Emerging Lessons from the UK Ecosystem Markets Task Force - Business opportunities that protect and/or value nature’s services

High profile work by the UK Ecosystem Markets Task Force may lead to the development of business opportunities that protect and/or value nature. A scoping report published in May identified 8 types of opportunity, including the 12 “most promising”. The approach holds valid lessons for countries elsewhere in Europe and beyond.

---

Munich, 22 February 2013: The last decade or so has seen a rapidly growing recognition of the economic value of nature, with the work of the Millenium Assessment, the Stern Review on the Economics of Climate Change, and The Economics of Ecosystems and Biodiversity. The UK was one of the first countries to complete a National Ecosystem Assessment.[1] Building on this, the UK is now exploring business opportunities that value and/or protect nature. The approach taken and emerging findings hold valid lessons for other countries.

In June 2011, the UK Government published its Natural Environment White Paper,[2] the first on the natural environment for over 20 years. One of the key commitments was to create "a green economy, in which economic growth and the health of our natural resources sustain each other, and markets, business and Government better reflect the value of nature".

To help deliver this commitment, the government set up a business-led Ecosystem Markets Task Force (EMTF) to review the opportunities for business from expanding green goods, services, products, investment vehicles and markets which value and/or protect nature’s services. The EMTF started work in late 2011, chaired by Ian Cheshire, Group Chief Executive Officer, Kingfisher plc., and will report in March 2013 to senior ministers.[3]

EMTF commissioned a major scoping study which submitted its report in June 2012.[4] The study analysed the wealth of detail in the UK National Ecosystem Assessment to extract references to business opportunity, then analysed the resulting long-list of opportunities to derive 8 main "types" of business opportunity:

1. Product markets - Products derived from and/or sustaining ecosystem services, including certification schemes.
2. Biodiversity offsetting which works by compensating residual development impacts on ecosystems in one place by restoring or creating equivalent ecosystem benefits elsewhere.
3. Payment for ecosystem services – a variety of schemes through which the beneficiaries, or users, of ecosystem services provide payment to the stewards, or providers, of ecosystem services.
4. Environmental technologies which prevent or treat pollution, enhance management of ecosystems, or enable more efficient resource use.
5. Markets for cultural services including tourism, recreation and health benefits.
6. Financial and legal services as enabling activities relevant to ecosystem service business opportunities – for example enabling capital to be invested in product markets.
7. Ecosystem knowledge economy – the UK and Europe could emerge as an international leader in the knowledge base needed to value and protect ecosystems.
8. Corporate ecosystem initiatives - Many companies are already voluntarily taking actions that may not be covered in the categories set out above. Driven by a number of factors, including the need to enhance or protect brands, to meet consumer demand, manage supply chain issues or simply because of the desire among management to "do the right thing".

The study produced a catalogue of some 40 opportunities and identified from among these the 12 "most promising" opportunities showing greatest market potential and greatest potential benefit to nature. For each, the study identified necessary enabling actions and areas needing further research. Some of these opportunities can best be taken forward largely by business alone, others require enabling action by government.
The 12 highest-ranking opportunities are:

1. Biodiversity offsetting – a very substantial market "waiting to happen", involving moving from the current voluntary approach to a mandatory regime.
2. Development of a Peatland Carbon Code to provide a framework for companies to purchase carbon credits to support restoration and re-wetting of degraded peatlands.
3. Woodland enhancement through a larger market for woodfuel to meet growing demand, offering significant potential to enhance woodland ecosystems.
4. Developing the UK ecosystems knowledge economy – including strengthening collaboration between business and knowledge based institutions.
5. Layered Payment for Ecosystem Services (PES) in which different ecosystem services, which arise from the same area of land, are sold to different buyers.
6. Carbon sequestration as an "allowable solution" – involving allowing house-builders to achieve zero carbon homes by, in part, offsetting carbon through woodland or peatland restoration.
7. Expanding reach and value of sustainability certification – creating business opportunities for producers, intermediaries, retailers and related services; of particular relevance for agricultural ecosystems.
8. Optimizing ecological and economic benefits of sustainable tourism.
9. Global Centre of Excellence for Ecosystem Services Certification.
10. Water re-use technologies – could enhance business bottom lines, while alleviating water scarcity, reducing pollution, water extraction and energy consumption; of benefit to freshwater and coastal ecosystems.
11. Reducing risk for insurers through investment in green infrastructure – including woodlands, floodplains, coastal wetlands and upland peat bogs.
12. Developing environmental bonds as vehicles for investments in nature – underwritten by government, could leverage scaled-up investment helping to fund green growth and jobs.

The report also highlighted the need for more fundamental systems change in the way that our economy and society accounts for, manages and uses natural capital. Other current government initiatives such as the Natural Capital Committee,[5] natural capital asset check and efforts to fully incorporate natural capital in the UK Environmental Accounts are important steps towards better accounting for the value of ecosystems in decision making processes.

The report is informing ongoing research which will underpin final EMTF recommendations to Government in March 2013.

---

Guy Duke