Anyone who stumbled into the packed room could be forgiven for thinking that a new iGismo was about to be launched. There was a palpable buzz at this week's Policy Exchange event on securing the value of nature.
Professor Dieter Helm, Chair of the UK Government's Natural Capital Committee, said that biodiversity is where climate change was 10 years ago. Then, the Stern Review put a price on damages (US$85/tonne) and climate change action stepped up a gear.
Prof. Helm said that it feels as though the same is happening now for biodiversity. His Committee is tasked with ensuring that the Government has a better informed understanding of the value of natural capital, to prioritise actions to support and improve the UK’s natural assets. The urgency of the issue is reflected in a tight timescale, with its work due to be reviewed by 2014.
With current inertia in practices and processes based on valuing most natural assets at zero, up to half of all species globally could be extinct by the end of the century. Environmental accounting is a step in the right direction to shine a light on the unsustainable use of assets. "Valuation is extraordinarily important to show that this is an economic issue," explained Prof. Helm.
Valuations will be designed to embed natural capital into the economy, and to properly track the depreciation and maintenance of natural capital assets on the balance sheet. Prof. Helm noted the importance of measuring the footprint of production and consumption so that exported biodiversity loss is measured, like a balance of natural capital payments.
Monetising biodiversity and ecosystem services is just a piece of the picture and can't solve all problems, but it's important so that decisions are informed by natural capital considerations to make resource allocation more efficient, he said. UK Secretary of State for the Environment, Caroline Spelman MP, added that resource efficiency could deliver £23 billion in savings in the UK alone.
Professor Georgina Mace, Imperial College, London, added that valuing the benefits of ecosystem services to build on the UK National Ecosystem Assessment will help assess the central role of natural capital in the economy, alongside produced, human and social capitals. As Prof. Mace put it, "Tackling valuations won't be easy, but it can be done."
Biodiversity loss is compounded by climate change, and the Stern Review warned that ecosystems will be particularly vulnerable to impacts. One study estimated that up to 40% of species face extinction with 2°C of warming, the limit set for a temperature rise under UN climate agreements to cut emissions. Natural capital and resource scarcity might be more topical than climate change in 2012, but it's not a case of "either or". The revised international Strategic Plan for Biodiversity 2011-2020 emphasises the critical role of biodiversity in climate change mitigation and adaptation.
Commitments by companies, banks, investors and policymakers to support natural capital valuation and accounting are an important, small, first step that could have big consequences. They have a vital role to play in meeting demand for low-carbon, resource-efficient production and consumption that maintains natural assets needed to underpin future balance sheets.