5th March 2018 Victoria Park Plaza

1. Natural Capital
5th March 2018
Victoria Park Plaza

2. • 15:00 – 15:10 Welcome –Colin Mayer – Chair
• 15:10 – 15:15 Overview of accounts – Emily Connors
• 15:15 – 15:45 A detailed look at the work of natural capital at ONS – Emily Connors
• 15:45 – 16:00 Discussion
• 16:00 – 16:30 Issues and problems in measuring natural capital in the context of woodland – Miranda Winram
• 16:25 – 16:45 Discussion
• 16:45 – 17:05 Refreshment Break
• 17:05 – 17:35 Actual and potential uses of natural capital accounts – Nick Barter
• 17:35 – 17:50 Discussion
• 17:50 – 18:00 Chair’s closing remarks – Colin Mayer
• 18:00 – 19:00 Drinks Reception
Natural capital accounting for
the UK
Emily Connors
Head of Natural Capital, ONS
Measuring Natural
Capital in Woodland –
Forest Enterprise’s
Expereince
Miranda Winram: Head of Strategy
and Insight
ESWG Seminar on Natural Capital 5th March 2018
25 Year environment planA Green Future:
Our 25 Year Plan to Improve the Environment
What gets measured gets managed
Nick Barter, Defra

3. Natural capital accounting for
the UK
Emily Connors
Head of Natural Capital, ONS

4. Contents
An introduction to the accounts
Examples of our statistics
Future priorities and issues to address

5. ONS and Defra involvement
2011
ONS commit to incorporate natural capital into UK Accounts by 2020
ONS and Defra commit to a joint project
2012
UN SEEA Experimental Ecosystem Accounting
ONS Roadmap identifies early priorities
2014
Defra-ONS ecosystem accounting principles
ONS experimental partial aggregate estimates of UK Natural Capital

6. Beyond the project
Aichi Target 2; Sustainable
Development Goal 15.9 - By
2020, integrate ecosystem and
biodiversity values into national
and local planning and accounts
World Bank WAVES project

7. Purpose of the accounts
• GDP tells us only part of our economic story
• hides and excludes services provided by natural capital
• focuses only on flows, not stocks
• nature is priceless, not valueless
• Getting the best overall outcomes for society through:
• highlighting links with economic activity and pressures on
natural capital to help decision making
• monitoring losses and gains in our natural capital and
providing an integrated information set for analysis of
interactions between the economy and the environment

8. What are natural capital accounts?
• Extent of the
ecosystem asset -
land cover
Stock
Non-monetary (physical) accounts
Wealth at a point in
time

9. What are natural capital accounts?
• Extent of the
ecosystem asset -
land cover
Stock
• Condition of the
ecosystem asset -
indicators
Stock
Non-monetary (physical) accounts
Wealth at a point in
time

10. What are natural capital accounts?
• Extent of the
ecosystem asset -
land cover
Stock
• Condition of the
ecosystem asset -
indicators
Stock • Ecosystem services
provided by the asset
Flow
Non-monetary (physical) accounts
Wealth at a point in
time
Flow of services
consumed each year

11. What are natural capital accounts?
• Ecosystem services
provided by the
asset
Flow
• Extent of the
ecosystem asset -
land cover
Stock
• Condition of the
ecosystem asset -
indicators
Stock • Ecosystem services
provided by the asset
Flow
Non-monetary (physical) accounts
Monetary accounts
Wealth at a point in
time
Flow of services
consumed each year

12. What are natural capital accounts?
• Ecosystem services
provided by the
asset
Flow
• Value of ecosystem
services for the life
of the asset
Stock
• Extent of the
ecosystem asset -
land cover
Stock
• Condition of the
ecosystem asset -
indicators
Stock • Ecosystem services
provided by the asset
Flow
Non-monetary (physical) accounts
Monetary accounts
Wealth at a point in
time
Flow of services
consumed each year

13. What are natural capital accounts?
• Ecosystem services
provided by the
asset
Flow
• Value of ecosystem
services for the life
of the asset
Stock • Integrated
ecosystem-
economic accounts
Integrate
• Extent of the
ecosystem asset -
land cover
Stock
• Condition of the
ecosystem asset -
indicators
Stock • Ecosystem services
provided by the asset
Flow
Non-monetary (physical) accounts
Monetary accounts
Wealth at a point in
time
Flow of services
consumed each year

14. Strategy for account development
Woodland
Provisioning
Services
Timber Fruits
Regulating Services
Pollutant
removal Flood
protection
Carbon
sequestration
Cultural Services
Education
Recreation
Aesthetic
Value

15. UK account Habitat accounts
Farmland
Woodland
Freshwater
Urban
Coastal margins
Semi-natural grassland
Marine
Mountains, moorland and heath
Cross-cutting accounts
Land cover and land use
Carbon stock
Pollution removal
Recreation
All ecosystem services
Biodiversity
Soil
CompleteNotcomplete
Spatial
accounts
Which can be broken
down by region and
by habitat
Strategy for account development

16. What are natural capital accounts?
• Ecosystem services
provided by the
asset
Flow
• Value of ecosystem
services for the life
of the asset
Stock • Integrated
ecosystem-
economic accounts
Integrate
• Extent of the
ecosystem asset -
land cover
Stock
• Condition of the
ecosystem asset -
indicators
Stock • Ecosystem services
provided by the asset
Flow
Non-monetary (physical) accounts
Monetary accounts
Wealth at a point in
time
Flow of services
consumed each year

17. Extent of the
ecosystem asset
Stock
Thousand hectares
Opening stock
1998
Additions to
stock
Reductions to
stock
Net
change
Closing stock
2007
Woodland 2,862 -706 713 7 2,869
Enclosed Farmland 9,950 380 -640 -260** 9,690
Semi-natural Grasslands 4,016 612 -435 177 4,193
Freshwater 3,065 -726 710 -16 3,049
Dwarf shrub heath (Heather and
Heather Grassland) 1,319 89 -57 32 1,351
Montane Habitats and Inland Rock 126 2 -17 -15** 111
Coastal Margins 149 6 -3 3 152
Urban & Suburban 2,756 170 -101 69 2,824
Unknown 178 -1 1 0 178
Total 24,419 -173 171 -3 24,417
Territorial Sea 11,717 - - - 11,717
Economic Exclusive Zone (Excluding
Territorial waters) 56,624 - - - 56,624
Sources: Countryside Survey (1998;2007), Northern Ireland Countryside Survey (1998, 2007), OS
Meridian, UK Hydrographic Office, Office for National Statistics
Woodland
Enclosed
Farmland
Semi-natural
Grasslands
Freshwater
Dwarf shrub
heath (Heather
and Heather
Grassland)
Montane
Habitats and
Inland Rock
Coastal Margins
Urban &
Suburban

18. Type Indicator Indicator signaling improvement or
deterioration in condition between 2008
and 2015
Chemical Nitrogen soil balance Improvement
Phosphorus soil balance Improvement
Biodiversity Farmland bird index Deterioration
Protected areas Hectares of Protected Areas Improvement
Organic Farming Number of organic farms Deterioration
Source: British Trust for Ornithology, Royal Society for Protection of Birds, Joint Nature
Conservation Committee, Defra
Condition of the
ecosystem asset
Stock
Farmland

19. • Ecosystem services
provided by the asset
Flow
• Ecosystem services
provided by the
asset
Flow
• Value of ecosystem
services for the life
of the asset
Stock
Non-monetary (physical) accounts
Monetary accounts
Ecosystem service flow and asset value

20. Services we have
worked on
There are numerous
ecosystem services, those
highlighted are those partially
or fully developed
Provisioning
Agricultural production Wild animals
Water (public) Water (not for public)
Fish Timber
Renewable energy souces
Regulating
Carbon Sequestration Air pollution removal
Waste water cleaning Soil waste
Smell, noise and visual pollution
Flood, erosion and landslide
protection
Temperature regulation Water flow control
Lifecycle regulation Pollination and seed dispersal
Water condition regulation
Cultural
Recreation (day trips by UK
residents)
Overnight visits; visits by non-
residents
Scientific and educational
interactions Heritage and aesthetic interactions
Symbolism Existence value

21. £0
£1,000
£2,000
£3,000
£4,000
£5,000
£6,000
£7,000
£8,000
£9,000
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2009 2010 2011 2012 2013 2014 2015
Time spent in natural environment, thousand hours Total Value (£ million)
Monetary and physical flows together: Recreation

22. Woodland
United Kingdom
2009 2010 2011 2012 2013 2014 2015
Total biomass for timber removals
(million cubic metres overbark standing)
10.9 11.9 12.9 12.9 14.0 14.6 13.7
Carbon sequestration (million tonnes
carbon dioxide equivalent)
17.9 18.0 17.9 17.6 17.6 17.3 17.0
Air filtration (thousand tonnes) 338 331 325 323 320 318 316
Recreation (million visits to woodland) 245 172 257 290 366 352 351
Source: Defra, Office for National Statistics
Enable comparison between services: Woodland

23. 0
500
1000
1500
2000
2500
3000
2009 2010 2011 2012 2013 2014 2015
Time spent
at habitat
Pollution removal
Carbon
sequestration
Total timber
removals
Enable comparison between services: Woodland

24. Enable comparison between services: Partial UK
£-
£5,000
£10,000
£15,000
£20,000
£25,000
£30,000
£35,000
£40,000
£45,000
2010 2011 2012 2013 2014 2015
10 ecosystem service flow values
Oil and Gas 6 Recreation 10 Agricultural biomass 1 Fish caught 2 Timber 3
Water abstraction 4 Minerals 5 Renewable energy 7 Carbon Sequestration 8 Air pollutant removal 9

25. Enable comparison between services: Partial UK
£-
£100.00
£200.00
£300.00
£400.00
£500.00
£600.00
£700.00
£800.00
£900.00
2010 2011 2012 2013 2014 2015
Asset values
Oil and Gas 6 Recreation 10 Agricultural biomass 1 Fish caught 2 Timber 3
Water abstraction 4 Minerals 5 Renewable energy 7 Carbon Sequestration 8 Air pollutant removal 9

26. Agriculture, £86
Fishing, £11
Timber, £6
Water, £35
Minerals, £10
Oil and Gas, £138
Total Renewables,
£36
Carbon Sequestration, £105
Pollution Removal,
£33
Recreation, £301
Partial asset value, UK, 2015, £b

27. Challenges and issues still to address
• Data and valuation method gaps
• Predicting future flows
• What is driving change?
• Understanding how accounts can inform
sustainability
• Developing and refining accounting principles
in the light of experience

28. •Comparing ecosystem services is of interest – woodland
• Valuing in necessary, but bringing together the physical
data is also of high value
•Momentum for NCA is growing
•Explaining what isn’t currently included in the accounts is
just as important as explaining what is
What we have learnt

29. • A comprehensive set of habitat accounts that are
integrated with and underpin the high-level UK
estimates. Limited spatial disaggregation
• Valuation of most key services, with reasonably stable
estimates
• Established methods and data sources
• A number of regular natural capital account users
• Annual production rounds for key bulletins
Further developmental work will be needed beyond 2020,
especially spatial disaggregation
29
What we hope to achieve by 2020

30. Emily Connors
Emily.connors@ons.gov.uk
01633 651806
All our data available here:
https://www.ons.gov.uk/economy/nationalaccounts/ukse
ctoraccounts/methodologies/naturalcapital

31. Measuring Natural Capital in
Woodland – Forest
Enterprise’s Expereince
Miranda Winram: Head of Strategy and
Insight
ESWG Seminar on Natural Capital 5th March 2018

32. Measuring Natural
Capital in Woodland –
Forest Enterprise’s
Expereince
Miranda Winram: Head of Strategy
and Insight
ESWG Seminar on Natural Capital 5th March 2018

35. Amazing care for our
environment

36. Creativity Rooted
in Place

37. 252,000 ha of woods
and forest

38. • Natural Capital
• Ecosystem Services
• Natural Capital Accounting
• Long term
• Value
• Communication

39. • 2010 Proposed England Public
Forest ‘sell-off’

44. How to do it….
Work out what your
natural capital
includes e.g. 20ha of
conifer, 3ha blanket
bog, 5ha area of
woodland on deep
peat.
Step 1:
Asset Register

46. How to do it….
Work out what your
natural capital
includes e.g. 20ha of
conifer, 3ha blanket
bog, 5ha area of
woodland on deep
peat.
Identify what
ecosystem services
that natural capital
provides (e.g. carbon
capture) and
calculate how many
units of that benefit
are provided (e.g.
tonnes of Co2/yr)
Step 1:
Asset Register Physical Flow
Account
Step 2:

48. How to do it….
Work out what your
natural capital
includes e.g. 20ha of
conifer, 3ha blanket
bog, 5ha area of
woodland on deep
peat.
Identify what
ecosystem services
that natural capital
provides (e.g. carbon
capture) and
calculate how many
units of that benefit
are provided (e.g.
tonnes of Co2/yr)
Step 1:
Asset Register Physical Flow
Account
Step 2: Step 3:
Monetary
Account
Give a value to each of
those units of value
e.g. DEC non-traded
carbon value £60 per
tonne.
And minus the costs of
delivering those units
of value. In the case of
carbon it’s zero, as it’s
a by-product. For
timber, you need to
minus harvesting/
planting etc costs

50. How to do it….
Tot up any ‘misc’
costs that haven’t
been accounted for
already.
Likely to be higher
for a public body
than private sector,
but may still be some
basic legal
compliance costs.
Step 4:
Maintenance
Account

52. How to do it….
Tot up any ‘misc’
costs that haven’t
been accounted for
already.
Likely to be higher
for a public body
than private sector,
but may still be some
basic legal
compliance costs.
Draw all the £ values
together into a
monetary summary
Step 4:
Maintenance
Account
Balance Sheet
Step 5:

53. Balance Sheet

54. How to do it….
Tot up any ‘misc’
costs that haven’t
been accounted for
already.
Likely to be higher
for a public body
than private sector,
but may still be some
basic legal
compliance costs.
Draw all the £ values
together into a
monetary summary
Step 4:
Maintenance
Account
Balance Sheet
Step 5:
The number in the
bottom right corner
of the balance sheet
isn’t the whole story
– tell it how you want
it, or how you want it
to be used.
Step 6:
Presentation

55. Asset Register

56. Positives
• Quantified the scale of the (partial)
benefit compared to the financial
accounts. £22.5bn vs £1.4bn.
• Data collation & Improvement
• Influences strategic discussions.

57. Challenges -
• Basic Data
• Time consuming
• Complex concepts
• Identifying ecosystem service
flows
• Operationalising
• Frequency
• Motivation
• On the ground

58. Pilot ‘On the Ground’ Projects:
Challenges:
• Data boundaries
• Managing displacement / substitution
effects
• Motivation
• Balancing local staff expectations with
what’s achievable -

59. FEE’s next Natural Capital Account
2017/18
• Improving understanding of lower
priority areas
• Correcting errors
• Filling gaps in asset register
• Improving explanations
• Possible inclusion of air quality
work.

60. 60
More Information:
miranda.winram@forestry.gsi.gov.uk
On our website at:
https://www.forestry.gov.uk/forestry/BEEH-APTCAS

61. END
61

62. 25 Year environment planA Green Future:
Our 25 Year Plan to Improve the Environment
What gets measured gets managed
Nick Barter, Defra

63. • Background to the 25 YEP
• The (natural capital) engine of the
Plan
• What it says – key policies
• The role of measurement
• Background to aid discussion
Contents

64. Background to the 25 YEP

65. “We hold our natural environment in trust for the next generation. By implementing the measures
in this ambitious plan, ours can become the first generation to leave that environment in a
better state than we found it and pass on to the next generation a natural environment
protected and enhanced for the future.”
Theresa May, 11 January 2018
The plan has been published…

66. • Natural capital
• The National Ecosystem Assessment
(2011)
• The Natural Environment White Paper
(2011)
• The Natural Capital Committee’s third
State of Natural Capital report (2015)
• Government manifesto “…we pledge
to be the first generation to leave the
environment in a better state than we
inherited it. That is why we shall
produce a comprehensive 25 Year
Environment Plan that will chart how
we will improve our environment”
(2017)
• The 25 Year Environment Plan (2018)
The journey getting here
1909 - Johnson, Introduction
to Economics
70s/80s/90s - modern
meaning, stocks of natural
assets providing benefits
1989 - Pearce, Blueprint
for a Green Economy
2012 - Natural Capital
Committee established
– world first
Natural capital

67. It is a long-term 25 year plan, because a strategic approach is needed.
Informed by natural capital; the whole environment as an integrated system, focus on
stocks and pressures, helps understand benefits and trade-offs.
It sets the direction for future environment, land and sea use policy.
It demonstrates we are not engaging in a race to the bottom. It’s a positive narrative –
Green Brexit.
Key Plan strengths…
“When the United Kingdom leaves the European Union,
control of important areas of environmental policy will
return to these shores. We will use this opportunity to
strengthen and enhance the protections our
countryside, rivers, coastline and wildlife habitats
enjoy, and develop new methods of agricultural and
fisheries support which put the environment first”.

68. The (natural capital) engine of the Plan

69. Haveinterventionsworked?
*Other capital inputs include manufactured capital (eg. buildings and machines), human capital (eg. labour and education) and social capital (eg. rules and
procedures)
A framework for improving the environment

70. Haveinterventionsworked?
A framework for improving the environment
25 YEP
goals
The value of assets, which is where much management action is focused, is
determined by:
• Quantity
• Quality
• Location
• People’s exposure (i.e. ability to access)

71. For example:
• Atmosphere
• Freshwater
• Land
• Species
• Ecological
communities
• Soil
• Geological assets
• Oceans
MonitoringandEvaluation
Assets
For example:
• Clean air
• Clean and plentiful water
• Terrestrial and marine
plants and wildlife
• Protection from hazards.
• Products from natural
resources
• Beauty, heritage and
engagement (including
recreation)
Goods and benefits
Policies
Management actions
Investments
Governance and
institutions
HOW are we going to take action and improve the environment within a generation?
Whathasbeenachieved?Haveinterventionsworked?
Other
capital
inputs*
A strong
economy and
improved health
and wellbeing
WHAT we want to achieve
*Other capital inputs include manufactured capital (eg. buildings and machines), human capital (eg. labour and education) and social capital (eg. rules and
procedures)
Services
A framework for improving the environment
WHY
Drivers /
Pressures
Including:
• Climate Change
• Waste and poor
resource
efficiency
• Pollution /
chemicals
• Biosecurity
threats
Asset
Interactions

72. The 25 YEP framework
Our 25-year goals
Our policies will focus on:
 Using and managing land sustainably
 Recovering nature and enhancing the beauty of
landscapes
 Connecting people with the environment to improve
health and wellbeing
We will achieve:
 Clean air
 Clean and plentiful water
 Thriving plants and wildlife
 Reduced risk of harm from environmental hazards
such as flooding and drought
 Using resources from nature more sustainably and
efficiently
 Enhanced beauty, heritage and engagement with
the natural environment
We will manage pressures on the environment by:
 Mitigating and adapting to climate change
 Minimising waste
 Managing exposure to chemicals
 Enhancing biosecurity
 Increasing resource efficiency, and reducing pollution and waste
 Securing clean, productive and biologically diverse seas and
oceans
 Protecting and improving the global environment

73. What it says – key policies

74. Using and managing land sustainably
• Set the direction of
future land use policy.
• Plant trees; support the
development of
Woodland
Trust/Community
Forest’s new Northern
Forest and appoint a
Tree Champion.
• Embed an
‘environmental net gain’
principle for
development.
“The new system of
support that we will
bring in for farmers –
true friends of the earth,
who recognise that a
care for land is crucial to
future rural prosperity –
will have environmental
enhancement at its
heart”.

75. Enhance nature; develop a
Nature Recovery Network,
publish a strategy for nature,
provide opportunities for the
reintroduction of native
species and explore the role
of conservation covenants.
Recovering nature and enhancing the beauty of landscapes
Develop a NRN providing 500,000 HAs of additional
wildlife habitat, more effectively linking existing
protected sites and landscapes – delivering on Sir
John Lawton’s recommendations.

76. Defra evidence review on links between natural environments and
health published 2017 http://valuing-nature.net/news/defra-evidence-
statement-links-between-natural-environments-and-human-health
• Connect people with nature; support more pupil contact with local
natural spaces.
Connecting people with the environment to improve wellbeing
• Spend £10m encouraging
children to be close to nature,
e.g, nature friendly primary
schools and expand care
farming.

77. • Achieve zero avoidable waste by 2050 and zero avoidable plastic
waste during the course of the Plan.
• Publish a Resources and Waste strategy in 2018 to make us a world
leader in resource efficiency – doubling resource productivity by
2050.
Increasing resource efficiency, and reducing pollution and waste
• Launch a call for evidence
in 2018 seeking views on
how the tax system or
charges could reduce
single use plastic waste.
• Publish a Clean Air Strategy
for consultation in 2018.

78. • Set the direction of future sea use policy as we leave the Common
Fisheries Policy; develop new methods of fisheries support which
put the environment first.
Securing clean, productive and biologically diverse seas/oceans
• Major assessment
of sea health –
2018.
• Consult in 2018 on
the third tranche of
Marine
Conservation
Zones.

79. • We want to leave a lighter footprint on the global environment and will work in
partnership with industry to explore the possibility of developing additional tools
that support businesses to identify sustainable supply chains.
Protecting and improving the global environment
• Establishing a cross-
government global resource
initiative in 2018 to work with
businesses, NGOs, producer
countries and intermediary
countries.
• Internationally, we will lead the
fight against climate change,
invest to prevent wildlife crime,
pursue a ban on sales of
ivory….

80. • Consult on setting up a new independent body to hold government
to account and a new set of environmental principles to underpin
policy-making.
• Improve local environmental improvement through better local
delivery, with aspects of the Plan tested out in four Pioneers.
• Increase private funding of environmental enhancement; establish a
new green business council and explore the potential for a natural
environment impact fund.
Putting the Plan into practice
EnTrade

81. The role of measurement

82. Defra will work with experts to identify metrics to measure the state of the environment and
how it is changing, e.g, the health of nature, soil health, air and water quality. Adapt to new
technology, new knowledge, climate change…
Will include relationships between outcome and performance metrics (e.g, flood risk and
number of trees planted).
Monitoring progress and refreshing the Plan
“At present, we have well-developed systems that monitor
many aspects of our environment but these will need to evolve
to accommodate the needs of the Plan and a greater emphasis
on using a natural capital approach….We will also engage
widely over the next six months as we develop a comprehensive
set of metrics that we can use to monitor progress”.
“We will refresh the 25 YEP regularly to ensure that collectively we are focusing on the
right priorities, using the latest evidence, and delivering better value for money”.

83. Outcome metrics – whether the policies and actions within
the Plan are delivering on the goals and outcomes
associated with them. With indicators.
Performance metrics – at a more detailed level,
performance measures will be needed to monitor progress
in delivering the individual actions and policies within the
plan.
Accounts – a more systematic approach to measuring
change, with costs and values to inform relative importance
and help understand trade-offs. A valued asset base
provides a sense of what you are gaining or losing.
Forms of measurement

84. Benefits of accounts – communication/avoid bad decisions
15 x

85. Benefits of accounts – encourage action

86. Background to aid discussion

87. What we don’t want natural capital accounts to do..
Flow
GDP
Stock
Wealth

88. What we need natural capital accounts to do
GDP being a flow measure is backward looking – measure of activity
over previous time period. Limits value for management.
We need to know how sustainable activity is, hence the need to
incorporate stocks and their condition.
The perversity of focussing
on income.
a

89. Price effects vs change in stock
Do non-renewables
confuse the picture?

90. Are they fit for purpose?
Can we/media/politicians tell at a glance if natural capital is
being degraded or enhanced?

91. The sniff test

92. Discuss