Natural Capital Day

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can natural capitalism help reduce flooding? (c) Miles King

Monday was Natural Capital day at the Green Alliance. They produced a report called Natural Partners, in which they sought to explain that Natural Capitalists and Nature Conservationists could get along fine, instead of bickering. On the same day, they held a Natural Capital debate in London, which I went along to. There was a very good turnout.

I read the report on the train to London. At first I was not sure about it; was it entirely sensible to frame the debate as either traditional nature conservation, or natural capital? Other options are available – for example a broader environmental stance, or indeed the new kid on the block – rewilding.

A deeper problem for me was that the report failed to mention the vital importance of education and raising awareness. Education and raising awareness drives societal change at a number of levels – in terms of personal (consumer) choice but also, more importantly, changing perceptions of the value and importance of nature to people; and the need to change the way people live with and in nature. This has profound implications across other activities – people will not support the need for more regulation or incentives (the main policy levers that nature conservation uses, according to the report) to support nature if they do not understand its value to them (and society). Education and awareness raising also drives pro-environmental behaviours, which are in themselves beneficial to nature eg people changing consumption habits.

Perhaps the biggest problem with the proposed solution laid out in the report ie Natural Capital and Nature Conservation approaches are complementary,  was that the report entirely omits the problems associated with framing. Cognitive Linguistics research shows time and again that one frame dominates others. If the dominant frame is an economic one, only the economically relevant values of nature will be considered in decision making, or by individuals.

For a clear exposition of framing in nature debates, here’s an excellent blog from my namesake Miles Richardson. Others who have written deeply about the problems of using economic language as a frame to view actions for nature include Sian Sullivan and Common Cause Foundation. I would recommend reading both of them to gain a wider understanding of this critical issue.

I thought the authors of the report really struggled to find examples of where a Natural Capital approach was actually working. The report gave an example of flooding and the Natural Capital approach drawing in private sector funding. In reality this has not happened – the facility has been there for five years but the amount of private sector funding has been pitiful. £600m of the Govt’s £2.3Bn flood defence budget is expected to come from outside Govt. So far, only £61M has come from private business sources, while cash strapped local authorities have stumped up £190M.

I was not really convinced that the comparison between the pros and cons of Natural Capital vs Nature Conservation really worked (eg Page 15).

Green Alliance argue that Natural Capital operates on the presumption that the economy and environment are interdependent – but other Natural Capital devotees eg Prof Dieter Helm, are far more neoliberal – arguing that the environment is part of the economy.

I would suggest that in both cases, the assumption is contested. The environment existed before the economy was created (the economy is, after all, a social construct) and will exist after the economy has long gone.

the report suggests that for a natural capital approach, Natural assets are prioritised according to utilitarian values;  whereas for nature conservation, the priorities are based on threat, or for cultural or scientific values. But these are also utilitarian values.

But things got better – the report (to me) seemed to be putting forward the position that Natural Capital views nature through the lens of business – what can nature provide to a business bottom line, and what risks can nature put in the way of increasing shareholder value?

Let’s be clear – and this is not a criticism of business: Businesses are not there to increase natural value, they are there to increase sharedholder value. Sadly, in most cases, there is an inverse relationship between the two.

To look at this from the most sceptical position, a Natural Capital approach is about redefining the environmental crisis in a way that enables business as usual to continue. Even though business as usual is exactly what is causing the environmental crisis.

The main problems causing the environmental crisis are a burgeoning global population, unsustainable consumption of natural resources; and the increasing disparity in global wealth patterns. If a Natural Capital approach is going to do anything, it has to recognise these facts and act accordingly.

But my fear is that a headlong drive towards Natural Capital framing will create a global market in natural capital credits and debts. What would happen? The creation of natural capital offshoring – akin to corporate tax avoidance. Companies would set up subsidiaries in natural capital havens, where the “debits” would accrue without penalty. Natural Capital credits would be accounted for in those countries which required it (through regulation or “best practice”). Create a global market in natural capital and you create an opportunity for Natural Capital flight to the country with the weakest ethical framework (or none at all).

The report concluded, wisely, that “only in rare circumstances could a Natural capital approach lead private investment into restoration of lost or degraded ecosystems” but, intriguingly suggested that it may work best in the sphere of productive land-use.

The debate was quite interesting – I though Professor Georgina Mace spoke the most sense, urging great caution with how Natural Capital may end up not only delivering nothing new, but providing a justification for business as usual to continue. Prof Mace made a heartfelt plea that Natural Capital approaches could work but was clearly doubtful whether they would. Mace also pointed out that a Natural Capital approach has to recognise that there will be winners and losers – and that disparities may function between different sections of society, across different locations, and at different points in time – eg future generations may pay the cost of our inability to protect stocks of natural capital now.

Duncan Pollard, a senior executive from Nestle, who are funding the Green Alliance work on this issue. He was trying very hard to show how seriously Nestle take Natural Capital, but made a particularly telling remark – that any additional costs associated with adopting Natural Capital accounting would be passed on to the consumer. As far as Nestle are concerned, this is not about changing their business model.

Johnny Hughes, chief exec of the Scottish Wildlife Trust, gave a typically rosy view of Natural Capital, for he is a cheerleader among the Trusts; and the wider NGO movement, for adopting Natural Capitalism. Johnny sought to explain how good for businesses adopting Natural Capital acounting would be.

Questions came from the floor – many were very sceptical of the Natural Capital approach. One commentator mentioned that he was struck by the scale of finance moving into this area.  Apparently the green Bond market is booming and scale of city money is colossal. One green bond released last week as oversubscribed by eight times.

I was lucky enough to be able to ask a question – so I said this:

“When I hear that the green bond market is booming, my greatest fears for natural capital appear to be coming into focus. Give how the global finance sector has operated in the past, can we expect a trade in natural capital debt to lead inexorably to natural capital offshoring and natural capital debt havens? IF business WILL seek to pass on any extra costs associated with natural capital accounting, won’t consumers end up footing the bill AND all natural capital turns out to be is an inflationary measure, akin to a bout of ecological quantitative easing.”

Yes it got a few laughs but it was a deadly serious point. Georgina Mace echoed my concerns and Johnny agreed that was a great danger of Natural Capital going to the dark side (ok he didnt actually say that).

Johnny pins his hopes on a Natural Capital ethical framework or charter, which he is working on and hoping IUCN will adopt. But if it’s only voluntary – how will it be enforced?

I came away feeling even more strongly than before that, at least the way the Natural Capital debate is going, it is being captured by corporate interests who will use it for their own benefits. I’d like to believe that Natural Capital can be a force for good, as Professor Mace hopes for, but I fear it will not.

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About Miles King

UK conservation professional, writing about nature, politics, life. All views are my own and I don't write on behalf of anybody else.
This entry was posted in Green Alliance, Natural Capital and tagged , . Bookmark the permalink.

15 Responses to Natural Capital Day

  1. Miles, an interesting blog.You make some valid points and you may well be right.For me though the discussion around natural capital does appear to be engaging some of the business sector and maybe Govt in environmental issues and to me that has got to be good news.

  2. gwilwren says:

    Thanks Miles
    I think I understand where Natural Capital used to come from ie conservationists trying to make the argument to decision makers that the natural environment had an inherent economic value. Originally I recall the view was that its value was based on the cost of replacement vav the road scheme or whatever but of course that foundered if noone understood or valuedthe wildlife and habitats for their own sake.
    This debate then evolved onto ecosystem services ie an environment that is free at the point of contact offers clean water, clean air, food, flood alleviations etc etc.
    My fear with the way that the Natural Capital debate is evolving is that the environment no longer beomes free at the point of contact as articulated by the Nestle view that customers would have to pay (NB their CEO about 3 years ago was on record as saying that no one had the right to free fresh water).
    I am passionately opposed to any sort of green credit scheme – if it looks like a racket and sound like a racket it probably is a racket…………..a bit like sub prime mortgages no one really understood what the investments were let alone the risks.
    So what am I trying to say basically is that I agree with you – all this seems to being driven by the economic section of the sustainable cake which now has the economic muscle to buy up everythingand all it needs is an ethical justification. So instead of having a (free) fully functioning environment to support local populations it will become ‘owned’ by business and we will have to pay for access and the benefits………………
    I was listenng to Tony Juniper the other day and was taken by an example he gave. Coastal populations in West Africa have very little money to live on but they are in a (relatively) benign climate, can build cheap and easily renewable houses and have plenty of fish in the sea to eat so all is well until their Government sells the fishing rights to the EU or whoever for millions and then the subsistance fishermen dont have enough fish to eat at which point they get sucked into the global economy……………..

  3. Steve Hallam says:

    Hi Miles, great blog – very interesting and thought provoking. I think there’s every chance that trying to value nature in ways that turn it, or aspects of it, into financial entities or commodities will end in tears. Is this what you meant by ‘the framing issue’? I’m not sure exactly which aspect of this area your question related to. As we’ve bounced around before I (and I think you) think that framing nature purely in terms of its tangible economic services ‘benefits’ is rather missing the boat.
    I’m less convinced by your focus on ‘big business’ as an agent of the dark side. I appreciate that you allow that they are simply ‘doing their thing’ by maximising profits, albeit to the detriment of nature. But you, and other writers, talk about big business as if it is a self contained entity, divorced from the rest of us and pursuing its own agenda. In reality, big business behaves the way that it does because, by and large, this is what most people want it to. You mention, critically, that the Nestle boss is unwilling to reduce his profitability to help nature, preferring to increase their prices instead. But what would happen if Nestle, and the rest, did absorb these costs? They would make less profits, and thus pay less tax (no jokes please!) and lower dividends. So (even) less money for governments to use for conservation, and less money going to pension funds, to enable pensioners to pay for their RSPB subscriptions, or whatever. My point is that ‘whatever goes around, comes around’.
    So I think you’re focusing on the wrong target. The right target is much more diffuse and open to criticism, (and perhaps less convenient and satisfying to have a pop at) because it’s the myopia that we all have as part of our psyche. ‘Nature’ is being stuffed by humans at the moment not primarily because of big business, but because the vast majority of people are not prepared to compromise their short term standard of living (as they see it). If we are to stop damaging nature then everyone has to accept their share of the additional short term costs, whether as a taxpayer, consumer, or investor.

    An occasional diatribe from me …!

    • Miles King says:

      Thanks Steve. I recommend you read the links I put in the post on framing – they explain it far better than I can.

      I didnt say Big Business was an agent of the dark side; and I think producers such as Nestle are, at least in theory, in a position to do something beneficial for nature, as a result of adopting natural capital accounting. It’s when natural capital gets in the hands of the finance wizards that things can really go pear-shaped. Remember all those default swaps and collateralised debt obligations – clever repackages of toxic debt that were sold to unsuspecting mortgage companies and pension funds? Now apply that sort of financial trickery to natural capital accounting.

      But I don’t buy this idea that big business only responds to what people want. What’s the global advertising and PR industry for? To influence people to change their consumption habits (or just increase them.) Big Businesses drive change as well as responding to change in consumer habits.

      On your latter point, we are in agreement, which is exactly why I have set up People Need Nature. People, us, have to change the way we relate to nature – everyone does, to a greater or lesser extent. But that also means it is incumbent on people, like me, to point out the dangers of things like Natural Capital thinking, and how the best of intentions can be so easily corrupted, for purely financial gain.

  4. Mark Fisher says:

    Some quick notes. I’ve admired the writing of Sian Sullivan since her critique of the neoliberalisation of conservation, and then the natural capital myth and now value struggles in engagements with biodiversity offsetting policy.

    Framing nature – “does the written word simply reflect who we are and what we’ve become” – reminded me of an article by Mark Cocker last year about the publishing phenomenon of “new nature writing”, how nature writers are no longer naturalists but “excursionists”, that nature and culture have been replaced by landscape and literature, as in a “Mcfarlish” – the process of praising other authors to make your own book better by association. It has become about a process of “re-enchantment”, which has as much meaning as “rewilding” does nowadays. Cocker says “The problem with this formula is that landscapes readily persist when all that makes a place enchanting – the filigree of its natural diversity – has long since vanished”. This is about the value system for wild nature being debased in literature, in the same way that the “framing” of Natural Capital debases it.

    Perhaps the issue about framing and Natural Capital is about who it is that should put a value on nature? I offer the writings of Dario Kenner (Why Green Economy?) who highlights this when he notes that it has mainly been expert bodies such as academics, NGOs and consultancy firms who are valuing nature via a set of valuation methodologies that tend to focus on monetary valuation. I can’t overestimate the joy I had in looking for and finding the first Scarlet Elfcups in local woodland this week. Put a monetary value on that, because I can’t!

    • Miles King says:

      thanks Mark. It’s an insightful comparison to draw, between nature writing (and the ongoing debate over who occupies the high ground) and the natural capital debate.

      Who decides how to value nature, what criteria are used; who is party to the valuation exercise, who is excluded? These are all critical questions. I hope that People Need Nature and Rewilding Britain, among others, can enliven this debate, encourage others to join it, and perhaps even reframe what we mean by Natural Capital.

  5. Pingback: Oliver Letwin reveals enthusiasm for natural flood management | a new nature blog

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