RSPB: asset valuation
30 May 2019
On the theme of natural capital, we look at an RSPB report that set out to quantify the worth of its estate in England
The RSPB manages more than 158,000ha of nature reserves in the UK. From the native pine forests in Abernethy, Inverness-shire, through the wetlands at Minsmere in Suffolk and seabird colonies at Bempton Cliffs in Yorkshire, to swathes of restored blanket bog at Geltsdale, Cumbria and Forsinard, Sutherland, this land has long been valued for its contribution to protecting rare and special places and species. More than 2m visitors are drawn by the wildlife and restorative effect of nature on our health and well-being.
It is increasingly well understood that nature plays a more functional role in underpinning a prosperous economy and well-being across society. There is growing scientific evidence on the importance of land and other natural assets in mitigating climate change, reducing flood water flows and decreasing the risk of flooding, as well as in natural pest control and pollination. Nature often provides such benefits freely. Unfortunately, because these are not reflected in prices, balance sheets or GDP, they are often overlooked. Our failure to value nature properly underpins its overexploitation and underinvestment.
As described in Land Journal March/April, pp.6–15, natural capital approaches seek to make nature’s values visible by framing its benefits in economic terms. Natural capital accounting provides consistent information on the state of the stock, and on the private and societal impacts of nature’s management. Just as financial balance sheets report assets and liabilities, natural capital accounts should also report the costs of maintaining and restoring resources and services. The logic goes that if environmental information is presented and compiled by economic decision-makers, the importance of nature will move from the periphery of corporate social responsibility offices to the boardrooms where decisions are made.
It is easy to recognise that the financial account of an agricultural business fails to reflect the soil’s ability to maintain crops into the future, or the farm’s contribution to the landscape and local people’s sense of well-being. A natural capital account would seek to shine a light on the invisible costs and benefits of the farm and its activities, such as its effects on net greenhouse gas emissions and the impacts of fertiliser run-off on water quality.
To trial the approach, the RSPB produced a natural capital account of its nature reserve network in England, Accounting for Nature, in 2017, which follows the accounting framework developed by the Natural Capital Committee.
Table 1 shows the range of ecosystem service benefits that our nature reserves provide and whether their full value is reflected partially or fully in the financial accounts. The significance of these ecosystem services ranges from those that are important across the entire estate to those that are significant at a limited number of sites, such as for flood water attenuation. Based on the data available, it is estimated that the RSPB estate in England:
- has an overall climate cooling effect, sequestering 110,000 tonnes of CO2 equivalent per year, including emissions from livestock and fuel consumption by machinery and vehicles on our reserves;
- has more than 1.7m visits a year;
- supports 3,500 volunteers annually, who contribute to the maintenance of the RSPB’s reserve network by carrying out biological surveys, habitat management, fence and path maintenance, and visitor engagement; and
- enables more than 100,000 connection to nature experiences for children every year.
While there are still many gaps in its pilot account, even the partial assessment (in Table 1) supports the natural capital balance sheet (Table 2), which reveals that the asset value of the RSPB reserves is more than double the liabilities associated with the cost of maintaining them. Yet the monetised benefits do not even include the value of the primary reason for the reserves – that is, retaining a world rich in wildlife.
Many of the values reported in the natural capital balance sheet are invisible in standard financial accounts, highlighting the important contribution that this can make in informing decision-making and ensuring organisations are accountable for their commitments and their responsibilities to the natural world. The account also demonstrates the public benefits of nature and the need for policy support to ensure it is managed in a way that maximises these.
Natural capital accounts are still in their infancy, and there are issues with ensuring that values already difficult to measure are not further undermined. There is a risk that by shining a light on some of the benefits that nature provides, others become even less visible in decision-making. This is a particular issue for biodiversity, which provides society and business with a range of benefits that are often hidden in, or missing from, natural capital accounts.
The interest in natural capital accounting was evident in Paris in November 2018 when more than 1,000 businesses, policymakers, and NGOs met to discuss the practice. The issue of adequately integrating the value of biodiversity was high on the agenda, with efforts to improve guidance for those developing natural capital assessments and accounts ongoing.
In the UK, support from the 25 Year Environment Plan and increasing interest and engagement from the business sector mean that we can expect these tools to continue to be refined and adopted. However, much more needs to be done to encourage businesses to change management practices and reverse the overexploitation of nature.
Where the enhancement and protection of natural capital is not stipulated by regulations or in private interest, maintaining the flow of nature’s benefits needs public policy incentives. Business and government need to work together to enable the creation of new markets and legal requirements, as well as financial support for enhancing and restoring nature.
- Tables sourced from Accounting for Nature, RSPB
- Related competencies: Environmental management, Management of the natural environment and landscape
- This feature is taken from RICS Land Journal (May-June 2019)
- Related categories: Environmental management and policy