective on the most pressing challenge for natural capital restoration in the UK – how to finance it.

Natural science and economics are playing an important role in helping us to put the natural capital concept into practice. Nonetheless, a major impediment to progress still remains. It’s the finance and investment. Ambitious plans for natural capital restoration need innovative and well-worked investment plans.

When we think about the needs for new money, we should not deny the impact existing funding streams are having on our newly-found natural capital ambitions. When spent in partnership, grants from government, public agencies, the Heritage Lottery Fund, businesses and private foundations can achieve outcomes for people on the ground.  Look, for example, at the £40 million Big Lottery-Funded Connswater Community Greenway in Belfast. Combine this type of grant funding with giving by the public and agri-environment support, and, no doubt, we have amassed billions that is making a difference to local communities and businesses.

Consswater Community Greenway

Connswater Community Greenway (Photo: Ecosystems Knowledge Network)

The million dollar question is whether reliance on this flow of grants and giving is the way forward given what we now know about our natural capital.  This question involves several considerations:

  1. Whether traditional funding for environmental restoration will be enough to tackle the declines in the capacity of important habitats like marine areas, peatland and urban greenspace to meet our needs.
  2. Whether the sources and mechanisms for funding are appropriate in the light of the economic analysis we now have to hand. We now have natural capital accounts that demonstrate the value that specific groups receive from natural features. For example, the greenspace accounts for London published last year told us that the capital’s greenspace provides services valued at £5 billion per year. In the light of work such as this, we must talk of investment not just finance.
  3. Whether there is a case for private investors and asset managers to restore the fabric of the environment. After all, the world of conservation finance is growing globally and the UK is a centre of green finance expertise.

Across the UK, our natural capital restoration ambitions – and needs – are gargantuan. One example is found in the 25 Year Environment Plan, published in January 2018. It speaks of increasing woodland cover in England by 180,000 hectares by 2042. This is equivalent to nearly the entire area of Berkshire. We must ask the questions of who can and who should pay for such a major land-use change.  Is it down to charity?  Can the £500 million Northern Forest be funded by holding out a collection tin on the streets of Westminster or Warrington?

Those who point to the potential for compensation for the impacts of built development to fund our national natural infrastructure needs have yet to set out their funding case.  Even if it could, it would surely always rely on some very skilled ‘net gain’ negotiation.

The 25 Year Environment Plan indicates that new forms of blended finance are an important way forward for natural capital.  But we now urgently need the dialogue to work this out in practice. The Ecosystems Knowledge Network is pleased to be starting this at the Natural Capital Investment Conference on 1st March 2018. Experts in environmental finance and the stewardship of land and water will meet to work out what it means to invest in natural features based on their economic value to business and wider society. Innovative financial services businesses like Triodos Bank UK will be speaking about ways forward, learning, for example, from social finance.  We’ll also hear from organisations already giving consideration to new forms of investment – such as RSPB.

If Schumacher’s natural capital concept is to deliver anything, we must start talking about finance and investment.  Analysis of our environment by natural scientists and economists has opened up a natural capital funding chasm.  It has also pointed to a funding opportunity. Let’s explore it with a good measure of pragmatism and partnership.

 

The Natural Capital Investment Conference will take place at the British Library in London on 1st March 2018. https://ecosystemsknowledge.net/naturalcapitalconference

Bruce Howard leads the Ecosystems Knowledge Network, the UK’s leading hub for learning how to manage the environment as an asset. NCI was a partner in the establishment of the Network in 2011.