We need to value our natural capital – Alex Irwin – Scotsman

Natural capital is an extension of the economic notion of capital. In simple terms it refers to everything which nature or the environment provides – both the individual constituent elements and also the consequences of those elements interacting under the direction of humans or nature.

Natural capital is made up of three categories. The first of these is Natural Capital Stock, which includes plants, animals and minerals as well as heat and light provided by the sun and bacteria and viruses.

The next category, Natural Capital Services, are the goods and services derived from Natural Capital Stock which provide us with a direct and immediate benefit. This could include using lochs for fishing and canoeing, using stone to build houses or turning plant or animal materials into clothing.

The final category is Ecosystem Services, the services yielded by Natural Capital Stock which occur naturally. This includes pollination of plants, natural carbon storage provided by peatlands and forests and human-generated services, such as capturing energy from decomposing food waste.

While many farmers, landowners and other groups already fully recognise the importance of natural capital, its economic benefits are not always fully apparent to all. Part of the reason for this is the lack of wider understanding that these elements do not sit in isolation but impact on each other directly. For example, the creation of the steam train in the 18th century brought several public benefits, but also brought dis-benefits caused by the mining of Natural Capital Stock (coal) and the air pollution it emitted when used in the trains’ engines.

This finely balanced relationship is now beginning to gain prominence with growing understanding of the role natural capital assets can play in tackling climate change. Utilising Natural Capital Services to convert wind, sun and water into renewable forms of energy is a prime example of this as is the safeguarding of key resources, including peat bogs and forests, to further enable carbon reduction.

Here in Scotland, protecting these natural assets is also economically crucial for key sectors including our tourism industry which accounts for one in every 12 jobs. Meanwhile Scotland’s food and drink sector, which is largely dependent on the raw ingredients provided by nature, is worth more than £14 billion annually to the economy.

Placing value on natural capital, treating it as an asset of the economy, and factoring in the cost of non-beneficial activities, such as burning coal, using neonicotinoids in pesticides and polluting watercourses, could better enable us to protect the environment.

This approach could also create economic opportunities for a wide range of stakeholders by opening business diversification channels and new revenue streams. This includes opportunities for innovators to support companies in finding ways to mitigate against the effect their activities are having on the natural world. There are also an increasing number of grants being made available for the creation and maintenance of forests and the restoration of peatlands which can benefit landowners.

We must encourage a wider debate on the concept of natural capital ownership. While here in Scotland we may have no particular issue with the concept of owning land, ownership of clean air, clean water and pollination are more complex factors to be determined.

The concept of natural capital may be gaining prominence, but it will likely remain difficult for many landowners or farmers to identify their natural capital assets and assess their value in the immediate future. This situation is, however, likely to evolve as new markets develop, new funding is made available, and there is increased awareness of the value of natural capital including additional income streams that can be derived through the safeguarding and efficient stewardship of these natural assets.

With the eyes of the world about to focus on Scotland at COP26, we must focus internally on this challenge and ensure this platform helps create a positive legacy in how we maximise the full economic potential of the nation’s natural capital going forward  https://www.scotsman.com/news/opinion/columnists/we-need-to-value-our-natural-capital-alex-irwin-3385864