Natural capital and nature conservation champions don’t need to fight

View of English grazing sheep in countrysideThis post is by Green Alliance’s policy director, Sue Armstrong Brown.

The internecine struggle between supporters of natural capital and nature conservation continues to dominate the debate about how to restore the declining health of the UK’s natural environment. But what if they’re both right?

Proponents of the natural capital approach claim it’s the way to include the environment in economic decision making, and discount nature conservation as ‘utopian’. Opponents say it delegitimises protecting nature simply for nature’s sake, and provides a fig leaf to cover inadequate implementation of environmental policies.

Our new report, Natural partners: why nature conservation and natural capital approaches should work together, published today, identifies the distinctive strengths of the two schools of thought and concludes they should be complementary.

Urgent solutions are needed
The need to find better ways to restore the natural environment is becoming more urgent, as we breach environmental limits and reach disastrous tipping points for habitat loss, water cycles, nutrient enrichment and carbon emissions. The staunchest supporters of both approaches are motivated by the same desire to reverse environmental declines.

Natural capital and nature conservation have strongly contrasting concepts at their cores, resulting in different modes of operation. The natural capital approach can be defined as optimising the interconnection between the economy and the environment for the benefit of both. Nature conservation can be characterised as protecting the environment from damage inflicted by economic activity. Perhaps it isn’t venturing too far along the rhetorical limb to describe the idea at the heart of natural capital as ‘people need nature’ and the one at the heart of nature conservation as ‘nature needs people’.

Conservation where the market can’t deliver
In the world of nature conservation, the environment underpins the economy but is not defined by it. Resilient water cycles, healthy soils, diverse wildlife and beautiful landscapes have a value of their own. Markets are poor at internalising the costs or benefits of their environmental impacts. As a rule, the economy does not value the natural resources that sustain it nor does it recognise the intrinsic worth of a healthy environment, and conservation policy is needed to limit impacts to reasonable levels and repair the damage.

Conservation interventions are usually in three modes: regulation (to protect places and species, prohibit damaging activities or require beneficial ones); payments (grants to do things which benefit the environment); and sparing (removing land from the influences of commercial activity, creating nature reserves or exclusion areas).

This toolkit of measures has delivered most of the environmental protections and improvements we see today, but it has never been implemented at the scale needed to fully restore natural systems or achieve retreat from dangerous environmental limits. To do so would be possible, probably cost efficient and undoubtedly effective, but politically it is extremely challenging.

Natural capital thinking for a stronger economy
Meanwhile, in the world of natural capital, the economy and the environment are interdependent. Investing in improving the environment makes the economy stronger, because natural capital stocks are built up and ecosystem services, which provide the planet’s life support systems, are strengthened. Examples abound: changing land use to reduce flood risk costs less than the consequence of floods; the price of decarbonising is dwarfed by the cost of adapting to climate change; and better access to green spaces has been estimated to shave billions off the public health bill.

Of course, this doesn’t mean that all parts of the economy will benefit directly from improving the environment, and even those businesses which would benefit don’t always have the knowledge or the opportunity to invest. The government can apply a natural capital approach to its existing policies, by targeting conservation payments and protection towards environmental outcomes with the highest value. But this only scratches the surface of what a more developed natural capital approach could deliver.

There is no natural capital equivalent to the conservation policy toolkit. Market-based instruments to build natural stocks, such as accounting, offsetting, green bonds and green taxes, are the building blocks from which a natural capital policy framework could be constructed, but there are significant political, financial and regulatory challenges to its development.

The better the business case for investing in the environment, the more effective the natural capital approach will be. The strongest business cases tend to be in reducing environmental damage (which harms a company’s brand) or maintaining soil and water resources (which cuts risks and costs). But the business case for restoring landscapes and priority habitats tends to be weaker because, even though the overall benefits are significant, they can’t be attributed to a company’s bottom line. So where there is no clear business case, and the beneficiaries of restoration are society at large or nature itself, nature conservation policy provides the most direct and effective route to environmental improvements.

A strategic combination
Combining natural capital and conservation policy approaches could offer the best of both worlds. The strength of the natural capital approach is its potential to internalise many of the external costs of environmental damage into the economy, so that it makes good business sense to look after the environment and costs you to damage it.

The degree of policy development needed to bring this about shouldn’t be underestimated, but with every flood event and global climate summit, the reasons to do it are getting clearer. The strength of the nature conservation approach, to complement this, is to cut through the complexities and perversities of commerce, protect the irreplaceable, no matter what the competing demands might be, and to recognise that we are all richer for cherishing nature.

Most of us will instinctively prefer one of the approaches to protecting the natural environment over the other. But aligning the two approaches, so the market pays to protect the environment where it can and conservation intervenes to protect the environment where it must, is the best chance we have to achieve landscape scale restoration of natural places and systems. In the end, nature needs people, and people need nature.

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