Markets for the future?

7th May 2014

Ecosystems 0

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Lee Horlock

One year on Paul Suff hears about progress on the recommendations put forward by the ecosystem markets taskforce

The remit handed to the ecosystem markets taskforce by the government in 2011 was to review the opportunities available to UK businesses from markets that value, protect and enhance the natural environment, including so-called green goods, services, products and investment vehicles.

Chaired by Ian Cheshire, chief executive at Kingfisher, the taskforce published its final report in March 2013. It concluded that boosting the economy and improving the environment were not mutually exclusive, and identified an opening for the UK to be at the forefront of these new markets.

The taskforce made the point that all businesses rely on nature to some extent and Defra, in its official response, agreed that the relationship between the economy and the environment was an essential one. "The benefits that we derive from the natural world and its constituent ecosystems are critically important to human wellbeing and economic prosperity," it stated.

In March, one year on from the launch of the report, the Aldersgate Group and PwC hosted an event to review progress against its recommendations, involving several taskforce members, including Cheshire, and the environment secretary Owen Paterson.

Five priorities

The business-led taskforce was keen to see more companies recognise that nature is a provider of vital resources and services, and that its value must be accounted for in day-to-day operations and investment decisions. Its report talked about the creation of a new economic model, which integrated the "real" value of nature into how businesses operate by assigning a value to the services it provides. Assigning such a value would make organisations more resilient, it claimed.

The taskforce identified 22 opportunities for UK firms and made recommendations in four areas (see below), from which it highlighted the following priorities:

  • biodiversity offsetting;
  • bioenergy and anaerobic digestion on farms;
  • sustainable local woodfuel;
  • nature-based certification and labelling; and
  • water cycle catchment management.

The planning system in England is full of "weaknesses and inefficiencies", the taskforce concluded, and a more streamlined approach, alongside the introduction of biodiversity offsetting, would save developers time and money by reducing risk and uncertainty. It also would also "revolutionise conservation" by delivering the restoration, creation and long-term management of more than 300,000 hectares of habitat over 20 years.

The taskforce said that converting farm waste to energy, meanwhile, would help to improve air and water quality. Farms with anaerobic digestion (AD) plants would benefit from lower energy bills and reduced waste disposal costs, as well as help cut greenhouse-gas emissions. The report also concluded that bringing unmanaged woodlands into active, sustainable management for woodfuel would support the emergence of a biomass heat market.

In terms of expanding nature-based certification and labelling, the taskforce recommended making existing schemes, such as LEAF, Marine Stewardship and FSC, more visible. "Certification schemes could enhance ecosystem management, reduce ecosystem impacts, foster new affinities with landscape and, in turn, give participating firms greater market access, consumer loyalty and reputational benefits," it found.

Finally, the taskforce claimed that integrating an ecosystem services approach into water, wastewater and flood management would reduce the energy intensive, end-of-pipe treatment costs, improve water quality and preserve biodiversity.

Gaining momentum?

In its response to the report, Defra outlined a number of areas where it was already pursuing the recommendations made by the taskforce, such as biodiversity offsetting, AD and water management. It also announced several new initiatives to help realise the opportunities identified by the taskforce.

Paterson highlighted these at the progress event in March. He told the audience about his fact-finding visit to Australia to see how biodiversity offsetting works in practice. "Offsetting is really improving the [Australian] environment," he said. Paterson also reported that the government is analysing the responses to its consultation and the findings from pilots run by local authorities before making a final decision on introducing offsetting.

In its report, the taskforce had called for a mandatory scheme in England, with local authorities required to use offsetting to deliver a net gain for nature from all new developments. Paterson was unable to provide any assurance that the government would mandate offsetting.

Peter Young, chair of the Aldersgate Group and a member of the taskforce, confirmed that a mandatory scheme was still its preference, but conceded that a voluntary approach in the medium term would be adequate to help stimulate that market. "What we really want to see is the government not getting in the way at this stage of an emerging and embryonic market - and hopefully coming through with more robust metrics, methodologies and other mechanisms," said Young.

Of anaerobic digestion on farms, Paterson said Defra had allocated £3 million to support the uptake of systems. The initiative, announced in October 2013, enables farmers to apply for up to £400,000 from a loan fund to help finance onsite AD. "It will help farmers to see if AD is right for them and enable them to apply for loans if it is," he said. He also reported that Defra was working with Wrap to support the use on farmland of digestate from the AD process.

Cheshire, however, called for a more "joined-up" response from the government on AD. "Decc is looking at farms' energy efficiency and carbon emissions, while Defra is focused on something else. We need to ensure we join the dots in policy terms." Young also described different departments as operating in "silos" on AD. "We need an integrated approach. It shouldn't be beyond the scope of ministers to talk to colleagues."

Paterson said the introduction of the renewable heat incentive would encourage the uptake of biomass heating, but argued that raising the profile of certification and labelling schemes was the responsibility of the business community.

The environment secretary also reported that Defra had supported the creation of water catchment partnerships across England with £1.6 million in "pump-priming" funding. This has led to 87 catchments being set up covered by 111 different partnerships. In addition, Paterson referred to the payments for ecosystem services (PES) pilot projects being funded by Defra across England and Wales, including one scheme run by the Bristol Avon Rivers Trust and Wessex Water to improve water quality from sewage treatment works.

Also, Defra recently reported that 322 flood defence schemes allocated funding in 2013/14 received external contributions. Jack Frost, another member of the taskforce and a director at Johnson Matthey, argued that more needed to be done to encourage private companies to invest in flood prevention measures. "It is generally accepted that markers are a good way of allocating capital, but it is not a mechanism we use for flood defences."

Cheshire, meanwhile, urged the government to move faster. "We have a resilience issue courtesy of what is going on with the climate. There needs to be acceleration in the direction of travel and interventions are required to build resilience, particularly against flooding," he said.

Summing up the progress made by the government since the publication of the taskforce report, Cheshire said: "The government's heart is in the right place. The challenge now is to push through in some of the areas where the politics is perceived to be difficult."

Priority areas in ecosystem markets

Carbon and markets for nature

  • Biodiversity offsetting - securing net gain for nature through planning and development.
  • Sustainable local woodfuel - active sustainable management supporting local economies.
  • Carbon reduction through investing in nature.
  • Environmental bonds.

Food cycle

  • Bioenergy and anaerobic digestion on farms - closing the loop by using waste to generate energy.
  • Nature-based certification and labelling - connecting consumers with nature.
  • Common agricultural policy.
  • Food waste.

Water cycle

  • Water cycle catchment management - including water and wastewater catchment management, sustainable urban drainage systems and soft flood defences.
  • Water trading.
  • Water supply pipe ownership.
  • Water metering.
  • Long-term planning.
  • Privatisation of flood defences.

Natural capital - crosscutting themes

  • Managing natural resource security.
  • Using nature to enhance resilience.
  • Business accounting for nature - standards and metrics.
  • Knowledge economy - UK expertise enabling business opportunities to enhance nature.

Header image source: Rex Features


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