Natural Capital Accounting: A Guide for Action

Posted on Friday, 9 February 2024
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How can we measure the value of the services that nature provides us, many of which we take for granted?  Water, air, soil, trees, peatland, woodlands are among the services that nature provides us on which our lives depend.  A new report from the National Economic and Social Council, Natural Capital Accounting: A Guide for Action  sets out how to go about considering and valuing these often invisible services. This report provides detailed examples, from Ireland and across many countries including the UK and the Netherlands that are using natural capital accounting to make nature more visible in national accounts.


Natural Capital Accounting

The report finds that natural capital accounting is an important part of the solution to working more closely with nature.  Natural capital accounting integrates environmental data into the system of national accounts for economic activity and it can help Ireland to better account for nature.

This report provides detailed examples, from Ireland and across many countries including the UK and the Netherlands that are using natural capital accounting to make nature more visible in national accounts. The report highlights how understanding what nature contributes can help all of us, and crucially, people within the policy-making system, to become more aware of what needs to be done to measure nature’s contribution to society and the economy so it can be better protected. It describes the types of work and skills, such as data sharing and geographical mapping, needed to help us value and nurture nature and its services. It outlines the work underway by the CSO in building Ireland’s ecosystem accounts.

The report identifies using natural capital accounting to support a just transition in agriculture and land use as an area of opportunity. The report details how there are increased efforts and work underway in development of payment for ecosystem services for farmers such as protecting birds and other species. It argues more ecological training must be available for farm advisors and payment systems which reward and incentivise efforts to protect and improve nature must be improved and made more widely available.

Developing better tools to account for nature can be useful in many other ways but will only deliver improvements more broadly if they are taken up and used in Government departments, agencies and local authorities. Just increasing the data is not enough, it needs to be used as a key tool to inform decision-making. The measures and indicators can also be used to improve how we measure our performance as a country, and to help restore Ireland’s biodiversity and protect against climate change.


Social Justice Ireland view

Social Justice Ireland has consistently advocated that our natural capital and ecosystems should also be assigned value in our national accounting systems.  Ireland became a world leader in establishing the first Citizen’s Assembly on Biodiversity Loss, however this will mean nothing if the recommendations of the assembly are not implemented in full.  The European Commission has published guidelines on integrating ecosystems and natural capital into decision-making[1].  Government should ensure that our natural capital and eco-systems are included, not only in the decisions making and policy making process, but also in our national accounts. The Commission guidelines state that the integration of ecosystems and natural capital should take place within existing frameworks, and that ex ante assessments on the environmental impacts of plans, policies or programmes should be carried out.  The report also states that the SDGs related to natural capital and living ecosystems are the basis for achieving all other social and economic goals[2].

Ireland must develop a new National Index of Progress encompassing environmental and social indicators of progress as well as economic ones. By measuring and differentiating between economic activities that diminish natural and social capital and those activities that enhance them, we can better track our progress and ensure that our economic welfare is sustainable. Such an Index would also allow us to move beyond a purely financial approach and look at the value added to or subtracted from our natural and social resources as a whole by the policies that we pursue.  The use of such indicators would help ensure that issues such as climate justice and balanced regional development, among other key indicators of wellbeing, are given the priority they deserve by policymakers.  At a practical level the CSO should be fully resourced to implement the System for Environmental-Economic Accounts (SEEA) and the future compilation of natural capital accounts. These datasets will be vital to measure progress on environmental issues and the SDGs.