Annex 4: Theme 2 - Putting People at the Heart of Biodiversity

Home , Forestry England, Natural England

Evaluation of Biodiversity 2020

Annex 4: Theme 2 - Putting people at the heart of biodiversity

Evaluation of Biodiversity 2020 This report is the copyright of Defra and has been prepared by CEH under contract to Defra. The contents of this report may not be reproduced in whole or in part, nor passed to any other organisation or person without the specific prior written permission of Defra. CEH has used reasonable skill and care in checking the accuracy and completeness of information supplied by the client or third parties in the course of this project under which the report was produced. CEH is however unable to warrant either the accuracy or completeness of such information supplied by the client or third parties, nor that it is fit for any purpose. CEH does not accept responsibility for any legal, commercial or other consequences that may arise directly or indirectly as a result of the use by CEH of inaccurate or incomplete information supplied by the client or third parties in the course of this project or its inclusion in this project or its inclusion in this report.

Contents

List of Abbreviations and Acronyms ...... 4 1 Introduction ...... 5 1.1 Purpose of the evaluation ...... 5 1.2 Overview of Biodiversity 2020 ...... 5 1.3 Theme 2 ...... 7 2 Priority Action 1: People Engagement ...... 8 2.1 Evaluation framework ...... 8 2.2 Theme 2 Priority Action 1: Key activities ...... 9 2.3 Q1: Is there increased awareness and improved understanding of the value of biodiversity? 12 2.4 Are more people engaging with the natural environment?...... 17 2.5 Are more people taking positive action for nature? ...... 27 3 Priority Action 2: Biodiversity values incorporated in decision-making ...... 34 3.1 Evaluation framework ...... 34 3.2 Theme 2 Priority Action 2: Key activities ...... 35 3.3 Do businesses and organisations have better awareness of green market opportunities? . 37 3.4 Is there guidance and tools to support the integration of natural values in impact assessment?...... 47 3.5 Are natural values better integrated into decision-making? ...... 57 4 Priority Action 3: Innovative financing mechanisms ...... 71 4.1 Evaluation framework ...... 71 4.2 Theme 2 Priority Action 3: Key activities ...... 72 4.3 Overview of the main innovating financing mechanism being used in the UK ...... 74 4.4 Are new tools or innovative mechanisms making a meaningful contribution to funding for nature? ...... 76 4.5 Are there some tools or mechanisms that worked better that others and why? ...... 84 5 Priority 2 and 3 Workshop Note ...... 95 5.1 Introduction ...... 95 5.2 Integrating biodiversity values into decision-making ...... 95 5.3 Innovative financing mechanisms ...... 103 5.4 Priorities for Defra action ...... 107 5.5 Evidence and knowledge sharing ...... 107 5.6 Appendix 1: Workshop participant list ...... 109 5.7 Appendix 2: Evaluation workshop agenda ...... 110

List of Abbreviations and Acronyms

BAME Black, Asian and minority ethnic CaBA Catchment Based Approach CBD Convention on Biological Diversity DEFRA Department for Environment, Food and Rural Affairs EKN Ecosystems Knowledge Network EMTF Ecosystem Markets Task Force HLF Heritage Lottery Fund IFM Innovative Financing Mechanism LEP Local Enterprise Partnership LGS Local Green Space LNP Local Nature Partnership MENE Monitoring of Engagement with the Natural Environment NCC Natural Capital Committee NIA Nature Improvement Area PA Priority Action PEG People Engagement Group PES Payment for Ecosystem Services

1 Introduction

On behalf of Defra, CEH and ICF undertook an evaluation of Biodiversity 2020. The evaluation is based on a synthesis of existing indicators and evaluative evidence, and a series of expert workshops and interviews. This document presents the evidence base for Biodiversity 2020 Theme 2, Priority Actions a, 2 and 3 – on ‘engaging people in biodiversity and the wider natural environment’, ‘incorporating biodiversity values into decision-making, and ‘innovative funding mechanisms’. 1.1 Purpose of the evaluation

In August 2011 Biodiversity 2020 was published, building on the Natural Environment White Paper1, setting out the strategic direction for biodiversity policy in England to 2020 on land (including rivers and lakes) and at sea. In the 25 Year Environment Plan2 the Government committed to publish a new strategy for nature building upon Biodiversity 2020, and to evaluate the current strategy in order to learn lessons that can strengthen the future strategy. The purpose of this evaluation was to assess progress towards the Outcomes set out in Biodiversity 2020 (relating to land and freshwater only), and identify lessons and opportunities to improve delivery in the future (i.e. under a new strategy). Specifically: 1. What progress has been made towards delivering the Strategy Outcomes?

2. What worked and why? Which actions or activities had the greatest benefit in terms of delivering our desired outcomes? And, conversely, what has prevented progress?

3. What lessons can be learned and opportunities identified for furthering progress under a future strategy?

1.2 Overview of Biodiversity 2020

Biodiversity 2020 is a national strategy for England’s wildlife and ecosystem services, implementing the CBD in England. It sets out the Government’s ambition by 2020 ‘To halt overall biodiversity loss, support healthy well- functioning ecosystems and establish coherent ecological networks, with more and better places for nature for the benefit of wildlife and people’, in line with the CBD Aichi Targets. In accordance with the aim to meet the Aichi targets, the Strategy has four intended Outcomes, which relate to habitats and ecosystems on land; marine habitats, ecosystems and fisheries; species; and people:

• Outcome 1: Habitats and ecosystems on land: ‘By 2020 we will have put in place measures so that biodiversity is maintained and enhanced, further degradation has been halted and where possible, restoration is underway, helping deliver more resilient and coherent ecological networks, healthy and well-functioning ecosystems, which deliver multiple benefits for wildlife and people’, including:

1https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/228842/ 8082.pdf 2https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/693158/ 25-year-environment-plan.pdf 5

o 1a. Better wildlife habitats with 90% of priority habitats in favourable or recovering condition and at least 50% of SSSIs in favourable condition, while maintaining at least 95% in favourable or recovering condition; o 1b. More, bigger and less fragmented areas for wildlife, with no net loss of priority habitat and an increase in the overall extent of priority habitats by at least 2000 km2; o 1c. By 2020, at least 17% of land and inland water, especially areas of particular importance for biodiversity and ecosystem services, conserved through effective, integrated and joined up approaches to safeguard biodiversity and ecosystem services including through management of our existing systems of protected areas and the establishment of nature improvement areas. o 1d. Restoring at least 15% of degraded ecosystems as a contribution to climate change mitigation and adaptation. • Outcome 2: Marine habitats, ecosystems and fisheries: Activities on the marine aspects of Biodiversity 2020 are primarily delivered through the UK Marine Strategy, which is being evaluated separately. • Outcome 3: Species: ‘By 2020, we will see an overall improvement in the status of our wildlife and will have prevented further human-induced extinctions of known threatened species.’ • Outcome 4: People: ‘By 2020, significantly more people will be engaged in biodiversity issues, aware of its value and taking positive action.’ Actions under the strategy are delivered under four themes, each of which links to multiple Strategy Outcomes (see Figure 1). Within each theme, a number of Priority Actions specify the priorities for that theme and the actions that will be delivered to achieve the aim of the theme:

• Theme 1: A more integrated large-scale approach to conservation on land and at sea. Priority actions under Theme 1 aim to establish more coherent and resilient ecological networks through integrated landscape scale approaches, along with conserving priority species and agricultural genetic diversity through targeted actions.

• Theme 2: Putting people at the heart of biodiversity policy Priority actions under Theme 2 aim to engage, educate and promote positive behavioral change, as well as changing how biodiversity is valued and seeking new financing mechanisms.

• Theme 3: Reducing environmental pressures Priority actions under Theme 3 aim to reduce pressures on the environment by working with key sectors and stakeholders, reforming policies and providing incentives, regulations and guidance to deliver sustainable management of natural resources, whilst ensuring environmental outcomes are integrated into the work of key sectors.

• Theme 4: Improving our knowledge Priority actions under Theme 4 aim to improve the capacity and evidence base for decision making, through supporting research and development, better monitoring and surveillance, and better access to data. This will support delivery of the strategy and enable better monitoring of progress towards Strategy Outcomes.

Mission ‘To halt overall biodiversity loss, support healthy well- functioning ecosystems and establish coherent ecological networks, with more and better places for nature for the benefit of wildlife and people’

Outcome 3 – Species Outcome 1 - Habitats and Outcome 2 - Marine Outcome 4 – People ecosystems on land habitats, ecosystems and An overall improvement in Significantly more people fisheries the status of our wildlife and Biodiversity is maintained and engaged in biodiversity prevention of further enhanced, further Biodiversity is maintained, issues, aware of its value human-induced extinctions degradation is halted and further degradation is halted and taking positive action. of known threatened where possible, restoration is and where possible, species. underway, helping deliver restoration is underway, more resilient and coherent helping deliver good ecological networks, healthy environmental status and and well-functioning clean, healthy, safe ecosystems, which deliver productive and biologically multiple benefits for wildlife diverse oceans and seas. and people.

Theme 1: Theme 2: Theme 3: Theme 4: A more integrated Putting people at the Reducing Improving our large-scale approach to heart of biodiversity environmental knowledge conservation on land policy pressures and at sea Figure 1 The overall structure of The Strategy. Note that Outcome 2 is outside of the scope of this evaluation. 1.3 Theme 2

This Evidence Pack considers actions and activities carried out relating to Theme 2 of the Strategy, and the impacts they have had in achieving the goals of the Theme, and the Strategy Outcomes. Theme 2 of the Strategy aims to engage more people in biodiversity issues, raising awareness levels on the value of biodiversity and what individuals can do to protect and enhance the natural environment. It aims to do so by engaging people, civil society organisations, private businesses and public bodies, so that through enhanced knowledge, improved partnership-working and new tools and funding mechanisms, it fosters decision-making that takes into account biodiversity values. There are three priority actions under this theme directly contributing to achieving Outcome 4 of the Strategy, and indirectly feeding into and/or complementing actions that support the delivery of Outcomes 1, 2 and 3. These priority actions are: • Priority Action 1 – People engagement • Priority Action 2 – Biodiversity values incorporated in decision-making • Priority Action 3 – Innovative funding mechanisms A review of available evidence relating to each Priority Action is included in this Evidence pack.

1.3.1 Method for generating the evidence pack This evidence pack draws together evidence from evaluations and reports of activities undertaken since 2011, to respond to the evaluation questions. Evidence was obtained from: • Defra and partner organisations and through desk research, up to the 30th June 2019. The evidence presented is unlikely to be exhaustive, particularly in relation to individual, relatively small-scale projects, given the time limitations of the Evaluation project. This evidence is presented in Sections 2 to 4.

• A workshop held to discuss evidence and expert opinion on Priority Actions 2 and 3 (see Section 5) • Interviews with 13 experts from government agencies, NGOs and academia, to discuss evidence and receive expert opinion on Priority Action 1. This evidence is presented along evidence from the literature in Section 2.

2 Priority Action 1: People Engagement 2.1 Evaluation framework

2.1.1 Intervention logic Priority action 1 aims to “work with the biodiversity partnership to engage significantly more people in biodiversity issues, increase awareness of the value of biodiversity and increase the number of people taking positive action” (Defra, 2011)3. Civil society organisations are expected to continue to play a key role in engaging members of the public in biodiversity issues and the wider natural environment, such as geodiversity. The Strategy recognises this, calling for renewed and expanded effort; with Government principally facilitating the sector in their role and creating the conditions to empower people to make a difference. Specified activities under this Priority Action include: • Engaging the public and private sector in better understanding and recognising the value of biodiversity. • Engaging society, including getting more children learning outdoors, and helping people to ‘do the right thing’. • Improving the availability of quality green spaces and empowering communities through a new green areas designation. Improved awareness and understanding of the value of the environment is one route through which change is anticipated. However research in the fields of environmental psychology and behaviour change reveal that there can be a much wider range of individual and contextual factors – beyond awareness - that can encourage or deter individuals from engaging with the environment and adopting pro-environmental behaviours. Outcome 4 of the Strategy recognises this, emphasising in addition to awareness, engagement and positive action. Figure 2 presents a Logic model for Priority Action 1, describing the Activities, Outputs, Intermediate (or short term) Outcomes and the Long term Outcomes that actions under this Priority Action aim to achieve. The Long-term Outcomes of this Priority Action, along with those of all other Priority Actions across Themes, eventually feed into the wider Strategy Impacts (not visualised in Figure 2).

3 Defra (2011) Biodiversity 2020: A strategy for England’s wildlife and ecosystem services. 8

Priority Action 1 Activities Outputs Intermediate Outcomes

Work with the Establish stakeholder Stakeholder group Better partnership working group to biodiversity offering guidance working partnership to engage guide effective action & build a partnership significantly more approach & Partnerships, pilots Communities people in biodiversity collaboration and schemes empowered to make issues, increase delivering & testing awareness of the approaches a difference to their value of biodiversity local environment Engage society in and increase the general & specific number of people More opportunities Improved awareness groups & understanding taking positive action available for people

to engage with Make high quality nature & take Positive change in use green space available & empower positive action of & attitudes communities to towards environment designate green Citizens and space organisations More positive reached environmental action

Outcome 4: More people engaged in biodiversity issues, aware of its value and taking positive action Figure 2 Theme 2 Priority Action 1 Logic model

2.1.2 Evaluation questions The evaluation of Priority Action 1 intends to answer the following questions: 1. Is there increased awareness and improved understanding of the value of biodiversity?

2. Are more people engaging with the natural environment?

3. Are more people taking positive action for nature?

4. Why have some schemes and initiatives been more effective in engaging people with the natural environment?

In setting out the available evidence, aspects related to question 4 (on why some initiatives are effective) is integrated within the evidence presented for questions 1 to 3. 2.2 Theme 2 Priority Action 1: Key activities

The Biodiversity Strategy set out a number of activities to be delivered under Priority Action 1. These are set out in Table 1, along with summaries of progress in delivering those activities and/or examples of specific actions that have been delivered in-line with those Strategy commitments.

Table 1 Theme 2 Priority 1 summary of actions and activities

Strategy activities Summary of activities delivered - Key actions identified in the strategy Working with key stakeholders to A Biodiversity People Engagement Group (PEG) was enhance effectiveness. established. A Biodiversity segmentation scoping study4, to - Establish stakeholder working group as help understand the attitudes, values, motivations and part of the Strategy’s governance behaviours of key groups and how to engage them more structure. effectively, was commissioned and delivered. However the - Explore opportunities for synergies PEG was disbanded before making taking any partnership- and greater partnerships and or action-oriented steps. Interviewees suggest that whilst collaboration. an enthusiastic and diverse array of stakeholders were convened in the PEG, an unclear mandate and direction/leadership led to little concrete action (which might have implemented aspects of the commissioned scoping study) being taken by the group.

UK Government led the establishment or offered support to partnerships, e.g. set-up of Local Nature Partnerships (LNPs) and Nature Improvement Areas (NIAs), establishment of a Green Infrastructure Partnership5, support for initiatives, like Grow Wild6. Engage society in general & specific A broad range of actions, some delivered by or with interest groups. support from Defra, others independently by civil society - “Help for everyone to ‘do the right organisations and others. For example: thing’, at home, when shopping, as - Nature Improvement Area partnerships work with schools volunteers.” and other education centres to engage not only school - Initiatives to “get more children groups but also teachers7. learning outdoors, removing barriers - Supporting young people to experience, learn about, and and increasing schools’ abilities to teach care for nature, such as through Kew Garden’s ‘Grow Wild’ outdoors.” programme, the Forestry Commission’s ‘Active Forests’, and the Environment Agency’s junior angling support programme delivered by the Angling Trust. - Working with National Citizen Service, the Scout Association, Girlguiding, and others to make sure that young people’s participation in the Great British Spring Clean and other organised litter-picking activity is promoted and formally recognised in progress towards existing qualifications, awards and badges8. - Launch of #iwill4nature in 2019, an initiative growing environmental youth social action (green action) during the Year of Green Action. Defra also pledged to the #iwill

4 Christmas, S., Wright, L., Morris, L., Watson, A., and Miskelly, C. (2013). Engaging people in biodiversity issues. Final report of the Biodiversity Segmentation Scoping Study. Available at: http://randd.defra.gov.uk/Default.aspx?Menu=Menu&Module=More&Location=None&ProjectID=18411& 5 The Natural Choice: Securing the value of nature. Presented to Parliament by the Secretary of State for Environment, Food and Rural Affairs by Command of Her Majesty. June 2011 6 https://www.growwilduk.com/ 7 Collingwood Environmental Planning (2015) Monitoring and Evaluation of Nature Improvement Areas: Final Report (2012-15). Defra Research Project WC1061 http://randd.defra.gov.uk/Document.aspx?Document=13504_NIAMonitoringandEvaluationFinalReport(WC10 61).pdf 8 https://www.iwill.org.uk/pledge/defra

Strategy activities Summary of activities delivered - Key actions identified in the strategy campaign, which aims to make social action a part of life for 10 to 20 year olds across the UK9. - Dissemination of information via social media, reaching out a wide public. RBG Kew disseminates its science via Twitter and blog10. - Festival of Nature 201611 - NGOs-Businesses partnerships, such as the case of Wild Challenge project, where RSBP partners with Aldi to explore new ways to connect children with the natural world.12 Access to green space A broad range of actions, some delivered by or with - “New green areas designation, support from Defra, others independently by civil society empowering communities to protect organisations and others. For example: local environments.” - Creation of a new “Local Green Spaces” (LGS) - Improvement of quality and access of designation13, and uptake in a number of local areas e.g. green spaces to everyone. Chapel-en-le-Frith Parish Council Neighbourhood Plan Empowerment of local communities to allocated 14 LGSs this end. - A £1.5 million fund was allocated by the Government to the Pocket Parks Programme in 2016, supporting 87 community groups to establish public green spaces in England14 15 - The Doorstep Greens initiative was set up to provide new or renovated green areas of public use close to people’s homes. It is a joint Natural England and New Opportunities Fund project16. - The Parks Action Group, established in 2017, helps parks and green spaces in England meet the needs of communities17 - The Friends of Ashington Woods Project restored and enhanced local woods, and increase awareness of the woods with the local population18.

9 https://www.iwill.org.uk/environment-secretary-michael-gove-helps-launch-campaign-putting-young- people-at-the-centre-of-the-year-of-green-action 10 https://stateoftheworldsplants.org 11 Festival of Nature 2016. Evaluation Report. Bristol Natural History Consortium (BNHC) 12 https://www.rspb.org.uk/fun-and-learning/for-families/family-wild-challenge/ 13 National Planning Policy Framework, March 2012 https://www.gov.uk/government/publications/national- planning-policy-framework--2 14 https://www.gov.uk/government/news/green-light-given-to-over-80-pocket-parks 15 https://www.gov.uk/government/news/1-million-funding-for-communities-to-create-their-own-pocket- parks 16 https://data.gov.uk/dataset/6a80e5a7-017e-49ba-a981-5cd0c727086f/doorstep-greens-polygons 17 https://www.gov.uk/government/news/government-pledges-500000-for-new-action-group-to-grow-future- of-public-parks 18 Ashington Community Woodland Interim Access to Nature. Evaluation Report, 2011. Groundwork North East

2.3 Q1: Is there increased awareness and improved understanding of the value of biodiversity?

2.3.1 Introduction There is no single measure of people’s awareness or understanding of the value of biodiversity. A report19 exploring people’s engagement with biodiversity, identifies multiple ways in which awareness, engagement and action can be interpreted, highlighting difficulties in the development of meaningful indicators to measure these. A small number of indicators based on surveys with members of the public are reviewed in the following section, offering insights into changes in people’s understanding of biodiversity and issues around it. Some, like the MENE survey, attempt to gauge people’s concern about biodiversity loss and its impacts, while others seek to directly test people’s understanding of the concept of biodiversity (UEBT, 2018).

2.3.2 Evidence Figure 3 below presents indicators related to awareness/ understanding of the value of biodiversity. The UK Biodiversity Indicator A1: Awareness, understanding and support for conservation, reports with data for 201420 (no earlier or later data available) that: • 6% of people in the UK were highly engaged with the issue of biodiversity loss21. • 25% of people in the UK showed some engagement with the issue of biodiversity loss22. • 16% of people are aware of the threat to biodiversity, but are not concerned about it. • 52% of survey respondents stated that they were not aware of the threat to biodiversity in the UK The Business Biodiversity Barometer provides an indication of the change in public understanding of biodiversity in UK23. Across two indicators (Figure 3) it shows that awareness has increased, although people able to give a correct definition of biodiversity remain a minority. However, as suggested in research24 commissioned by the PEG, a lack of understanding does not mean the public need educating on the meaning of the term – “it is not people who need to change so that they fit better with the concept of biodiversity; rather it is our framing that needs to change so that it resonates more effectively with people do not have an understanding of environmental issues”.

19 Christmas, S., Wright, L., Morris, L., Watson, A., and Miskelly, C. (2013). Engaging people in biodiversity issues. Final report of the Biodiversity Segmentation Scoping Study 20 England Biodiversity Indicators, available at. Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/729713/ UKBI_2018v2.pdf 21 They are aware of the threat to biodiversity in the UK, are concerned about the loss of biodiversity, and take actions to support and protect biodiversity, including requiring some higher effort 22 people who are aware of the threat to UK biodiversity, concerned about the loss of biodiversity and take some ‘day-to-day’ actions to support and protect biodiversity 23 Based on a sample of 1,000 UK consumer survey responses in each year. UK summary report available at: http://www.biodiversitybarometer.org/2018-uk 24 Christmas, S., Wright, L., Morris, L., Watson, A., and Miskelly, C. (2013). Engaging people in biodiversity issues. Final report of the Biodiversity Segmentation Scoping Study

Across the ten countries the survey is conducted in (which includes the UK), the survey reports that “awareness and understanding of biodiversity is growing globally. It is highest among youth. It also increases among lower incomes, becoming more mainstream.”25

Figure 3 Change in UK public understanding of biodiversity, 2009-18

Source: Business Biodiversity Barometer, 2018

2.3.2.1 Attitudes and concerns The MENE survey26 provides a range of indicators on attitudes towards and concerns about the natural environment and biodiversity (see Figure 3). A large majority of the population agreed with statements regarding concern and importance of the natural environment and biodiversity – 86% of the population are concerned about damage to the natural environment, 94% recognise the importance of natural places and 87% see spending time outdoors as an important part of their life. These proportions are high across age groups, although strong agreement tends to be lower amongst younger age groups and increases with age. Agreement with the various statements has been fairly consistent over the last nine years, although there has been a slight reduction in the proportion ‘strongly agreeing’ that they are concerned about the natural environment.

25 UEBT Biodiversity Barometer 2018. Available at: https://static1.squarespace.com/static/577e0feae4fcb502316dc547/t/5b51dbaaaa4a99f62d26454d/1532091 316690/UEBT+-+Baro+2018+Web.pdf 26 A survey undertaken annually by Natural England, with a sample of at last 45,000 England residents each year: Naturel England (2018). Monitor of Engagement with the Natural Environment. The national survey on people and the natural environment. Headline report 2018. Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/738891/ Monitorof_Engagementwiththe_Natural_Environment_Headline_Report_March_2016to_February_2018.pdf 13

Figure 4 Attitudes and concerns about the natural environment and biodiversity

2.3.3 Interviews Progress The opinion of a majority of interviewees was that there has been a limited increase in public awareness and understanding of biodiversity over the past 8 years in England. Some limited evidence was identified / provided by interviewees in support of their assessment. An interviewee cautioned that positive indicators reported in the MENE survey27 should not be considered conclusive evidence as the time series is not long enough. A few interviewees perceived an increase in awareness especially since 2018, attributing this to the increase of media interest. Some interviewees suggested that young people are the group with the greatest level of awareness.

27 Naturel England (2018). Monitor of Engagement with the Natural Environment. The national survey on people and the natural environment. Headline report 2018 14

One interviewee suggested that the public tends to have a good understanding of biodiversity in its global context, but often lacks an understanding of biodiversity – and relevant threats to it - in the UK. For instance, the majority of people are aware of the decreasing population of polar bears in the Artic, but only a few are aware of the falling number of rare wild plants in the UK. Further improvements in people’s awareness and familiarity with their local natural environment are required. Amongst the key challenges identified by interviewees in assessing change in public awareness and understanding was a lack of consensus on suitable measures and a lack of primary research. Contributing factors A number of interviewees suggested that increased coverage / prominence of biodiversity issues in the mainstream media was the main factor in recent improvements in people’s understanding. Interviewees frequently referred to TV programs, including BBC’s Blue Planet, which was characterised by one interviewee as a notable success when it comes to making people talk about biodiversity loss and what they can do themselves about it as individuals. Research has shown that following the final episode of Blue Planet, online searches of ‘plastic recycling’ increased by 55% in the UK, as did searches for conservation charities: 169% increase of visits in the Marine Conservation website and 35% raise in visits to the Plastic Oceans Foundation28. Interviewees also referred to scientific reports – some scientific research has also managed to make news headlines. For instance, a study revealing a decline of 40% in insect species29 was reflected across national media (e.g. BBC News30, the Guardian31). Social media was considered to have played a crucial role in spreading messages and contributing to the understanding and awareness of the threats to biodiversity. An identified example was the campaign to stop netting that prevents birds from nesting,32 which started as a local movement but became a national concern when people started to share and disseminate messages and pictures online33. As a consequence of the social media pressure, developers and property owners ended up removing netting3435. Amongst the strengths of this type of media is the strong visual content illustrating threats to biodiversity, including footage and pictures - such as albatross mistakenly eating plastic, which was widely shared on social media.

28 Hitwise (2018) Brits change rubbish habits due to ‘Attenborough effect’ https://www.hitwise.com/en/articles/brits-change-rubbish-habits-due-attenborough-effect/#.XSxl8WxYbop 29 Sanchez-Bayo & Wyckhuys (2019) Worldwide decline of the entomofauna: A review of its drivers. Biological Conservation. https://www.sciencedirect.com/science/article/pii/S0006320718313636 30 BBC News (2019) Insects decline: What do insects actually do? https://www.bbc.co.uk/news/av/science- environment-47293667/insects-decline-what-do-insects-actually-do 31 The Guardian (2019) Why are insects in decline, and can we do anything about it? https://www.theguardian.com/environment/2019/feb/10/why-are-insects-in-decline-and-can-we-do- anything-about-it 32 Hogg (2019) Use of netting on trees, bushes and hedgerows to prevent nesting birds. RSPB https://www.rspb.org.uk/our-work/rspb-news/news/stories/use-of-netting/#1tshHLgorcatFbuH.99 33 Netting to stop birds nesting: Call for new safeguards (2019) BBC News. https://www.bbc.co.uk/news/science-environment-47787278 34 Tesco backtracks on swallow nets at Norwich store (2019) BBC News. https://www.bbc.co.uk/news/uk- england-norfolk-47591127 35 Council forced to remove netting set up to prevent sand martins nesting in cliffs (2019) ITV news. https://www.itv.com/news/2019-04-09/council-forced-to-remove-netting-set-up-to-prevent-sand-martins- nesting-in-cliffs/ 15

According to many interviewees, these channels can be further utilised to achieve higher levels of public engagement with biodiversity messages. Not only because they can reach a big audience, but because they are able to put biodiversity issues at the centre of people’s lives. Interviewees noted that NGOs and charities are improving their communication and engagement strategies, increasingly using non-traditional channels like social media. Interviewees identified a lack of effective outreach and insufficient publicity of awareness-raising messages and engagement campaigns as a factor limiting improvements in awareness and understanding. One interviewee suggested that publicity around the Biodiversity Strategy 2020 itself has been poor, noting that they themselves were unaware of any public engagement around the Strategy. Lessons There was consensus across interviewees that effective communication is key, and that how messages and concepts are articulated could be improved. A majority of interviewees emphasized that it is essential to use non-technical language the public can understand. Hence, it was proposed that technical terms such as “biodiversity” be avoided and terms more familiar to the public, like “nature” or “wildlife”, be adopted. This would help people to better understand and engage with the message being promoted. Interviewees suggested a need to move beyond information and knowledge-based campaigns to focus on an emotional relationship and connectedness with the natural world. It was suggested that knowledge-based messages are often difficult for people to relate to, whereas emotion-based messages can trigger a more direct and impactful response. It was also suggested solutions and actions related to the issue being promoted should be communicated, rather than simply informing people of the problem, as people may better engage with the issue when they feel they can do something about it. Interviewees highlighted the importance of the framing messages appropriately for different groups, backed by appropriate market research and communication strategy design. For example, focussing on specific groups thought to have low awareness and understanding. Interviewees identified initiatives like the ongoing Citizen Engagement on the Environment36, aiming to promote understanding of the value of nature by putting the focus on those sectors with less apparent interest in the environment (e.g. urban deprived areas and BAME groups37).

2.3.4 Assessment The indicators show awareness and understanding of biodiversity is improving, although with further room for improvement – a finding that is supported by the opinion of interviewees. However whilst a majority of the population is concerned about the natural environment, there appears to have been a softening of this concern. The role of the media and social media as communication channels appears particularly important, coupled with tailored messaging for different societal groups, and adoption of more user-friendly terminology (such as wildlife and nature rather than biodiversity).

36 Defra (2018) Citizen Engagement on the Environment Project summary 37 MENE data indicates that people living in urban and deprived areas, as well as BAME groups spend less time outdoors.

2.4 Are more people engaging with the natural environment?

2.4.1 Introduction Engagement refers to both than solely undertaking activity or visits to the natural environment. It involves “knowledge, concern, attitudes, risk perception and behaviour” (Höppner and Whitmarsh, 2011)38. This section reviews evidence presented across: access, visits and young people and education.

2.4.2 Evidence 2.4.2.1 Access to local green space MENE data39 (see Figure 5) shows that having access to open green space near where they live is important to the vast majority of the population. This proportion has remained consistently high over the last nine years, though the proportion who strongly agree has declined. While the vast majority of the population indicate positive opinions regarding their access to local green spaces, the proportions strongly agreeing with the stated positive opinions have declined. Research by NLHF40 found that fewer park managers (compared to the 2015 survey) reported that their parks have been improving in the past three years (2014-16) – although the majority response was that condition is stable (53%). And more park managers think they will deteriorate than think they will improve over the next three years (39%), although the most common response was that condition will be stable (42%). The NLHF report does not conclude on why this deterioration has occurred, although one of the possible reasons it suggests is the effects of reduced long term maintenance. Continuing falls in maintenance budgets and staff numbers were reported by vast majority of surveyed park managers. The NLHF report also cites a State of the Market report from the Association of Public Service Excellence (APSE)41 that found that 78% of local authorities agree or agree strongly that ‘the squeeze on public sector resources is affecting parks and green spaces disproportionately to other service areas’.

The Parks Action Group, launched in 2017, integrates cross-government senior officials and experts from different areas of expertise (horticulture, leisure, heritage and tourism). It is intended to provide guidance on issues related to parks and other green spaces across England in order to help England’s public parks and green spaces meet the needs of communities. To kick start their work, the government provided £500,000 funding in 201742. Evidence submitted to the inquiry into public parks43 identified two lessons for support park improvements: (i) where local authorities appoint an elected member as a local parks champion, they report a higher proportion of their parks to be improving; (ii) to generate ideas for how parks

38 Höppner, C. and Whitmarsh, L. (2011). Public Engagement in Climate Action: Policy and Public Expectations. In L. Whitmarsh, S. O'Neill, & I. Lorenzoni, Engaging the Public with Climate Change. Earthscan. 39 Naturel England (2018). Monitor of Engagement with the Natural Environment. The national survey on people and the natural environment. Headline report 2018 40 HLF (2016) State of UK Public Parks. Heritage Lottery Fund 41 APSE (2016) State of the Market Survey 2016, Local Authority Parks and Green Space Services, Briefing 16- 15, April 2016, p3. See: apse.org.uk/apse/index.cfm/members-area/ briefings/2016/16-15-local-authority- parks-and-green-spaces-state-of-the-market-2016/ [accessed 05/06/16] 42 https://www.gov.uk/government/news/government-pledges-500000-for-new-action-group-to-grow-future- of-public-parks 43 Communities and Local Government Committee (CLGC); Seventh Report of Session 2016–17. Public parks. February 2017. House of Commons https://publications.parliament.uk/pa/cm201617/cmselect/cmcomloc/45/4507.htm#_idTextAnchor039 17

can be improved a broad cross-section of local people should be engaged, going beyond park ‘friend’ groups – for example the London Borough of Hackney sought to engage local creative people and entrepreneurs to bring forward and develop ideas about how to improve and enhance their parks and open spaces.

Figure 5 Evidence on local green space – MENE 2017/18

The Biodiversity Strategy refers to the Natural Environment White Paper reform of establishing a new green space designation. The National Planning Policy Framework (NPPF)44 introduced a new ‘Local Green Space’ (LGS) designation, which allows local communities to identify and protect areas of significant importance to them via local and neighbourhood plans. In doing, the aim is to generate local people more interested and engaged with nature.45 No comprehensive indicator of the use of LGS designations is available, but examples of its application can be found. For example: the Neighbourhood Plan 2013-2028 of Chapel-en-le-Frith Parish (Derbyshire) identified and allocated 14 areas of LGS; Thanet District Council undertook a

44 published by the Department for Communities and Local Government in March 2012 45 Green Spaces In Leicester And Leicestershire: Local Green Spaces Toolkit And Existing Policy Context 18

public consultation where local community proposed 43 LGSs; in 2015, the Bath & North East Somerset Council allocated 101 new LGSs. An innovative exercise of engagement with communities across the county was carried out by the Leicestershire County Council, from January to April 2011 via an online tool: 3,114 potential LGSs were identified. 2.4.2.2 Visits to the natural environment MENE data46 (see Figure 6) indicates that the proportion of adults taking visits at least once a week has increased, from 54% in 2009/10 to 62% in 2017/18. The increase has been seen across population groups, including those for which levels of participation tend to be lowest (see Figure 5) Frequency of visit taking varied between population groups with larger variations by age, ethnicity and socio-economic status (measured using Index of Multiple Deprivation (IMD)) than for other demographics (analysis included a wider range of variables, not shown). Younger people (age 16-24) were the most frequent visitors, compared to other age groups. The least frequent visitors included those aged 65 and over, members of the BAME population and residents living in the most deprived areas of England.

46 Naturel England (2018). Monitor of Engagement with the Natural Environment. The national survey on people and the natural environment. Headline report 2018 19

Figure 6 Evidence on visits to the natural environment

2.4.2.3 Black and Ethnic Minority Groups A recent Landscapes Review47 indicates that further efforts are needed to encourage people to visit area of the natural environment. In particular, when it comes to first time visitors and encouraging greater diversity of visitors. The review indicated that many people do not make visits to natural environment because they do not know the countryside or do not feel welcome in it. Some perceived landscapes in England as exclusive spaces. Some initiatives have tried to address existing inequalities of access and engagement in England. For instance, the Mosaic Model48 was used to engage people from BAME communities with National parks. This was considered a “huge success”, whilst initial funding lasted49. The Mosaic Model is an approach that has been applied to increase engagement within both BAME and deprived young people (18-24 year olds) groups. The Mosaic Cymru project (2012-15), in which the approach was applied in Wales, aimed to tackle the twin challenges of enabling people from BAME communities to access to the natural environment and working with key agencies to help them improve how they engage with BAME communities. Its primary achievement was using a cohort of Community to increase ethnic minority visitors. Whilst the project evaluation50 reported that the project had increased the awareness of National Park organisations to how to engaging BAME communities, it found that one relatively straightforward approach – increase the diversity of people represented on communication materials – did not appear to have been implemented in all parks. The final evaluation states that:

47 Landscapes review - National Parks and AONBs: Review to consider the next steps for National Parks and Areas of Outstanding Natural Beauty sites (AONBs) in England. (2019) Letters between Julian Glover and Michael Gove setting out the interim findings of the designated landscapes review. July 2019 48 Natural England (2017) The Mosaic Model Access to Nature: Early Findings Paper 49 Landscapes review - National Parks and AONBs: Review to consider the next steps for National Parks and Areas of Outstanding Natural Beauty sites (AONBs) in England. (2019) Letters between Julian Glover and Michael Gove setting out the interim findings of the designated landscapes review. July 2019 50 The Gilfillan Partnership (2015). Evaluation of the Mosaic Cymru project. Final Report Summary. Available at: https://www.cnp.org.uk/sites/default/files/uploadsfiles/Mosaic%20Cymru%20Final%20Evaluation%20summar y.pdf 20

“…. its creation of a cohort of Community Champions who have the skills, knowledge and confidence to introduce ethnic minority communities to the National Parks. This cohort of Champions has increased the number of ethnic minority visitors to the National Parks. People who have worked in the National Parks for many years report an increase in ethnic minority visitor numbers and, in some cases, that they are now seeing ethnic minority visitors for the first time to engaging people from black and minority ethnic (BAME) communities in National Parks”. 2.4.2.4 Young people and education A number of projects have sought to increase participation and offer opportunities for young people to visit and learn about the natural environment, whilst more broadly efforts have been made to increase opportunities for school education to take place outside. General education and engagement Examples of youth engagement and education projects include: • The Mosaic for young people project (2014-16) recruited over 130 Community Champions, of young people from deprived backgrounds, at an average cost of £3,478. The project evaluation51 emphasised the benefits to those young people taking roles as community champions, with regards their confidence in the outdoor, in leading activities and at work (rather than their effectiveness at engaging other young people). A sample of the community campions taking part in before and after questionnaires recorded a significant increase in their response on ‘My relationship with nature is an important part of who I am’. • The UK National Parks with Forest Holidays, over a five year programme, aims to delivery at least 15 flagship education projects reaching 5,000 young people as well as covering the travel costs of an estimated 15,000 National Park visits for young people. The 2018 pilot year ‘engaged 5,000 young people in activities run by their local National Park and included many from disadvantaged backgrounds’52. • All of the 12 Nature Improvement Area partnerships53 engaged with schools and further education colleges. Whilst many of the partnership organisations did this prior to the NIAs, nearly half of partner survey respondents indicated that the NIAs had improved how they worked with schools and colleges – in particular citing that the NIA funding enabled this. The activities typically included school visits to the NIA to learn about the environment, to undertake cross-curriculum activities (such as art) or to support volunteering via surveys and practical activities. Education in schools

51 Waite, S., Waite, D., Quinn, J., Blandon, C., and Goodenough A. (2016). Mosaic Matter. Executive Summary. Available at: http://www.cnp.org.uk/sites/default/files/uploadsfiles/Final%20Evaluation%20Executive%20Summary.pdf 52 https://nationalparks.uk/about-us/partners/forestholidays 53 Collingwood Environmental Planning (2015) Monitoring and Evaluation of Nature Improvement Areas: Final Report (2012-15). Defra Research Project WC1061 http://randd.defra.gov.uk/Document.aspx?Document=13504_NIAMonitoringandEvaluationFinalReport(WC10 61).pdf

A survey conducted with a sample of teachers in UK schools during the 2016/17 Outdoor Learning Day campaign54 indicates that nearly two fifths of teachers have increased time for outdoor lessons and that four fifths would like to. Key reported findings from the survey include55,56: • 38% in teachers the UK (44% globally) have increased time for outdoor lessons. • 81% of teachers in the UK (87% globally) want more time to take lessons outside. • 19% of teachers in the UK (22% globally) of teachers have increased playtime since taking part in the campaign, • 55% of teachers in the UK (compared to 68% globally57) want more time for children to play outdoors. • 99% of teachers in the UK (97% globally) believe that outdoor playtime throughout the school day is critical for children to reach their full potential • 84% and 89% of teachers in the UK respectively said that children are happier after playing outdoors and 89when they learn outdoors. • 76% of teachers in the UK (79% globally) said that the weather stops children playing outdoors. • 16% of teachers in the UK (14% globally) said that nothing prevents children from playing outdoors. The Natural Connections Demonstration Project was a 4-year initiative to help school children – particularly those from disadvantaged areas – experience the benefits of the natural environment by empowering teachers to use the outdoors to support everyday learning. The project evaluation58 reports that it engaged with: 2,531 teachers, 2,492 teaching assistants, and 40,434 students. School survey respondents reported statistically significant increases in the time spent on learning in the natural environment activity across all school terms. Over 90 per cent of schools surveyed agreed that learning in a natural environment was useful for curriculum delivery – and it was used most regularly and consistently in the core subjects of science, English, maths and PE. Schools adopted many different models of learning in the natural environment, with anything from a few staff to many or all of the staff involved. The evaluation found that participating teachers first began to understand the benefits to pupils and teachers; then increased levels of learning in the natural environment activity; and finally increased the regularity of such activity and embedded it across the school. Participating schools found improvements across four of the five challenges identified for introducing learning outside – staff confidence, uncertainty about linking with the curriculum, funding, volunteer support need. Reported positive impacts for teachers of learning in the natural environment:

54 A global programme which states that it engages over 1.2 million children and young people around the world and more than 260,000 in the UK and Republic of Ireland (ROI) participating in outdoor lessons and play. The stated survey method is: Two surveys of teachers that have taken part in Outdoor Classroom Day in 2016- 2017; A third for more than one campaign. Over 600 responses were gathered from a dataset of over 13,000 teachers and head teachers. Forty-five countries are represented, three quarters (74%) of respondents were from primary schools or ‘all through’, with school days longer than five hours (87%). 55 https://outdoorclassroomday.org.uk/resource/the-impact-of-outdoor-learning-and-playtime-at-school-and- beyond/ 56 Project Dirt (2018). The impact of outdoor learning and playtime at school – and beyond. A summary of the survey findings conducted for Outdoor Classroom Day 2018. Available at: https://outdoorclassroomday.org.uk/wp-content/uploads/sites/2/2018/05/FINAL-Project-Dirt-Survey- Outdoor-Play-and-Learning-at-School-2018-15.05.18.pdf 57 The 45 countries across which the survey was conducted 58 Waite, S. (2016). Natural Connections Demonstration Project, 2012-2016: Final Report. Natural England Commissioned Report NECR215. Available at: file:///C:/Users/32087/Downloads/NECR215_edition_1%20(1).pdf 22

• teaching practice (79 per cent) • health and wellbeing (72 per cent) • professional development (69 per cent) • job satisfaction (69 per cent) • teaching performance (51 per cent). Positive impacts for pupils. • enjoyment of lessons (95 per cent) • connection to nature (94 per cent) • social skills (93 per cent) • engagement with learning (92 per cent) • health and wellbeing (92 per cent) • behaviour (85 per cent) • attainment (57 per cent). The Natural Connections Demonstration Project evaluation concludes that the project “provides evidence that a distributed model of independent local brokerage can unlock a latent demand for learning in a natural environment in schools and support schools to overcome local barriers, adopt and embed low-cost learning in a natural environment practice, and deliver a range of positive outcomes for teachers and pupils”. Success is contingent on hub leaders with the appropriate skill set, with adequate support and relationships with a central unit and across and between hubs. The evaluation indicates that a ‘whole school cultural shift’ that supports the sustainable adoption of learning in the natural environment policy and practice is most effective - schools invested in their school grounds as educational places, in leadership for outdoor learning, and used learning in the natural environment for core subjects.

2.4.3 Interviews Progress The overarching view across interviewees was that access to green spaces in England has not improved in the last 8 years – or has only improved slightly. While some efforts have been made to improve access and engagement, experts considered these insufficient. One interviewee further noted that parks and green spaces in England are lost at a dramatic rate, hence diminishing opportunities for people to engage with nature in their local environment. Interviewees agreed that levels of access to nature differ across England and across population groups. Urban area populations were thought to be less likely to have access to good quality natural environments. As one expert highlighted, this can be particularly evident in areas of high deprivation. Despite the lack of supporting data, interviewees argued that the elderly, the youth, the disabled and the poor are population groups typically excluded due to the way green areas are designed. One interviewee indicated “remarkable differences” exist within urban areas such as London, between less and more deprived areas. Contributing factors Interviewees offered reasons explaining why there had been little to no improvement in access to green spaces: • Impact of austerity on local authorities. o Reduction of local budgets makes harder to prioritise funding of green spaces. Research published by the National Federation of Parks and Green

Spaces59 was referenced, which reports that only around 0.15% of total public expenditure is spent on open spaces. o Cuts on local budgets have weakened the planning system, thereby offering less protection to existing green spaces. Planning departments in local authorities are considered understaffed and overwhelmed. • The lack of uniform standards to define adequate levels and quality of green space provision, giving too much discretion to local authorities and/or individual developers to decide. 2.4.3.1 Challenges, needs and lessons Better understanding motivations: Interviewees suggested, that a pre-requisite to improving access to the natural environment is gaining a better understanding of why people use green spaces60. Motivations to visit nature extend beyond the physical characteristics of the site and are mainly social in nature: why and how people interact with the environment is a social question, not a physical one. A group of interviewees highlighted the urgency to understand people’s relationships with nature when informing planning policy, by considering their needs and interests. The Writers in the Forest61 campaign was suggested as a good example of an initiative intending to inform future policy developments in engagement and access to nature. Launched by Forestry England, it aims to collect people’s views on what trees and woodlands mean to them. Data collected will be fed back into access to nature and people engagement policies. Some interviewees suggest promoting the benefits of biodiversity for people, rather than pretend the public engages for the nature’s sake. One interviewee argues it is necessary to carry out further qualitative research to understand these links. The Active Forest Program follows this idea by framing health and wellbeing activities within the forest environment - there were over 700,000 sporting visits over the three-year pilot, with a 246% increase in the number of visits in the third year versus the first (baseline) year of the programme62. Of the participants, 91% returned to woodland for activities within three months and 77% returned to undertake a different activity Early years engagement. Interviewees suggested that people may not engage with nature because they never had the chance to experience nature as a child. Defra initiatives addressing this issue where identified by interviewees, such as the Children and Nature scheme launched by Defra as part of the 25 Year Environment Plan, taking schoolchildren on natural site visits. However, these were considered to have a limited impact if not extended to engage parents. . Green space quality: Issues around quality of green spaces were highlighted by a few interviewees as hindering engagement. Further to this, concerns about the commercialisation of public green spaces have also been expressed by some experts. New, sustainable funding mechanisms for green spaces were identified as necessary. Accessibility and infrastructure: this challenge was particularly identified in relation to wilder natural areas e.g. national parks rather than urban green spaces. It spanned a number of related issues that can limit engagement. i. People often lack the skills needed to identify a suitable site, path or route to visit. One interviewee proposed this should be addressed by making information easier to the “new

59 Moore (2017). The end of parklife as we know it? The battle for Britain’s green spaces. The Guardian. https://www.theguardian.com/uk-news/2017/jul/09/the-end-of-park-life-as-we-know-it-the-battle-for- britains-green-spaces-rowan-moore 60 Motivations are reported on in Natural England’s MENE survey 61 Forestry England. Writers in the Forest. Tribute to Trees. https://www.forestryengland.uk/100/writers 62 Forest Research (2017) Fun and Fitness in the Forest. Monitoring and evaluation of the three- year Active Forest pilot programme. Liz O’Brien and Jack Forster 24

and uninitiated visitor” by designing more attractive and readable maps or marking trails, as well as improving their maintenance. ii. Existing facilities in natural spaces are often inadequate. One interviewee suggested better maintained facilities such as toilets and cafes are needed. iii. Accessibility: challenges regarding accessibility included a lack of proximity (of households to green space) and physical access constraints (such as for disabled or elderly people). Access improvements were highlighted by interviewees, including: • The accessibility trail in the Gait Barrows National Nature Reserve improved access not only for the general public, but also for people with disabilities63. • The England Coast Path Programme is improving access around the English coast to complete a 2,795 mile continual path by 202064. i. Transport infrastructure: A number of interviewees highlighted that many areas of natural interest in England are only reachable by car. Better integration between public transport and infrastructure policies with environmental policies. Nearly all interviewees suggested there is need to enhance biodiversity where people are, so that people can directly benefit from it and vice versa. This links to an the idea that bottom-up policies emerging from an understanding of people’s local space and needs, will ultimately make biodiversity relevant to people. The Great London National Park City Project65 was proposed as a successful example of bringing nature to where people are. From engagement to experiences and connection: Some interviewees argued the need to extend efforts to engage people with nature – away from simply efforts to get people active in nature, towards a more immersive or meaningful experience that build a greater connection with nature. Research in this area was referenced, which reveals that nature connectedness and physical contact with nature support development of pro-environmental behaviours66. This is supported by an empirical research carried out by Otto & Pensini (2017), where it is found that children’s relationship with nature explains 30 times more positive attitudes towards nature than knowledge based environmental education67. In the same way, a different study68 explores alternative routes to engage people with nature that were found to predict people’s connection with nature (contact, emotion, compassion, meaning and beauty), yet knowledge was not. Examples offered include: • Durrell Conservation Trust Zoo, who offer ways for people to more directly experience the natural environment in an aim to build a greater connection between people and nature69. This includes the installation of a walk-through exhibit, and the organisation of on-site fun runs. Some interviewees identified this example as supporting better engagement and connection.

63 Natural England (2013) Gait Barrows National Nature Reserve 64 England Coast Path: improving public access to the coast. https://www.gov.uk/government/collections/england-coast-path-improving-public-access-to-the-coast 65 http://www.nationalparkcity.london/ 66 Richardson et al (2019) A Measure of Nature Connectedness for Children and Adults: Validation, Performance, and Insights. Sustainability 67 Otto & Pensini. (2017). Nature-based environmental education of children: Environmental knowledge and connectedness to nature, together, are related to ecological behaviour 68 Lumber, Richardson, Sheffield (2017) Beyond knowing nature: Contact, emotion, compassion, meaning, and beauty are pathways to nature connection 69 Durrell calls for runners to support new Butterfly House at Jersey Zoo. Durrell Wildlife Conservation Trust - Saving species from extinction. https://www.durrell.org/wildlife/news/durrell-calls-runners-support-new- butterfly-house-jersey-zoo/

• The 30 Days Wild campaign70, taking part every month of June, has evolved towards the inclusion of carefully curated activities with the precise wording refined with reference to five pathways to nature connection being developed in on-going research at the University of Derby: contact, emotion, meaning, compassion and engagement with natural beauty - experiences specifically designed to foster greater connectedness with nature. Some interviewees pointed to a need to continue to move away from simply trying to get people active in nature, towards a more immersive or meaningful experience that builds a greater connection with nature. In relation to this, some interviews suggested a change of approach - shifting from “putting people at the heart of biodiversity” to “putting biodiversity at the centre of people’s lives”. Communication channels: example from the schools sector. The Natural Connections evaluation71 highlights the importance of flexible and multi-dimensional communication. It finds that for engagement tools, websites are no longer fit for purpose as their content tends to remain static (e.g. the Growing Schools website failed to create a community of users). More interactive ways of engagement are needed on a cross-platform on-line presence with particular importance of social media accounts. The content needs to be flexible and tools such as infographics or micro-videos demonstrated to be effective. Alternatives to websites, such us the online platform launched by Wild Time for Schools are more useful. A simple interface and a content purely focused on learning in the natural environment resources for teachers are highlighted as key features for its success, as well as control over content by project leaders (an element lacking in the Growing Schools website). However it was found out that teachers did not have time to contribute in the generation of content; suggesting the need for a hub or central facilitation and content manager.

2.4.4 Assessment Indicators across the range of engagement dimensions are generally positive, suggesting that engagement with the natural environment has increased over the time of the Strategy. Green spaces near where people live continue to be highly valued, although constrained budgets are putting pressure on the quality of parks. Interviewees indicate that access is still an issue – with less access in urban and more deprived areas. In general, a range of actions could still be taken to support and improve access of green spaces – both wild and managed parks. The important role of champions or mediators was identified in evaluations from programmes across a range of interest areas – including encouraging black and ethnic minorities to visit national parks and in encouraging schools to increase learning in the natural environment. Such models rely on the champions or mediators being adequately skilled and supported. Training and empowerment of champions can itself also bring benefits for those taking the roles. A number of examples of success were provided where people have been offered a richer experience of interacting with the natural environment. These range from action-oriented experiences offering physical and mental wellbeing benefits, to more immersive or continual (i.e. multiple day) experiences. Interviewees pointed to a need to continue to move away from simply trying to get people active in nature, towards a more immersive or meaningful experience that

70 https://www.wildlifetrusts.org/wildness. Evaluation report: Richardson M, Cormack A, McRobert L, Underhill R (2016). 30 Days Wild: Development and Evaluation of a Large-Scale Nature Engagement Campaign to Improve Well-Being. PLoS ONE 11(2): e0149777. https://doi.org/10.1371/journal.pone.0149777 71 Waite, S. (2016). Natural Connections Demonstration Project, 2012-2016: Final Report. Natural England Commissioned Report NECR215 26

builds a greater connection with nature. Interviewees pointed to a need to continue to move away from simply trying to get people active in nature, towards a more immersive or meaningful experience that builds a greater connection with nature. In relation to this, some interviews suggested a change of approach - shifting from “putting people at the heart of biodiversity” to “putting biodiversity at the centre of people’s lives”. Making best use of the flexibility and interaction that can be achieved through use of modern online communication channels was highlighted as beneficial. Although it should be recognised that there can be significant work in maintaining a flow of high quality information via such channels. 2.5 Are more people taking positive action for nature?

2.5.1 Introduction In the context of the Biodiversity Strategy to 2020, a positive action is change in individual behaviour that has a positive impact on nature either now or in the future, directly or indirectly. Stern (2000)72 provides a high-level framework of environmentally significant behaviours, a subset of which are notably relevant in this context. A simple typology covers environmental citizenship (e.g. activism, engagement in environmental groups/petitions, practical volunteering), and private sphere actions including consumer purchases, lifestyle choices and waste disposal behaviour.

2.5.2 Evidence The Monitoring Engagement with the Natural Environment (MENE) survey73 asks people about whether they participate in pro-environmental behaviours and activities involving the natural environment. Figure 7 provides the summary of these results, as presented in the MENE report. Key trends: • The proportion of adults choosing to walk or cycle instead of using their car, when they can, increased from 40% to 48% over 2009/10-2017/18. • A relatively high proportion of adults recycle when they can. The proportion has increased slightly (by 3 percentage points) since 20109/10. • There has been little change in participation rates in all other pro-environmental behaviours reported on in the survey. Both MENE and a UK biodiversity indicator provide data on volunteering (the former in terms of people participating, the latter in terms of time spent volunteering). The MENE report indicates no changes in environmental volunteer work (three questions relate to volunteering, two of which show ‘no change’, one of which has no trend data available). The UK biodiversity indicator on conservation volunteering shows little change when reviewed over the same period (since 2009/10)74. The underlying data of the UK biodiversity indicator shows that a number of NGOs saw a decline in volunteer time since 2010 including: RSPB; Natural England; Plantlife; and the Woodland Trust. It is reported that this reflects “the cyclical nature of some projects undertaken, such as tree planting and work on specific nature reserves”75, but also reflects changes in volunteer time data

72 Stern (2000). Toward a Coherent Theory of Environmentally Significant Behaviour. Journal of Social Issues, Vol. 56, No. 3, 2000, pp. 407–424 73 Natural England (2018). MENE. National Survey on people and the natural environment. Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/738891/ Monitorof_Engagementwiththe_Natural_Environment_Headline_Report_March_2016to_February_2018.pdf 74 JNCC (2018). UK Biodiversity Indicators 2018. Conservation. Taking action for nature: volunteer time spent in conservation. Available at: http://jncc.defra.gov.uk/page-4253

75 https://jncc.gov.uk/our-work/ukbi2018-a2-conservation-volunteering/ 27

collection methods. The UK biodiversity indicator on time spent volunteering shows a positive trend over the longer term, since 2000. The MENE survey indicates that nearly one third of the population would like to undertake positive changes to their lifestyle to protect the environment (either intend to make changes (17%) or would like to make changes but have not done so due to barriers such as a lack of knowledge and other difficulties (17%)), whilst a similar proportion indicate that they are happy with their lifestyle as it is. A reported 10% of the population (including 40% of the 9% of the population who said that they currently didn’t undertake any positive actions) did not know whether or not they are likely to make changes to your lifestyle to protect the environment. Other available evidence indicators numbers of volunteers participating in particular pro- environment projects. This does not provide evidence to directly support conclusions on whether positive action is increasing in England – in absolute terms or as a proportion of the whole population. It solely indicates the levels of, and changes in, participation resulting from specific projects. For example: • Evidence shows that 88% of people who watched the final episode of Blue Planet on the effect of plastics in the oceans have since then shifted their behaviour as a result (i.e. taken positive action). Further to that, 60% of UK population are now more likely to use a refillable water than before and Waitrose received 30,000 questions and posts about plastic in the six months after the final episode (an 800% increase).76 • The Wildlife Trust 30 Days Wild campaign, which engages people to ‘do something wild every day’ for 30 days, had 49,000 sign up participants in 2017, up from 25,000 in 2016. An evaluation77 of the 2016 and 2017 campaigns found participants had sustained and significant increases for scores in conservation behaviour i.e. they undertook more conservation action and continued to do so after the campaign finished.78 • The Festival of Nature 2016 inspired participants (11,265 in total) to take an average 1.45 positive actions for nature during and after the festival, totalling 16,365 actions79. Action ranged from making bird feeders to recording wildlife observations, to signing petitions.80 • Volunteers participating in the Great British Beach Clean have increased from 5,394 in 2015 to 14,527 in 2018.81 • Nature Improvement Areas engaged a 47,159 days of volunteering was reported over a 3-year period – equivalent to 68 FTEs per year (around 6 FTEs per NIA per year). Volunteering increased in each of the three years, with the amount of

76 Waitrose & Partners (2019) Food and Drink Report 2018-19. The Era of the Mindful Consumer 77 Richardson M, Cormack A, McRobert L, Underhill R (2016). 30 Days Wild: Development and Evaluation of a Large-Scale Nature Engagement Campaign to Improve Well-Being. PLoS ONE 11(2): e0149777. https://doi.org/10.1371/journal.pone.0149777 78 Based on surveys of a sample of participants, collecting data at baseline, post-30 days and post-3 months of their participation. 79 Numbers reflect data reported by a sample of exhibitors / activity organisers. The sample data has not been extrapolated to the whole festival participant population. 80 Postles, M., Squire, B., Bartlett, M., Morrison, K. (2016). Festival of Nature 2016. Evaluation Report. Bristol Natural History Consortium (BNHC). Available at: https://www.bnhc.org.uk/research-evaluation/festival- nature/ 81 Marine Conservation Society (2018) Great British Beach Clean Conservation Report. Available at: https://www.mcsuk.org/media/gbbc-2018-report.pdf

volunteering in the third year twice as much as in the first. The Nature Improvement Area partnerships worked with volunteers, contractors and students to provide training and / or undertake capacity building and develop confidence82.

82 Collingwood Environmental Planning (2015) Monitoring and Evaluation of Nature Improvement Areas: Final Report (2012-15). Defra Research Project WC1061. Available at: http://randd.defra.gov.uk/Document.aspx?Document=13504_NIAMonitoringandEvaluationFinalReport(WC10 61).pdf 29

Figure 7 Participation in pro-environmental behaviours – evidence from MENE

Figure 8 Volunteer time spent in conservation organisations83

2.5.3 Interviews 2.5.3.1 Change in levels of positive action Interviewees’ opinions differ on whether the number of people undertaking positive action has increased or stayed the same. No interviewees indicated that less people are undertaking positive

83 UK Biodiversity Indicators 2018. Conservation. Taking action for nature: volunteer time spent in conservation; http://jncc.defra.gov.uk/page-4253 30

action. Nearly all were cautious in offering their opinions, in some cases noting that there is insufficient evidence on which to base such judgements. Some interviewees offered views on specific aspects. These included the following opinions: • Over the longer term view (i.e. 20 years) participation has increased in London in particular, and other cities. • There has been particularly high participation in environment related consultations compared to the past (e.g. on plastics) and petitions (e.g. on netting and birds). • There has been little change in the type of people undertaking action. • Patterns of volunteering are changing, with people less likely to commit to long term actions. • Young people are particularly vocal about ‘wanting’ to take positive action. Interviewees also differed in their opinion as to whether a majority of people undertook positive action or not. In part this appeared to relate to the specific type of action respondents had in mind (as indicated in Figure 2 there are large differences in participation levels across different activities). Some interviewees cautioned on the potential link between pro-environmental behaviour and positive impacts for biodiversity. Views reflected uncertainty about whether increases in positive action translate into a positive impact i.e. how effective is the action84, as well as uncertainty regarding the links between different types of action and biodiversity (and priorities for biodiversity). One interviewee referred to evidence from MENE indicating that people see pro-environmental behaviours as different to pro-nature conservation behaviours. Further research was suggested as needed to better understand the effectiveness of activities and to guide how activity can be best aligned with biodiversity needs. 2.5.3.2 Examples of successful engagement in positive action Interviewees identified specific projects / campaigns, as well as more general areas of activity and offered opinion on why they had been successful (or aspects of them had been successful). Promoting personal and societal benefits: An interviewee suggested that charities engaging people in environmental volunteering have been successful in selling the personal benefits for volunteers e.g. mental health benefits, not solely the environmental benefits. Although environmental benefits remains important as people report benefits from ‘doing something meaningful’. The National Bat Monitoring Programme (NBMP) is a series of bat surveys undertaken annually by volunteers, which enables monitoring of bat population in the UK. Providing professional learning content was thought to engage volunteers as they feel they are learning and getting something back beyond just helping nature. The organisation noted that pitching volunteers at different levels to accommodate their different levels of experience and interest helped broaden the reach. Proactive initiatives such as the sending of the two-monthly e-bulletin "Bat Monitoring Post" served to inform and keep engaged in the organisation's activities those who had signed up85 .

84 This reflects a distinction between action that has a positive impact and action intended to (but not necessarily having) positive impact. Stern (2000). Toward a Coherent Theory of Environmentally Significant Behaviour. Journal of Social Issues, Vol. 56, No. 3, 2000, pp. 407–424. 85 National Bat Monitoring Programme. Bat Conservation Trust & JNCC. Annual Report 2017 https://cdn.bats.org.uk/pdf/National-Bat-Monitoring-Programme-Annual-Report- 2017.pdf?mtime=20181109145017

Green Gym initiative86 reported that active volunteering improving the natural environment can create a sense of purpose and pride in making a difference in the local environment. However, some volunteers gave up volunteering at Green Gym because it is always on weekdays - they stated they would continue if sessions would be offered on weekends87. External recognition of the organisation or school's activities encourages and motivates further engagement with nature. This can be seen via awards (e.g. "Green Schools"88 or "Healthy Schools"89), media reporting or external visitors to exchange good practices90. An interviewee identified The Great Hurdle Hunt91, which seeks to engage people in citizen science to help demonstrate the scale of the issues of plastic pellets, as an example of where engagement is used to gather evidence to directly influence policy, which was thought to be a powerful way encouraging people to take positive action. Enhancing connectedness: An interviewee cited the Wildlife Trusts’ 30 Days Wild Campaign as an effective initiative, and its consideration of ‘pathways to connectedness’. The campaign encouraged people to make more time for nature (in particular ‘everyday nature’) in their lives for 30 days (it did not directly promote the resultant benefits of nature connectedness, happiness, health and pro- nature behaviours as benefits of this). 101 Random Acts of Wildness activities, specifically selected to maximise benefits and offer a range of activity types, were promoted via a web platform to participants, who could also share their experiences. The evaluation report found significant and sustained effects of the campaign on health, happiness and nature connection and conservation behaviours. The report suggests there is the potential to apply 30 Days Wild to millions of people within schools, workplaces and local neighbourhoods each year, so that they and the natural world can enjoy the ensuing benefits.92 The importance of connectedness was highlighted in a recent study93 that found that “increased participation in nature-based environmental education was related to greater ecological behaviour, mediated by increases in environmental knowledge and connectedness to nature. [….] connectedness to nature explained 69% and environmental knowledge 2% of the variance in ecological behaviour”. Making action accessible: An interviewee suggested that The Bat Conservation Trust’s efforts to engage people in bat conservation were successful because activities could be undertaken in or near urban areas (where there are populations of bats) in the evenings (when people are free to participate). According to one interviewee, people get more involved when they feel they can do something about the wildlife/nature that is local to them. Initiatives with a wide scope like the “Bat

86 Green Gym scheme is run by The Conservation Volunteers (TCV) and in 2016 comprised more than 100 Green Gyms across the UK. It encourages to make positive changes in volunteers’ wellbeing and in the natural environment by promoting outdoor activities such as conservation, park management and growing food. 87 Green Gym Evaluation Report 2016. https://www.tcv.org.uk/sites/default/files/green-gym-evaluation- report-2016.pdf 88 http://www.greenschoolsprogramme.org/schools/gsp-audit/green-schools-awards/ 89 https://www.healthiergeneration.org/take-action/schools/national-healthy-schools-award 90 Waite, S. (2016). Natural Connections Demonstration Project, 2012-2016: Final Report. Natural England Commissioned Report NECR215 91 A citizen science initiative to collect help collect data on the distribution and presence of nurdles (the raw material of the plastics industry, used to make plastic products) along coastlines. For more information see: https://www.nurdlehunt.org.uk/ 92 Richardson M, Cormack A, McRobert L, Underhill R (2016). 30 Days Wild: Development and Evaluation of a Large-Scale Nature Engagement Campaign to Improve Well-Being. PLoS ONE 11(2): e0149777. https://doi.org/10.1371/journal.pone.0149777 93 Evaluating the effect of participation in nature-based environmental education in 4th to 6th graders (N = 255). Otto, S. and Pensini, P. (2017). Nature-based environmental education of children: Environmental knowledge and connectedness to nature, together, are related to ecological behaviour. Global Environmental Change, Volume 47, 2017. 32

Conservation Trust” proved to be successful when covering both rural and urban areas, allowing participants from all areas to engage with their local biodiversity. 2.5.3.3 What more can be done A number of interviewees suggested that improving awareness and understanding is not enough. There should be greater consideration of the drivers of behaviour. Three key topic areas were identified: connectedness, awareness and access. Connectedness An interviewee stressed the importance of promoting connectedness and suggested that a pathways to nature connectedness be used a framework, that goes beyond improving knowledge about environmental and biodiversity issues, for encouraging positive impact behaviours. Awareness of opportunities A number of interviewees expressed the view that many people are not aware of the opportunities to undertake direct positive action – they may be unaware of what action they can personally take for what benefit, or may be unaware of programmes or campaigns being offered that they could participate in. Beyond basic awareness, points raised include: ensuring an understanding of what positive action is, so that people can apply it in their lives; using peer group messaging, as people like to hear from people that they relate to; and using more accessible language – such as nature and wildlife rather than biodiversity. Access to opportunities A number of potential barriers to undertaking positive action were identified, which need to be addressed to make it easier for people to undertake positive action: • Ensuring that any supporting infrastructure that is needed is in place and practically accessible for potential users; • Covering the basic costs of volunteering to make it more accessible to lower income groups; • Ensuring that environmentally beneficial (or preferable) products or services are clearly labelled, making it easier for consumers to choose them, and/or using subsidies to ensure they are affordable. • Ensure adequate support and funding for NGOs - who are often the providers of positive action opportunities – so that they can provide these opportunities at various geographical scales and locations. Awareness of benefits Promote understanding of how actions can benefit biodiversity. Ensuring there is feedback of results of participation and of how actions are benefiting biodiversity. It was suggested that this can encourage continued action by those already involved, but also demonstrate to others that ‘everyone is doing this’ and hence trying to influence social norms.

3 Priority Action 2: Biodiversity values incorporated in decision-making 3.1 Evaluation framework

3.1.1 Intervention logic Priority action 2 aims to ‘promote taking better account of the values of biodiversity in public and private sector decision-making, including by providing tools to help consider a wider range of ecosystem services’. The many benefits that biodiversity provides are not fully reflected in markets, and hence have not traditionally been adequately incorporated into economic decision making frameworks. This priority action aims to: • improve understanding of the benefits of biodiversity, and the natural environment more generally; and • engage and support policy makers, businesses and organisations to better integrate natural capital and ecosystem services in decision making.

Specified activities under this Priority Action include the development of guidance for businesses on valuing the natural environment and adopting a responsible approach towards the use of natural capital. In the public sector the inclusion of natural capital in national accounts and support for green markets are referenced in the Strategy. The setup of the Natural Capital Committee is expected to support these activities and lead to decision-making in policy and practice that accounts for the value of biodiversity. Figure 9 presents the Logic model for Priority Action 2, describing the Activities, Outputs, Intermediate (or short term) Outcomes and the Long term Outcomes that actions under this Priority Action aim to achieve. The Long-term Outcomes of this Priority Action, along with those of all other Priority Actions across Themes, eventually feed into the wider Strategy Impacts (not visualised in Figure 9).

Intermediate Long term Priority Actions Activities Outputs Outcomes Outcomes

Promotion of Establish a New structures People & Changes to biodiversity Natural Capital providing advice to organisations decision and values in Committee support stakeholders take action & policy-making decision making decisions based based on the & development Provide support Guidance & tools on the value of value of the of ecosystem to businesses & developed: the natural natural service (ES) organisations • Supplementary environment environment assessment tools develop Green Book guidance on guidance Better Biodiversity valuing the • Roadmap to a awareness, benefits are natural Green Economy understanding & accounted for in environment • Guidance for IAs uptake of ES & financial and assessments market decisions Engage policy • PES opportunities makers and • NC Accounts & integrate other ‘tool’s biodiversity considerations in Evidence and policy key policy documents documents disseminated

Figure 9 Theme 2 Priority Action 2 Logic model

3.1.2 Evaluation questions The evaluation of Priority Action 2 intends to answer the following evaluation questions, looking to evaluate progress across stages in the above process, but also aiming to understand the links and interactions between these and capture any lessons on why some might have progressed more or have had better outcomes than others: 1. Do businesses and organisations have better awareness of green market opportunities? 2. Has relevant guidance and tools been developed, to support integration of natural values in impact assessments? To what extent is that helpful? Are some more helpful for that others and for which audiences - why? 3. Are natural values better integrated into private and public sector decision making? 3.2 Theme 2 Priority Action 2: Key activities

Progress on the key activities identified in the Strategy under Priority Action 2 are summarised in Table 2. Table 2 Theme 2 Priority Action 2 – Strategy activities summary

Strategy activities Key reforms described by Assessment of progress the strategy Establish a Natural ■ Establish an independent ■ The NCC was established in 2012 to run up to Capital Committee committee to advise the 2015, but was reinstated for a second term running government on natural from 2016-2020. capital ■ The Committee has advised the Government on the development of the 25 Year Environment Plan

Strategy activities Key reforms described by Assessment of progress the strategy and on embedding natural capital into decision- making. ■ The NCC has developed practical guidance on choosing the most appropriate approach to Natural Capital Valuation and integrating natural capital into decision-making. Provide support to ■ Develop guidance & ■ A wide range of guidance and tools have been businesses & tools and disseminate developed in collaboration with businesses, develop guidance on evidence and policy academia and third sector organisations. valuing the natural documents ■ An increasing number of partnerships and environment ■ Support partnerships and knowledge networks (such as the Valuing Nature business participation in Network) have been formed acting as resource coalitions, such as, The hubs and developing further guidance on how to Economics of Ecosystems choose the appropriate method, tool or approach and Biodiversity (TEEB) in valuation. Membership in these networks varies ■ Support the creation of with stakeholders across business, academia, new markets for green government and wider. goods and services ■ A number of green opportunities for businesses have been identified by the Ecosystem Markets Taskforce. Some of these refer to the creation of new markets. Progress varies across these opportunities with some being more advanced than others (see Section 2.3). Some have received government funding. Engage policy ■ Include consideration of ■ Green Book supplementary guidance on makers and nature’s value in Impact environmental impact was published in 201294. integrate Assessments. There is no evidence on the degree to which biodiversity ■ Inclusion of natural Government Impact Assessments have adequately considerations in capital in UK’s national been integrating environmental impacts, reflecting key policy accounts the updated Green Book. documents Nature value ■ A Roadmap has been developed by the Office for ambassadors to engage National Statistics (ONS) in collaboration with key decision-makers & Defra, setting out a strategy to incorporating informers natural capital into UK Environmental Accounts by 202095. Progress has been made with the development of the first set of national and sub- national Natural Capital Accounts for several broad habitats (ONS, 2018)96, accompanied by a set of Principles on Natural Capital Accounting (ONS, 2017)97. Some gaps in coverage exist (e.g. cross- cutting soil and biodiversity accounts) but recent

94 https://www.gov.uk/government/publications/green-book-supplementary-guidance-environment 95 The Roadmap was initially published in 2012 and updated in 2015 and 2018 to reflect three phases towards developing the UK Environmental Accounts by 2020. 96 ONS (2018) UK Natural Capital: interim review and revised 2020 roadmap. https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/methodologies/uknaturalcapitalinteri mreviewandrevised2020roadmap 97 ONS (2017) Principles of Natural Capital Accounting. https://www.ons.gov.uk/economy/environmentalaccounts/methodologies/principlesofnaturalcapitalaccounti ng

Strategy activities Key reforms described by Assessment of progress the strategy reviews suggest these are expected to be filled by 2020 (NCC, 2019)98. Significant methodological challenges remain primarily relating to data gaps and aggregate natural capital estimates suggesting a robust set on national natural capital accounts will be challenging to deliver by 2020 (ONS, 2018; NCC, 201899). ■ The network of Nature Value Ambassadors was revisited in the Natural Environment White Paper update 2014 and considered “delivered” through a range of other initiatives100 “which already involve people operating as champions in their sector or area” (Defra, 2014)101

3.3 Do businesses and organisations have better awareness of green market opportunities?

3.3.1 Introduction The term ‘green market opportunities’ refers to a wide range of opportunities across an array of business sectors and industries. Such market opportunities tend to change in time depending on public policies, private initiative, business practices, industry leadership as well as, public demand for greener practices, services and products. The Ecosystem Markets Task Force (EMTF), was set up by the Government as a business-led initiative that would “review the opportunities for UK business from expanding green goods, services, products, investment vehicles and markets which value and protect ecosystem services” (NEWP, 2011)102. It identified 22 green business opportunities (EMTF, 2012)103, of which a subset were identified as ‘high priority’ on the merits of their potential impact, scale and relevance to existing issues. (EMTF, 2013)104. Some of these opportunities are amenable / suitable for uptake across

98 Natural Capital Committee (2019) State of Natural Capital Annual Report 2019. Sixth Report to the Economic Affairs Committee of the Cabinet. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/774218/ ncc-annual-report-2019.pdf 99 Natural Capital Committee (2018) Annual Report 2018. Fifth report to the Economic Affairs Committee. 100 Namely: Local Nature Partnership Chairs, Ecosystems Knowledge Network Champions, Forestry and Woodland Advisory Committee Chairs, Catchment Partnership Hosts, Natural Capital Committee members and Ecosystems Markets Task Force members. 101 Natural Environment White Paper Implementation update report https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/366526/ newp-imp-update-oct-2014.pdf 102 Natural Environment White Paper. The Natural Choice: securing the value of nature https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/228842/ 8082.pdf 103 EMTF (2012) Opportunities for UK Business that Value and/or Protect Nature’s Services; Elaboration of Proposals for Potential Business Opportunities. Attachment 1 to Final Report to the Ecosystem Markets Task Force and Valuing Nature Network. GHK, London. 104 EMTF (2013) Realising nature’s value: The Final Report of the Ecosystem Markets Task Force.

sectors, while others are industry-specific. The EMTF suggested a combination of business initiative and government support would be required to capture these opportunities. For the purposes of this evaluation we review evidence on the 12 business opportunities identified as high priority areas (EMTF, 2013) or ranked as most promising (EMTF, 2012), in terms of: • What progress has been made in raising awareness and take-up of the opportunities? • Across the 12 opportunities, what factors have supported or hindered progress?

3.3.2 Evidence on progress Global literature suggests overall improvements in business awareness of biodiversity particularly with reference to multinational corporations (TEEB, 2012105;Winn & Pogutz, 2013106). For a better understanding of changes relevant to the UK, Table 3 provides a review of progress against the 12 EMTF business opportunities (EMTF, 2012), drawing from the Government response to the EMTF (Defra, 2013)107, and progress documented in evaluative and progress reports, and other UK literature. Table 3 Review of progress against business opportunities identified by EMTF (2012; 2013)

Business Summary of progress opportunity Biodiversity Biodiversity offsets are designed to be an effective way of delivering the compensation offsetting required when developments cause biodiversity losses (where avoidance and mitigation are not possible). Biodiversity Offsetting is meant to provide measurable [1st Priority area biodiversity benefits whilst also enabling economic growth. Business opportunities EMTF, 2013] relate to the market for providing offsets, certifying, broking, etc. The EMTF has estimated the potential annual market value for biodiversity offsetting at £90-470 million in England. The Government tested Biodiversity Offsets in a pilot project that ran between 2012 and 2014. The EMTF suggested that Government signal its intention to mandate biodiversity offsetting and proceed on this basis in the pilot areas (EMTF, 2013). Whilst much of the necessary architecture is in place for offsetting in the UK, thus far the approach remains voluntary, which is considered one of the key factors behind the slow take up with a shortage in both supply and demand of offsets and implications on the scale of benefits materialised (Baker et al., 2014)108,109 – an issue also noted from

105 TEEB (2012). The Economics of Ecosystems and Biodiversity in Business and Enterprise. 106 Winn, M. I., & Pogutz, S. (2013). Business, ecosystems, and biodiversity: New horizons for management research. Organization & Environment, 26(2), 203-229. 107 Realising nature’s value: The Final Report of the Ecosystem Markets Task Force - Government Response https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/236879/ pb13963-government-response-emtf-report.pdf 108 Baker, J., Sheate, W. R., Bennett, T., Payne, D., Tucker, G., White, O., & Forrest, S. (2014). Evaluation of the biodiversity offsetting pilot programme. Defra project code: WC 1051 109 Darbi, M. (2018). European perspectives on No Net Loss of Biodiversity and Ecosystem services and challenges of biodiversity offset implementation – an update from science, policy and practice. (UK case study). BBOP webinar, 13 July 2018. Available at: http://bbop.forest- trends.org/documents/files/eu_perspectives.pdf

Business Summary of progress opportunity international experiences110. Since the first offset was agreed in 2013, the Environment Bank111 land registry reveals a total of 104 receptor sites available in England112. Results from the Stakeholder Consultation on biodiversity offsetting, concur that for the approach to achieve its potential benefits developers should be ‘required’ to use offsetting. Reasons for the opinion include that a mandatory system would build momentum and a scale that could support an offsetting market and deliver genuine benefits for biodiversity (Defra, 2016)113. A recent Stakeholder Consultation was carried out (February 2019) on whether new developments should provide a net-gain for biodiversity and the Government has signalled its intention to mandate net gains for biodiversity in the Environment Bill114. The Biodiversity Metric developed by Defra and ONS has also been updated based on feedback received from stakeholders and users and the lessons emerging from the Evaluation of the Biodiversity Offsetting pilots (Defra, 2014)115. A global review of literature on biodiversity offsets by zu Ermgassen et al. (2019)116 identified significant gaps in evidence on the effectiveness of offsets in achieving no net loss for biodiversity and highlighted the need to “urgently improve the evidence- base around efforts to mitigate development impacts on biodiversity”. Studies in the UK on the effectiveness of offsets for bat conservation, reported negative results and cited concerns around the lack of adequate consideration in the design of mitigation/offset measures (Garland et al., 2017)117 and the lack of post-development monitoring (Stone et al., 2013)118.

Bioenergy and EMTF highlighted an opportunity in the use of farm waste to generate energy through anaerobic anaerobic digestion (AD) on farms (EMTF, 2013). The National Farmers Union (NFU)119 digestion on farms recognising similar potential aspired to have 1,000 AD plants on farms in England by 2020 – a target NFU considered modest compared to developments in other EU [2nd Priority area countries. Following slow initial progress (125 operational plants in 2013120 and 342 in EMTF, 2013]

110 International experience indicates that a voluntary approach “is unlikely to be sufficient to support a viable habitat banking system” (ten Kate et al. 2010). Where a legal requirement has existed biodiversity offsetting generated benefits “faster easier and at a greater scale” (Baker et al., 2018; Conway et al. 2013; Tucker et al. 2014). 111 Sole broker of biodiversity offsets in the UK http://www.environmentbank.com/ 112 Data on the number of offsets agreed has been requested from the Environment Bank 113https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/50124 0/biodiversity-offsetting-consult-sum-resp.pdf 114 https://www.gov.uk/government/consultations/biodiversity-net-gain-updating-planning-requirements 115http://sciencesearch.defra.gov.uk/Default.aspx?Menu=Menu&Module=More&Location=None&Completed= 0&ProjectID=18229 116 zu Ermgassen, S. O., Baker, J., Griffiths, R. A., Strange, N., Struebig, M. J., & Bull, J. W. (2019). The ecological outcomes of biodiversity offsets under “no net loss” policies: A global review. Conservation Letters, e12664. 117 Garland, L., Wells, M., & Markham, S. (2017). Performance of artificial maternity bat roost structures near Bath, UK. Conservation Evidence, 14, 44-51. 118 Stone, E. L., Jones, G., & Harris, S. (2013). Mitigating the effect of development on bats in England with derogation licensing. Conservation biology, 27(6), 1324-1334. 119 NFU is the UK’s largest farming union, representing (in 2018) 55,000 members in England and Wales including 46,000 farming businesses. https://www.nfuonline.com/nfu-command-paper-response-submitted- 08052018/ 120 NFU Briefing 2013 https://www.nfuonline.com/assets/22388

Business Summary of progress opportunity 2016121) in 2018 there was a total of 800 operational and planned anaerobic digestion plants in the UK (NNFCC, 2018)122. Policy support for developing new AD capacity included the Anaerobic Digestion Strategy and Action Plan and relevant commitments by Defra (2011)123, which included a £10 million Anaerobic Digestion Loan Fund (ADLF) launched by Defra in 2011 and administered by WRAP. A £3 million extension of the existing fund, the On-farm Anaerobic Digestion Fund, offered farmers in England financial support to develop small-scale AD plants. The Green Investment Bank also provided targeted support to private investment124. Benefits from the use of AD for biodiversity can emerge as a result of reduced risk from pollution of water resources through run-off of nutrients and the use of AD’s by- products (digestate) on farms as a natural fertiliser alternative to chemical options. Introducing new crops can also improve soil quality. However, there are considerable risks associated with AD for biodiversity. If the location and crop for farming are not carefully selected there is potential for AD to negatively impact on biodiversity through increase in farming of purpose grown crops for feedstocks and the reduction of semi- natural habitats or high value biodiversity land (Defra, 2011; ADBA, 2014125)

Woodland Funding opportunities for the development of local woodfuel supply chains and active enhancement sustainable management have been available through the Green Investment Bank and through wood fuel the Rural Community Renewable Energy Fund. One of the factors constraining take-up, market identified in a wider review of perceptions around opportunities that woodlands provide (O’Brien et al., 2018)126, is a lack of awareness of these opportunities by [3rd Priority area woodland managers. EMTF, 2013] Grown in Britain127, a not for profit organisation established by a collaboration of industry and Government, following a recommendation of the Independent Panel of Forestry (Defra, 2013)128, has played an important role in promoting local woodfuel supply and raising awareness on active woodland management. The scheme provides a trademark certification to enhance brand recognition amongst buyers, suppliers and the public. Forestry Commission England reported that businesses with licences promoting British timber “manage around 200,000 ha of woodland and process around 1million tonnes of timber annually” (Forestry Commission England, 2016)129.

121 NFU Briefing 2016 https://www.nfuonline.com/ad_nfubriefing6/ 122 https://www.nnfcc.co.uk/publications/report-anaerobic-digestion-deployment-in-the-uk 123https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/69400 /anaerobic-digestion-strat-action-plan.pdf 124 http://greeninvestmentgroup.com/investment-sectors/waste-and-bioenergy/ 125 Anaerobic Digestion & Biogas Association (2014). Voluntary Guidelines On Best Practice For Crop Feedstocks In Anaerobic Digestion http://www.biogas.org.uk/images/upload/news_85_VoluntaryCodeofPracticeCrops.pdf 126 O’Brien, L., Ambrose-Oji, B., Hemery, G., Petrokofsky, G and Raum, S. (2018) Payments for ecosystem services, land manager networks and social learning. Forest Research, Farnham 127 https://www.growninbritain.org/ 128https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/22102 3/pb13871-forestry-policy-statement.pdf 129 Forestry Commission England/ Central Services Annual Report and Accounts 2015-16 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/537462/f orestry-commission-annual-report-2015-2016-web.pdf

Business Summary of progress opportunity Private investment of more than £1 million was secured as match funding, following a collaboration between the Forestry Commission and the Coast to Capital Local Enterprise Partnership which has invested £0.7 million in West Sussex and East Surrey. To-date this has supported development of six hardwood sawmills and a woodfuel hub, encouraging businesses to engage in active woodland (Forestry Commission England, 2017)130.

Nature-based Nature-based certification and labelling can include “livestock products, food service, certification and clothing, tourism, recycled materials, wood and Pharmaceuticals” (EMTF, 2013). labelling An increasing number of certification standards and accreditation bodies have

emerged as certification and labelling become more widely adopted by businesses [4th Priority area across sectors recognising reputational and market growth benefits (OECD, 2016131, EMTF, 2013] Addison et al., 2018132). Certification schemes and standards are largely voluntary, but with different approaches used for the process of certification (e.g. self-certified, third-party-certified etc.). The OECD recognises 3 types: Eco-labels, Self-declared environmental claims, and Environmental declarations (OECD, 2016). The most appropriate certification process is influenced by factors such as the target audience (e.g. consumers, B2B) and product characteristics. Based on a recent international review of 544 schemes by the OECD the majority of environmental labelling and information schemes are targeted by businesses to consumers (70%) with an increase noted in privately-owned schemes. Such schemes can have a positive impact on the environment, influencing markets and trade. Challenges include maintaining high standards and ensuring transparency. Inter- operability between schemes could be further explored as a way of minimising costs for actors across the supply chain (OECD, 2016). An increasing number of industry-specific schemes and labels have also been developed (Addison et al., 2018), such as Carbon Trust’s Footprint Label133 for products.

Water cycle Catchment management offers a holistic approach to tackling diffuse water pollution catchment and managing riverbanks and surrounding habitats. Projects that have adopted this management approach, have demonstrated positive impacts for biodiversity through habitat creation and restoration, soil and water quality improvements, invasive species control [5th Priority area and benefits manifested for wildlife (CaBA Benefits Assessment Working Group, EMTF, 2013] 2018)134. Key progress in this area has happened in the areas of:

130 Forestry Commission England/ Central Services Annual Report and Accounts 2016-17 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/629255/f cecs-annual-report-2016-2017-web.pdf 131 OECD (2016). Environmental labelling and information schemes. https://www.oecd.org/env/policy- persectives-environmental-labelling-and-information-schemes.pdf 132 Addison, P. F. E., Carbone, G., McCormick, N. (2018) The development and use of biodiversity indicators in business: an overview. Gland, Switzerland: IUCN. vi + 16pp. 133 https://www.carbontrust.com/client-services/certification/product-footprint/ 134 CaBA Benefits Assessment Working Group (2018). CaBA Benefits Assessment Full Report Final. Available at: https://catchmentbasedapproach.org/wp-content/uploads/2018/10/CaBA-Benefits-Assessment-Full- Report_Final-1.pdf

Business Summary of progress opportunity Adopting integrating water and waste water catchment management approaches: Defra tested the Catchment Based Approach (CaBA) between 2011-13, following which the approach was adopted by 93 catchments in England, managed by partnerships between landowners, businesses and local government (Defra, 2015)135. During 2017/18, CaBA partnerships delivered over 450 projects and for every £1 directly invested by Government, CaBA partnerships have raised £6.5 from non-governmental funders. Targeted support for specific types of projects (e.g. those addresses groundwater, coastal waters and water efficiency) and guidance to aid partnership better understand and adopt natural capital concepts are suggested to enhance progress (CaBA Benefits Assessment Working Group, 2018). A number of water companies have adopted catchment-based management approaches. Pioneering catchment management examples include: South West Water’s Upstream thinking project, Wessex Water’s EnTrade, the Severn Trent Environmental Protection Partnership (STEPS), and Anglian Water’s “Slug It Out” (Ofwat, 2017). Sixty-three CaBA partnerships are actively engaged in delivery and/or are funded by their local water company (and partnerships are also engaged with businesses across numerous sectors, as well as local authorities and Local Enterprise Partnerships). (Defra, 2015) The Water Act 2014 places a duty on Water companies with reference to resilience. Business awareness is high as the resilience of Water companies’ business is assessed by Ofwat. Ofwat’s 2014 Price Review noted that the sector is making “some good progress on green infrastructure and catchment management. But the scale of these emerging options was generally modest” (Ofwat, 2017)136. Natural England in collaboration with the Environment Agency have developed the guidance for the next Price Review (PR19 covering 2020-2025). The Water Industry Strategic Environmental Requirements (WISER) guidance is a strategic steer to water companies on the environment, resilience and flood risk for business planning purposes (EA & NE, 2018)137. A recent report by Indepen (2018)138 looking into catchment expenditure in England estimated that “£100 million could be saved by water companies using catchment solutions & linking with other funding pots.” A review of Sustainable Drainage Systems (SuDs) in the UK, engaging 50,000 industry professionals in a survey, suggests that “SuDS are beginning to become the norm” although “design and construction remain weakly regulated, and there is a lack of clear legal framework on SuDS ownership and maintenance” (Melville‐Shreeve et al., 2018)139.

135 Defra (2015) Evaluation of the Catchment Based Approach: Phase 2. Final report: WT1559 136 Ofwat (2017) Resilience in the round. Available at: https://www.ofwat.gov.uk/wp- content/uploads/2017/09/Resilience-in-the-Round-report.pdf 137Environment Agency and Natural England (2018). Water industry strategic environmental requirements (WISER). Available at: https://www.customer-panel.co.uk/media/1017/water-industry-strategic- environmental-requirements-wiser.pdf 138 http://indepen.uk.com/case-studies/catchments-if-you-can/ 139 Melville‐Shreeve, P., Cotterill, S., Grant, L., Arahuetes, A., Stovin, V., Farmani, R., & Butler, D. (2018). State of SuDS delivery in the United Kingdom. Water and environment journal, 32(1), 9-16. https://onlinelibrary.wiley.com/doi/pdf/10.1111/wej.12283

Business Summary of progress opportunity Carbon abatement The Peatland Code development process began in 2013 with pilot restoration projects via a Peatland (notably the pilot Peatland Code under Defra's Payments for Ecosystem Services (PES) Carbon Code pilot projects), followed by a Defra funded and commissioned report to develop peatland carbon metrics and financial modelling to enable quantification and valuation of the carbon impacts of peatland restoration. Peatland Code version 1.0 was launched in 2015 (Smyth et al., 2015)140 and a revised version was published in 2017 by the IUCN UK National Committee (IUCN UK, 2017)141. The Peatland code is a voluntary standard. The first Peatland Code restoration project to validate emissions benefits of restoration activities using the Peatland Code materialised in Scotland through the Peatland Programme of IUCN UK in 2017142. Four more Peatland sites are under development in Scotland, England and Wales (Peatland Code Registry143).

Developing the UK The UK is a leader in the development of guidance and tools to support the integration Ecosystems of nature values into their decision-making. The momentum for natural capital in the Knowledge UK and globally provides a growth opportunity for businesses with expertise across economy sectors of natural capital assessment, ecosystem services assessment, environmental valuation and natural capital accounting (NCC, 2018144; EMTF, 2012). Business opportunities in the UK underpin some of the other ecosystem / green market opportunities reviewed, such as the creation of new markets (e.g. biodiversity offsetting) or the increasing number of natural capital assessments carried out by water companies. Opportunities in the Ecosystem Knowledge economy are also found at a European level, with Knowledge Innovation Projects (KIPs) aspiring to close gaps in environmental knowledge and test innovative approaches on accounting for natural capital and ecosystem services (Environment Knowledge Community, 2015)145. KIPs have an implementation phase between 2015 and 2020 and thus far projects have explored accounting for pollination, water purification and outdoor recreation (Eurostat, 2018).

Payment for Defra tested PES in 16 Payments for Ecosystem Services Pilot Projects between 2012- Ecosystem Services 15. Guides have been developed on the application of PES in specific environmental (PES) contexts. Some of the challenges faced by the PES pilots included challenges in stakeholder buy- in and the extensive resources needed for relationship and partnership-building. Having to work within existing institutional and regulatory arrangements was also

140 Smyth, M.A., Taylor, E.S., Birnie, R.V., Artz, R.R.E., Dickie, I., Evans, C., Gray, A., Moxey, A., Prior, S., Littlewood, N. and Bonaventura, M. (2015) Developing Peatland Carbon Metrics and Financial Modelling to Inform the Pilot Phase UK Peatland Code. Report to Defra for Project NR0165, Crichton Carbon Centre, Dumfries. 141 http://www.iucn-uk-peatlandprogramme.org/sites/www.iucn-uk- peatlandprogramme.org/files/PeatlandCode_v1.1_FINAL.pdf 142 http://www.iucn-uk-peatlandprogramme.org/news-and-events/news/first-peatland-code-validation- awarded 143 http://www.iucn-uk-peatlandprogramme.org/peatland-code-registry 144 Natural Capital Committee (2018) UK Natural Capital: interim review and revised 2020 roadmap. https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/methodologies/uknaturalcapitalinteri mreviewandrevised2020roadmap 145 http://ec.europa.eu/environment/nature/capital_accounting/pdf/KIP-INCA-ScopingPaper.pdf

Business Summary of progress opportunity identified as a barrier which could be lifted with the development of “new legal and institutional structures to facilitate PES arrangements” (Defra, 2016)146. A survey of over 150 environmental professionals on perceptions about PES and its uptake in the UK (2017)147 revealed familiarity with PES, but some disagreement on the characteristics of the transactions with some arguing for more flexibility. Survey participants were keen to see more practical applications of PES, with wider implementation will be key in achieving the stated benefits of PES. To support this, respondents indicated three key areas for change: (1) more understanding, evidence and testing; (2) more guidance, regulation and clarity to enable PES; and (3) more awareness of PES and engagement with the public and potential participants. In addition, a need to enable facilitation and partnership working to set up and administer new PES schemes was identified.

Carbon The government introduced the Zero Carbon Buildings Regulations 2016 which include sequestration as "off-site solutions (called Allowable Solutions) would be made available to developers an 'Allowable as ways to meet the zero carbon standard.” The Zero carbon hub offers information on solution' progress up to 2016.

Optimising the An increasing number of tourist attractions, services and accommodation are aware of ecological and environmental issues and are taking action to adopt friendlier practices to the economic benefits environment (VisitEngland, nd148). Green accreditation schemes certifying sustainable of sustainable businesses have also been developed, such as, the Green Business Tourism Scheme149 tourism and Peak District Environmental Quality Scheme (67 businesses participating in 2018)150

Reducing risk for The Natural Environment White Paper (Defra, 2011) called for green infrastructure as a insurers through tool to conserve and enhance biodiversity. Green infrastructure, ranging from urban investment in parks to wetland creation, can play a significant role in reducing the vulnerability of green areas that are prone to flooding with benefits generated for both habitats and people. infrastructure Despite indication that “investment in green infrastructure can enhance insurance value” (Green et al., 2016)151, there is little indication that progress has been made on engaging the insurance industry in green infrastructure investment. Recent reports indicate a need to test products/financing mechanisms152,153 and for insurers to work in

146 Defra (2016) Defra’s Payments for Ecosystem Services Pilot Projects 2012-15. Review of key findings. 147 https://ecosystemsknowledge.net/sites/default/files/wp-content/uploads/PES_Survey_Summary_Final.pdf 148 Visit England (nd). Green accreditation schemes. https://www.visitengland.com/plan-your-visit/sustainable- travel/green-accreditation-schemes 149 https://www.green-tourism.com/home/ 150 https://www.peakdistrict.gov.uk/looking-after/eqm 151 Green, T.L., Kronenberg, J., Andersson, E., Elmqvist, T. and Gómez-Baggethun, E. 2016. Insurance Value of Green Infrastructure in and Around Cities. Ecosystems 12 May. Available at: https://www.stockholmresilience.org/research/research-news/2016-07-05-green-insurance.html 152 Colgan, C. S., M. W. Beck, S. Narayan, 2017. Financing Natural Infrastructure for Coastal Flood Damage Reduction. Lloyd’s Tercentenary Research Foundation, London. Available at: https://conservationgateway.org/ConservationPractices/Marine/crr/library/Documents/FinancingNaturalInfra structureReport.pdf , 153 Lloyds (2018). Innovative finance for resilient infrastructure. Available at: https://www.lloyds.com/news- and-risk-insight/risk-reports/library/understanding-risk/innovative-finance-for-resilient- infrastructure?utm_source=Lloyds_posts&utm_medium=social&utm_campaign=emergingrisks_innovative- finance-for-resilient-infrastructure

Business Summary of progress opportunity partnership (to avoid free riding) and Government to work with the industry to identify products and platforms to stimulate this market154. A collaborative government- industry ‘flood insurance working group’ does not appear to have been active since 2013. There is no indication that the insurance industry is making any meaningful contribution to flood management investment155. Flood Re156 was set up to ensure that households in high flood risk areas were able to obtain affordable flood insurance cover. Whilst it has been broadly successful in its principal aim, it does not appear to provide sufficient information on the subsidy included in the reduced premiums, nor to hold any levers, via which insurers or households may be incentivised to make investments in green infrastructure to support reduced flood risk157.

Developing The UK features 90 green bonds listed on the London Stock Exchange (Green Finance environmental Initiative, 2019)158. bonds as vehicles In order to strengthen green finance activity in the UK the Government has further set for investments in up the London Green Finance Initiative (GFI) in 2016. The Green Finance Taskforce nature (GFT) introduced in 2017 is part of the initiative set up to support the government maximise the opportunities for UK businesses in green finance and clean investment (Department for Business, Energy & Industrial Strategy, 2017). The Taskforce published a report in 2018159 outlining key recommendations for the Government to consolidate the UK’s position as a world leader in green finance.

3.3.3 Assessment / lessons This section seeks to draw cross-cutting lessons from across the 12 opportunities on the factors facilitating that progress, as well as those that are hindering progress. This is based on relevant evaluations and reviews (where available) which provide such lessons on existing practices and on the further development of the 12 opportunities. • A robust policy grounding generates confidence in the market and supports progress: Regulation and/or a clear policy framework provide confidence to market and investors when a new approach is introduced, or market is set up. A policy framework can provide clarity and assurance for businesses (EMTF, 2013). Evidence across a range of initiatives and approaches demonstrate the importance of a regulatory driver. Progress in the development of the biodiversity offset market has

154 Aldersgate Group (2017). Increasing investment in natural capital. Available at: http://www.aldersgategroup.org.uk/asset/1017 155 There is no mention of the insurance industry in reports such as: Priestly, S. (2017). Flood risk management and funding. BRIEFING PAPER Number CBP07514, 22 November 2017. Available at: http://researchbriefings.files.parliament.uk/documents/CBP-7514/CBP-7514.pdf 156 https://www.floodre.co.uk/ 157 The Environment, Food and Rural Affairs Committee (2016). Future flood prevention Second Report of Session 2016-17. Available at: https://publications.parliament.uk/pa/cm201617/cmselect/cmenvfru/115/115.pdf 158 Green Finance Initiative (2019). Facts & Figures. http://greenfinanceinitiative.org/facts-figures/ 159 Green Finance Taskforce (2018) Accelerating Green Finance https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/703816/ green-finance-taskforce-accelerating-green-finance-report.pdf

been relatively slow, with indications that a stronger policy signal – regulation mandating offsetting – is necessary to drive the market. O’Brien et al. (2018) revisiting PES in qualitative research with key stakeholders also highlight concerns raised by woodland owners and land managers around “stability” and a potential change in focus resulting from a change in government or EU Exit. On the contrary, the Catchment Based Approach - launched as a Defra policy framework in 2013 - was widely adopted across 93 catchments by 2014 (Defra, 2015)160. A stakeholder survey on SuDS, indicated that 53% of respondents identified the National Planning Policy as one of the key factors driving the uptake of SuDS and 54% supported stronger legislation (Melville‐Shreeve et al., 2018). • A clear institutional and technical framework is necessary to enable the normal functioning of green markets: Emerging green markets usually lack the institutional set up and market framework that existing markets benefit from. A market framework with guidance, standards, metrics, a registry of supply and related products and brokers is necessary to encourage take up (EMTF, 2013; Forestry Commission, 2016). The need for an independent certification to provide assurance in the measurement of carbon savings, was highlighted in the case of the Woodland Carbon Code (McNab et al., 2015)161 and Peatland Code (IUCN, 2015)162. A key challenge is ensuring that certification is of continually high standard. • Public funding can support market take-up: The success of bioenergy opportunities has been well support by public funding. CaBa partnerships have successfully used public funding to leverage additional funding from other sources (at greater than 1:6). • Adequate awareness of opportunities and benefits is necessary: In the first instance this refers to raising awareness around business opportunities available and “demonstrating the business case for action” by highlighting benefits for participating businesses (McNab et al., 2015). The evaluation of the PES pilots, identified this as a prerequisite to the success of any PES scheme, suggesting further that such information is tailored to each potential buyer category and “their respective motivations” (Defra, 2016). In a different example, certification schemes have failed in the past when a new scheme was introduced without the adequate prior awareness raising. (EMTF, 2013). The case of ‘Woodland enhancement through wood fuel market’ demonstrates that even where public funding is available, a lack of awareness of the opportunity can hinder participation in the market. Awareness raising can include with end beneficiaries who may be far removed from the delivery of the opportunities. For example, Ofwat (2017)163 highlights the need for Water companies to engage consumers in discussions on costs of investment in sustainable solutions to improve acceptability of the costs to end consumers. • Partnership working helps build capacity and opportunities: Partnerships that bring together expertise across government, business, academia and third sector organisations, support knowledge exchange and capacity-building across participating organisations (lessons emerging from CaBa and Biodiversity offsetting

160 Defra (2015) Evaluation of the Catchment Based Approach: Phase 2. Final report: WT1559 161 McNab, D., Davies, J., Eves, C., Rowcroft, P., & Dunscombe, R., 2015. Realising nature’s value in UK business. JNCC Report, No. 558, JNCC, Peterborough. 162 IUCN (2015) Peatland Code: pilot phase final report August 2015. http://www.iucn-uk- peatlandprogramme.org/sites/www.iucn-uk- peatlandprogramme.org/files/Peatland%20Code%20Pilot%20Phase%20Evaluation%20Report%20%28final%29 .pdf 163 Ofwat (2017) Resilience in the Round. https://www.ofwat.gov.uk/wp-content/uploads/2017/09/Resilience- in-the-Round-report.pdf 46

pilots). Connecting with other partnerships to disseminate opportunities, best practice examples and lessons learned has also proven beneficial – e.g. disseminating opportunities across the Local Enterprise Partnership (LEPs) network (Forestry Commission, 2016). Partnerships – in the form of public-private working groups or experts - have been influential in supporting development and awareness of a number of opportunities. The lack of progress on encouraging insurance companies to invest in green infrastructure appears to be at least partly due to a lack of collaboration within the sector and a lack of any public-private partnership task force. To aid set-up and administration of PES schemes, it is indicated that more support is needed to enable facilitation and partnership working. • Sharing practical / best case examples and guidance: Business case studies and best case examples are almost always identified as useful across stakeholders and can act to reassure risk-averse businesses. Pilot projects have been successfully launched by Defra to support a number of policy areas, providing broad opportunities for learning. Following successful water catchment examples by United Utilities and South West Water, participating in the PES Pilot project, “most of the water companies in England have deployed some form of catchment based approaches in their business plans”. This may be particularly relevant for the current policy objective of promoting the natural capital approach within market opportunities. It is suggested that effective use of natural capital concepts by CaBa partnerships requires supporting guidance on how to do so. Defra’s 25YEP Pioneers noted that engaging stakeholders in concepts of natural capital can be challenging and investment is needed to build understanding and acceptance164. 3.4 Is there guidance and tools to support the integration of natural values in impact assessment?

3.4.1 Introduction The challenges in the effective integration of natural values in impact assessment are well-recorded in literature (Baylis et al., 2015165; Bull et al. 2013166; de Groot, 2010167; Ferraro, 2009168; Ferraro & Hanauer, 2014169; Brownlie et al., 2013170) and include, amongst others: • Conceptual challenges, as a result of (amongst others) evolving terminology • Issues around scale, such as, initiatives spanning different scales and impact spillovers • Lengthy impact timeframes • Multiple outcomes and challenges in aggregation

164 ICF and Eftec (unpublished). Evaluation of the 25YEP Pioneers 165 Baylis, K., Honey‐Rosés, J., Börner, J., Corbera, E., Ezzine‐de‐Blas, D., Ferraro, P. J., ... & Wunder, S. (2016). Mainstreaming impact evaluation in nature conservation. Conservation Letters, 9(1), 58-64. 166 Bull, J. W., Suttle, K. B., Gordon, A., Singh, N. J., & Milner-Gulland, E. J. (2013). Biodiversity offsets in theory and practice. Oryx, 47(3), 369-380. 167 De Groot, R. S., Alkemade, R., Braat, L., Hein, L., & Willemen, L. (2010). Challenges in integrating the concept of ecosystem services and values in landscape planning, management and decision making. Ecological complexity, 7(3), 260-272. 168 Ferraro, P. J. (2009). Counterfactual thinking and impact evaluation in environmental policy. In M. Birnbaum & P. Mickwitz (Eds.), Environmental program and policy evaluation. New Directions for Evaluation, 122, 75–84. 169 Ferraro, P. J., & Hanauer, M. M. (2014). Advances in measuring the environmental and social impacts of environmental programs. Annual review of environment and resources, 39, 495-517. 170 Brownlie, S., King, N., & Treweek, J. (2013). Biodiversity tradeoffs and offsets in impact assessment and decision making: can we stop the loss?. Impact Assessment and Project Appraisal, 31(1), 24-33. 47

• Methodological challenges, such as difficulties in impact attribution and identification of causal relationships • Lack of effective monitoring / information to support impact assessment • “Biophysical, behavioral, and institutional factors” influencing intended outcomes and initiatives’ location ‘Guidance and tools’ can support the integration of natural values in impact assessment by providing information on the range of approaches available to identify environmental impacts, guidelines on how to incorporate these in impact assessments, as well as, tools and metrics that can aid assessment and quantification of particular impacts. A considerable amount of guidance and tools have been developed between 2011-2018 to support government, businesses and practitioners to both understand and assess the impact of their policies, products, services and operations on the natural environment, and incorporate natural values in impact assessments and decision-making. An increasing number of toolkits, resource hubs and online knowledge communities have also emerged pooling together resources and providing further guidance, case studies and practical examples. This section: • Provides a summary of the main guidance and tools that have been developed • A review of evidence on the adequacy of available guidance and tools and remaining challenges

3.4.2 Progress developing guidance and tools 3.4.2.1 Guidance Key guidance documents have been produced by Government, though an increasing number of more specific guides and tools are emerging from collaborations between government, research centres, Non-Governmental Organisations (NGOs) and private companies. Table 4 provides an overview of the most relevant impact assessment guidance developed by Government. Table 4 Overview of key guidance produced by Government

Guidance Function Owner Date The Green Book The Supplementary Green Book guidance provides specific HM Treasury 2018 and guidance for businesses on impact appraisal and valuing the Supplementary environmental effects of projects and programmes. The key guidance on guidance developed included172: environmental ■ Accounting for environmental impacts in policy appraisal appraisal171 (HM Treasury, 2012) ■ Accounting for the effects of climate change (HM Treasury, 2009) ■ Introductory guide to the valuation of ecosystem services (Defra, 2007) ■ Valuation of energy use and greenhouse gas emissions for appraisal (BEIS, 2018)173

171 https://www.gov.uk/government/publications/the-green-book-appraisal-and-evaluation-in-central- governent 172 https://www.gov.uk/government/publications/green-book-supplementary-guidance-environment 173https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/67120 5/Valuation_of_energy_use_and_greenhouse_gas_emissions_for_appraisal_2017.pdf 48

Guidance Function Owner Date

Updates to the above guidance are included in the revised Green Book. The Green Book (first published in 2003) was updated in 2018 incorporating the latest knowledge in environmental assessment and valuation. This revision of the Green Book presents the Natural Capital Framework (developed by the Natural Capital Committee) not as a replacement to existing frameworks but as an additional “more comprehensive framework” to appraising and valuing environmental impacts. It includes additional support for environmental valuation including Defra’s Environmental Valuation Look-up Tool (see Table 5) and context-specific guidance, such as, the Forestry Commission’s Woodland Valuation Tool and the Environment Agency’s Flood and Coastal Erosion Risk Management Appraisal Guidance.

Better Regulation Designed to support government departments carrying out BEIS 2018 Framework Regulatory Impact Assessments (RIAs)175. In the updated Guidance174 2018 guidance readers are signposted to Defra’s webpage on Environmental Impact and relevant resources. Wider Provides detailed guidance in monetising environmental Defra 2013 Environmental costs and benefits to support the assessment of wider Impacts: Step by environmental impacts of policy options. Where significant Step Guide176 and environmental impacts are identified, the Guide proposes Impacts the use of the Ecosystem Services Framework signposting Flowchart177 users to relevant Guidance178. Value Transfer Building on the introductory guide to valuing ecosystem Defra 2010 Guidelines179 services (Defra, 2007)180 to provide practical guidelines for the use of ‘value transfer’ in policy and project appraisal. Guidance on the The Natural Capital Committee (NCC) produced an overview Natural 2017 valuation of of methods in Economic valuation and its applications in Capital natural capital and natural capital management and the Government’s 25 Year Committee ecosystem Environment Plan, depending on the particular context and services181 purpose of the valuation. The NCC worked with Defra and

174https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/73558 7/better-regulation-framework-guidance-2018.pdf 175 Impact assessments with reference to regulatory measures 176https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/21869 1/env-impact-step-by-step.pdf 177 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/218699/ env-impact-flowchart.pdf 178 https://www.gov.uk/guidance/ecosystems-services 179 https://www.gov.uk/government/publications/valuing-environmental-impacts-guidelines-for-the-use-of- value-transfer 180 https://www.gov.uk/government/publications/an-introductory-guide-to-valuing-ecosystem-services 181 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/608850/ ncc-natural-capital-valuation.pdf

Guidance Function Owner Date HM Treasury to incorporate these into the revised Green Book. (NCC, 2018)182 Guidance on Following revisions to the EIA Directive (2012), this guidance European 2013 Integrating Climate aims to facilitate the integration of climate change and Commission Change and biodiversity considerations in EIAs (European Commission, Biodiversity into 2013)184. As a Member State the UK is legally required to Environmental employ tools such as Environmental Impact Assessments Impact Assessment (EIAs) and Strategic Environmental Assessments (SEAs)185 to (EIAs)183 address challenges relating to potential harm to the environment caused by projects, plans and programmes. Such requirements will need to be revisited following the EU exit although they have been translated into several UK regulations and policies186.

In addition to the above, guidance has been developed with reference to specific impacts and policy areas. The revised Green Book provides an overview of these, while more detailed guidance and issue-specific appraisal tools can be found on the government websites of relevant departments (such as Defra and BEIS). Some of the more recently developed tools are included in Table 5. 3.4.2.2 Tools and toolkits 0 provides an overview of the more specific tools available to support the integration of environmental values in impact assessments and beyond. It includes an extended - though not exhaustive - list which incorporates tools developed for specific habitats or users with a view to support them in incorporating environmental values and impacts in their decision-making. Some of the references are in fact toolkits developed by various networks to facilitate users by pooling together existing tools. Table 5 Overview of tools and toolkits

Tool / Toolkit Function Owner Date Environmental Database of indicative monetary values for a range of Defra 2015 Value Look-Up (EVL) environmental impacts to help analysts and decision- Tool187 makers, take better account of environmental impacts in policy and project appraisals (eftec, 2015).188

182 Natural Capital Committee: Annual Report 2018. Fifth report to the Economic Affairs Committee. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/677873/ ncc-annual-report-2018.pdf 183 http://ec.europa.eu/environment/eia/pdf/EIA%20Guidance.pdf 184 As a Member State the UK is legally required to employ Environmental Impact Assessments (EIAs) and Strategic Environmental Assessments (SEAs) to proportionately address challenges relating to potential harm to the environment caused by development. Such requirements will need to be revisited. 185 Under the EIA Directive (EC Directive 85/337) and SEA Directive (EC Directive 2001/42/EC) 186 These are explored in the next section on the integration of biodiversity consideration in Policy 187http://sciencesearch.defra.gov.uk/Default.aspx?Menu=Menu&Module=More&Location=None&Completed= 0&ProjectID=19514#Description 188 Similar tools include the Environmental Valuation Reference Inventory (EVRI) (https://www.evri.ca/en), developed in the 1990s and now incorporating economic values of environmental assets based on more than 4,000 environmental valuation studies

Tool / Toolkit Function Owner Date Biodiversity metric The biodiversity metric, initially developed as part of the Defra and 2012 and and tool189 Biodiversity Offsetting Pilot Scheme, has recently been Natural 2018 updated based on user feedback. The metric is England metric accompanied by guidance provided for developers, offset update providers, local authorities and practitioners on calculating biodiversity units. A spreadsheet-based tool is being developed to support the application of the metric (Natural England, 2018). Woodland Valuation The WVT was developed to support the valuation of the The Forestry 2015; Tool (WVT)190 social and environmental benefits of trees and woodland. Commission 2016 It is a searchable excel tool that includes literature organised by environmental goods and services, production function and beneficiaries. Ecosystem A toolkit incorporating the following selection of tools: EKN / Various Various Knowledge Network ▪ ARIES (ARtificial Intelligence for Ecosystem Services): Toolkit191 ecosystem service assessment and valuation software (open access)192 ▪ BeST (Benefits of SuDS Tool): guidance to help practitioners estimate the benefits of Sustainable Drainage Systems (SuDS) ▪ Co$ting Nature: web based policy-support tool for natural capital accounting and analysis of ecosystem services ▪ EcoServ-GIS: toolkit for mapping ecosystem services at a county or regional scale ▪ Green Infrastructure Valuation toolkit: set of calculator tools to assess the value of a green asset or a proposed green investment. ▪ i-Tree Eco software application for urban forest assessment ▪ InVEST software models for mapping and valuing ecosystem services ▪ LUCI (Land Utilisation and Capability Indicator) ▪ The Natural Capital Planning Tool (NCPT) ▪ ORVal (Outdoor Recreation Valuation Tool) ▪ Participatory GIS tool ▪ SENCE (Spatial Evidence for Natural Capital Evaluation) ▪ TESSA (Toolkit for Ecosystem Service Site-based Assessment) Biodiversity and Including the: Natural 2011- Ecosystem Services ▪ Natural Capital Assessment Gateway: Interactive Environment 2017 Sustainability search tool of projects relevant to mapping and Research Programme (BESS) assessing ecosystem services Council Tools193 ▪ The Saltmarsh App: allowing users to carry out research interactive plant and soil surveys project

189 http://publications.naturalengland.org.uk/publication/6020204538888192 190 https://www.forestry.gov.uk/forestry/beeh-as4j2w 191 https://ecosystemsknowledge.net/tool-assessor-list-of-tools 192 http://aries.integratedmodelling.org/ 193 Also available on EKN https://ecosystemsknowledge.net/bess/tools 51

Tool / Toolkit Function Owner Date ▪ The Saltmarsh Carbon Stock Predictor: predicting and mapping carbon stock using GIS ▪ The Cool Farm Tool and biodiversity metric allowing farmers to calculate greenhouse gas and biodiversity ▪ ESI-SIT Ecosystem Service Interactions: A Spatial Interactive Tool demonstrating how changes in landscape management can impact on ecosystem services Local Environment The Toolkit was developed to support the Local The 2015 and Economic Enterprise Partnerships (LEPs) in systematically assessing Environment Development (LEED) opportunities and threats emerging from the economy’s Agency, Toolkit and dependency on the natural environment. Training was Natural Guidance also provided to LEPs. In 2015 the tool was being used by England and 15 of the 39 LEPs (EKN, 2015)194. the Forestry Commission The Urban Developed to support the assessment of different urban Defra 2015-16 Environmental interventions on the local environment identifying social, Toolbox195 environmental, economic and cultural benefits of interventions in green and blue urban environments. The toolbox was developed as part of Defra’s Local Action Project (Defra, 2016)196. Natural Capital The Natural Capital Protocol is a standardised, Natural Capital 2016; Protocol and international framework for natural capital assessments Coalition and 2017 Toolkit197 developed to support businesses to “identify, measure WBCSD and value their impacts and dependencies on natural

capital” (NCC, nd)198. The Protocol highlights challenges in incorporating biodiversity considerations. Sectoral guides, technical support and training have been provided to businesses as part of the Natural Capital Protocol Programme. The Toolkit helps businesses who need to measure a specific element of natural capital, such as biodiversity. Integrated IUCN designed to help businesses assess the impacts of IUCN 2014 Biodiversity projects on biodiversity and incorporate biodiversity Assessment Tool considerations into planning and decision-making. (IBAT) Eco4Biz199 Ecosystem services and biodiversity tools to support World Business 2013 business decision making providing a structured approach Council for for corporations to assess the impacts of their products or Sustainable

194 https://ecosystemsknowledge.net/apply/local-economy/LEED 195 http://urbanwater-eco.services/toolbox/ 196 Defra (2016) Local Action Project. Final report: WT1580 http://randd.defra.gov.uk/Default.aspx?Menu=Menu&Module=More&Location=None&ProjectID=19667&Fro mSearch=Y&Publisher=1&SearchText=wt1580&SortString=ProjectCode&SortOrder=Asc&Paging=10#Descriptio n 197 https://naturalcapitalcoalition.org/protocol-toolkit/ 198 https://naturalcapitalcoalition.org/protocol/protocol-application-program/ 199 https://www.wbcsd.org/Programs/Redefining-Value/Business-Decision-Making/Measurement- Valuation/Resources/Eco4Biz

Tool / Toolkit Function Owner Date operations across scales and manage their ecosystem Development impacts. (WBCSD, 2013) (WBCSD)

Oppla Marketpace200 Oppla is self-characterised as a “knowledge marketplace” European 2016 providing access to a searchable database of reports, Commission guidance, case studies and methods on natural capital, ecosystem services and nature-based solutions. It is supported by 60 universities, research institutes, agencies and enterprises.

Some of the tools reviewed above, such as EVL and Oppla, include searchable databases that support the function of these tools. The NCC’s ‘How to do it workbook’ (2017)201 also provides a brief overview of data and approaches to assessing natural capital. Another tool by EKN, not listed in the table above, is the Ecosystem approach self-assessment form202 developed to support local partnerships, such as AONBs, explore “how they are currently applying an Ecosystem Approach to their planning and delivery”. Completed forms, not published at the time of authoring this review, will support the measurement of progress towards Biodiversity 2020 Outcome 1C. 3.4.2.3 Networks and communities Although there is limited evidence to indicate the extent to which people engage with the guidance and tools, there is an increasing number of knowledge networks bringing together a range of resources, tools, best practice examples and case studies for interested parties. The Biodiversity 2020 Strategy recognising the value of TEEB (The Economics of Ecosystems and Biodiversity)203 as a global community supporting the integration of biodiversity and ecosystem services into decision- making practice, highlighted the need to develop similar networks and practitioner communities. UK-based networks include: • Ecosystems Knowledge Network (EKN) • Valuing Nature Network • Natural Capital Committee (NCC) • Natural Capital Initiative • Knowledge Transfer Network • UK Network of Environmental Economists • RIDE Forum (previously Living With Environmental Change - LWEC Ecosystem Task Force) • National Biodiversity Network • State of Nature Partnership • UK Biodiversity Science Committee • Ecosystem Markets Task Force

200 https://oppla.eu/marketplace 201 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/608852/ ncc-natural-capital-workbook.pdf 202 https://ecosystemsknowledge.net/sites/default/files/wp- content/uploads/Outcome1C_SelfAssessmentForm.pdf 203 http://www.teebweb.org/

• Aldersgate Group • The Prince’s Accounting for Sustainability Project • Business In The Community • The Local Enterprise Partnership Network • Oppla Some of these networks provide further guidance on how to choose the appropriate tool or method depending on the habitat type, data availability, use etc. The EKN recently developed a ‘Tool Assessor’204 to aid users in choosing the appropriate tool for a particular application of the natural capital, green infrastructure and ecosystem service concepts. The Tool Assessor currently provides short profiles / factsheets for 14 tools identifying the particular context and scale at which they are appropriate, as well as, the cost, software and skill requirements from users. Similar user support tools include: • The Ecosystem Service Transfer Toolkit205: An excel database developed by Natural England (2014) allowing users to search the effects of specific land management actions on ecosystem services. The tool also offers suggestions to users on tools that meet their particular needs. • The National Ecosystem Approach Toolkit (NEAT)206: NEAT was developed as a decision-making and communication support tool, that aids decision-makers across stages of the policy cycle by supporting them choosing the most appropriate tool from a selection of nine tools in ecosystem and impact assessment and valuation.

3.4.3 Assessment The range of guidance and tools developed over the past years reflects the growing body of research, knowledge and approaches. These new tools and guidance incorporate knowledge from a variety of actors within and beyond the UK boarders. There is a number of UK, European and global networks promoting and sharing knowledge in areas of environmental impact assessment, valuation and natural capital accounting. 3.4.3.1 Availability and quality of guidance and tools Progress has been made incorporating natural values into guidance and tools and recommendations for improvements from earlier reviews (eftec, 2014)207 have been taken forward: • The Green Book has been updated to reflect advancements in knowledge and methodologies in impact assessment, using natural capital language and seeking further integration with other guidance and tools available by signposting users. • New guidance and tools have been developed in areas that were lacking, including more practical guidance in the form of examples, case studies, best practice principles and templates, while further research is underway in challenging areas, such as, biodiversity. • There is increased collaboration between key actors through partnerships and participation in networks and coalitions.

204 https://ecosystemsknowledge.net/resources/guidance-and-tools/tools/tool-assessor 205 http://publications.naturalengland.org.uk/publication/5890643062685696 206 https://neat.ecosystemsknowledge.net/ 207 Baseline Evaluation of Environmental Appraisal and Sustainable Development Guidance Across Government. http://randd.defra.gov.uk/Document.aspx?Document=11937_131003_ERG1222_Appraisals_Final_2014_03_0 7.pdf 54

Interviewees to the eftec research (2014) had noted “that the extent of guidance was ‘about right, but that the accessibility of guidance, and the integration between the Green Book and other guidance documents, could be improved”. Maintaining general guidance in the Green book and providing ‘niche’ information in the supplementary guidance was also identified as helpful by users (eftec, 2014). Further integration of new guidance into existing tools and frameworks could encourage systematic use (eftec, 2014; NCC, 2019). The review of updated guidance reveals improvements in the Green Book in terms of integrating cross-references to other guidance and signposting those interested to explore a particular issue further to additional documents and websites. There is no up-to-date evidence on user perceptions. Guidance is now made available through a wider host of knowledge networks. The EKN – which provides links to guidance, tools and associated training (provision of training on some of the featured tools e.g. EcoServ-GIS (EKN, nd)208 found that eight out of ten EKN members209 thought the network “made a difference in the way they work” – although this refers to the range of support EKN provides, which is broader than just guidance-related support. Short area-specific guides on impacts in areas of air quality, biodiversity, adapting climate change, landscape, noise, waste, water and flood risk can also be found on the government’s website on assessing environmental impacts210, though these were developed in 2011. The variety of tools developed reflects the range of i) approaches and methods available for assessing and valuing natural capital, ii) user needs, iii) impacts and policy areas for practical applications, and iv) ecosystems and ecosystem services. Across these tools we find two broad categories; those that are aimed to support specific applications in natural capital and ecosystem service assessment and valuation and those that support decision-making211. The latter are of increasing interest (NCC, 2019). The majority of the tools reviewed are open access and use a combination of excel, GIS and web-based tools appropriate for a range of users. 3.4.3.2 Gaps and challenges Guidance: • A challenge is maintaining the balance between guidance that is relevant to users and reflects up-to-date knowledge and methodologies while avoiding overwhelming users by including technical information in overarching guidance (such as the Green Book). With reference to updates in the guidance which may be required it is worth repeating a concern raised (eftec, 2014) around updates to guidance that are too frequent not allowing users to familiarise with the guidance. • The Environmental Value Look-Up (EVL) Tool provides a database of indicative monetary values that can be used in assessments. However, the NCC highlights that implementation of the Green Book requires policy makers to have “access to robust values for changes in the services provided by natural capital which will require adequate resourcing” (NCC, 2019). Tools:

208 https://ecosystemsknowledge.net/about/impact-outcomes 209 The EKN numbers circa 2,000 members across government, public delivery agencies, academia, charity sector and private sector. (https://ecosystemsknowledge.net/membership) 210 https://www.gov.uk/guidance/assessing-environmental-impact-guidance 211 A range of categorisations and typologies exist in literature but are arbitrary reflecting the objective of the particular review. E.g. IUCN divides tools by those that are “written step-by-step” and the “computer-based modelling tools”. (https://portals.iucn.org/library/sites/library/files/documents/PAG-028-En.pdf)

• Some gaps exist: o Coverage of ecosystem types: A recent review of 14 tools included in the Tool Assessor by EKN212 reveal that some gaps exist in the coverage of marine environments while none of the tools reviewed assessed supporting Ecosystem Services (ES). These results need to be caveated on the partial review of available tools. o Inclusion of wider impacts: With reference to decision support tools, the NCC (2018) reported a lack of “methods for assessing the social and distributional consequences of environmental investments” o Monetisation of aspects of biodiversity: It is not possible to monetise all values of biodiversity, meaning those run the risk of being excluded from decision-making (RSPB, 2017) • The Natural Capital Committee (2018) highlight the need for the development of “natural capital decision support tools”. These tools would be able to not only capture and assess impacts (environmental and economic) on natural capital but also assess different options and provide information to inform investment decisions as to the optimal location of an activity, spending allocation etc. • Scope of use – there is no one-size-fits-all tool: Most tools are developed for a specific application (Bagstad et al., 2013), and cannot be applied across all contexts, sectors and scales. There may be trade-offs in the generalisability of a tool and the depth of analysis and outputs it provides. The wide range of tools available, creates challenges for users in the selection of the most appropriate tool: (EKN, nd). Some guidance has been developed to support users including toolkits reviewed in the previous section (e.g. Tool Assessor) and NCC’s more detailed guidance: ‘How to do it: a natural capital workbook’ (NCC, 2017)213. • Data availability, quality and transparency: o The quality of tool output is dependent on the quality of data that input into it. Data gaps and challenges associated with ensuring high quality data, at the right scale across habitat types and impacts are reported (RSPB, 2017; ONS, 2018; Bagstad et al., 2013). o NCC (2018) highlights the importance of future data availability, noting than plans should be put in place to ensure a continuous flow of monitoring data, that “utilise the rapid growth of very high quality open source code and freeware as a means of improving decision support” at low cost. o Handling of uncertainty in data and value estimates can give rise to concerns about the reliability of results and the transparency of the underlying assumptions (Howard et al, 2016214,; Bagstad et al, 2013) • Cost implications. Howard et al (2016)215 identified concerns regarding the costs of using tools, considering that budgets available to conduct assessments to support decision-making are usually limited. The majority of tools are publicly/freely accessible, however there are costs associated with data collection and analysis (Howard et al., 2016; Bagstad et al., 2013). UK stakeholders engaged in research by

212 https://ecosystemsknowledge.net/resources/guidance-and-tools/tools/tool-assessor 213 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/608852/ ncc-natural-capital-workbook.pdf 214 Howard, B., Neumann, J. & O’Riordan, R. 2016. Tool Assessor: Supporting practical assessment of natural capital in land-use decision making. JNCC Report 584. JNCC, Peterborough. 215 The particular research offers an assessment of individual tools for readers interested in further details. 56

Howard et al. (2016), queried whether the cost of using the tools would outweigh the benefits. • Sufficient technical capacity is needed for organisations who wish to use the tools. Whilst guidance, practical examples and templates have been developed to support users, broader training may also be required. Some knowledge networks and the Government have provided training for specific tools in the past (e.g. EKN). Considering the growing number, complexity and use of tools, a comprehensive, comparative review across tools would be beneficial and is currently missing from literature. NCC is currently undertaking work on appraising the suit of existing “metrics, models, datasets and tools in the measurement of natural capital” (NCC, 2019). 3.5 Are natural values better integrated into decision-making?

3.5.1 Introduction 3.5.1.1 Introducing ‘natural values’ and ‘integration’? A number of much-debated terms are used in both literature and practice to refer to or frame concepts around nature and its value, amongst which ‘biodiversity’, ‘ecosystem services’ and ‘natural capital’. Whilst biodiversity is integral to these, giving rise to ecosystem services (ES) and constituting the “living component of natural capital” (NCC, 2017216), approaches to ES and natural capital assessment, valuation and accounting are still struggling to adequately capture the range of values derived from biodiversity (NCC, 2017; CCI, 2016217; CISL, 2016218). This Evidence Review will take a wide view of ‘natural values’ with an understanding that they incorporate biodiversity in varying degrees. The integration of natural values into decision making is multifaceted and challenging to assess, with different types of decision-makers using different approaches to integrating natural value considerations. To facilitate the presentation and assessment of evidence we separately look into business (Section 3.5.2) and public sector decision-making (Section 3.5.3). Overall, there is a lack of systematic evidence on the integration on natural values into decision- making across private and public sector.

3.5.2 Integration of natural values in business decision-making 3.5.2.1 Introduction Businesses are becoming increasingly aware of the dependencies on biodiversity and the impact of their products and services on the natural environment. Recent research and literature in this area highlights the benefits of managing business relationships with biodiversity (Smith et al, 2018;

216 Biodiversity and Natural Capital https://naturalcapitalcoalition.org/wp- content/uploads/2017/12/Flyer_Nov2017_LD.pdf 217 Biodiversity at the heart of accounting for natural capital: the key to credibility. Available online at: http://www.cambridgeconservation.org/sites/default/files/file- attachments/CCI%20Natural%20Capital%20Paper%20July%202016_web%20version.pdf 218 University of Cambridge Institute for Sustainability Leadership (CISL) (2016). Biodiversity and Ecosystem Services in Corporate Natural Capital Accounting: Synthesis report. Cambridge, UK: Cambridge Institute for Sustainability Leadership

Addison et al., 2018; Pritchard & van der Horst, 2018219; CISL, 2016; Spurgeon, 2014220; Waage et al., 2013221), which include: • Reputational benefits: Satisfying increased demand for transparency, accountability and sustainable practices from the public, investors and key stakeholders • Strategic benefits: Mitigation against increased risks to the business resulting from dependencies in declining biodiversity and gaining a competitive market advantage • Operational benefits: Improvements in operational efficiency across the supply chain • Financial benefits: Access to new revenue streams (e.g. environmental markets) and enhancement of existing streams. • Compliance benefits: Ensuring compliance with an increasing number of environmental policies and regulations at a national, European and global level. Improved decision-making: Integrated decision making that supports sustainable business strategies and improved business reporting. An increasing number of tools, methods, approaches and guidance is being developed on identifying, assessing and accounting for natural values. Reviews of such tools have also started to emerge. For instance, the Natural Capital Coalition (2014)222 offers a helpful review of business initiatives, techniques, methodologies, tools and datasets available for the practical application of natural capital valuation, while it also identifies a range of other business hubs and potential resources. A more limited number of studies go beyond these, to explore the avenues for integration of biodiversity into business decision making (Smith et al., 2018), present examples (e.g. Natural Capital Coalition223,224, CBD225, IUCN226) and discuss the practical challenges entailed (Smith et al., 2018; Addison et al., 2018; TEEB, 2010227). Smith et al. (2018) identify a range of ways in which businesses can integrate biodiversity into decision making, from raising awareness amongst internal and external stakeholders and implementing certification schemes to embedding biodiversity in corporate strategy. The next sections review a number of avenues via which businesses are incorporating biodiversity into decision-making, including: • Environmental management tools • Biodiversity reporting disclosures

219 Pritchard, R., van der Horst, D. (20ı8) Monetary Natural Capital Assessment in the Private Sector. A review of current status and research needs. Valuing Nature Natural Capital Synthesis Report VNPıı 220 Spurgeon, J.P.G (2014) Natural Capital Accounting for Business: Guide to selecting an approach. Final report to the EU Business and Biodiversity Platform, performed under the ICF contract. 221 Waage, S., Kester, C., Armstrong, K., (2013). Global Public Sector Trends in Ecosystem Services, 2009-2012. 222 Natural Capital Coalition (2014) Valuing natural capital in business. TAKING STOCK: Existing Initiatives and Applications. https://naturalcapitalcoalition.org/wp- content/uploads/2016/07/Valuing_Nature_in_Business_Part_2_Taking_Stock_WEB.pdf 223 https://naturalcapitalcoalition.org/category/case-studies/ 224 https://naturalcapitalcoalition.org/wp- content/uploads/2016/07/Valuing_Nature_in_Business_Part_2_Taking_Stock_WEB.pdf 225 https://www.cbd.int/business/ressources/case-studies.shtml 226 https://www.iucn.org/theme/business-and-biodiversity/resources/business-sectors 227 TEEB (2010) The economics of ecosystems and biodiversity: Mainstreaming the economics of nature: A synthesis of the approach, conclusions and recommendations of TEEB. The Economics of Ecosystems and Biodiversity.

3.5.2.2 Environmental management Amongst the most common tools in the management of environmental impacts of businesses are Environmental Management Systems (EMS), and Environmental and Social Impact Assessment (ESIA) focusing on risk and impact management but incorporating a number of relevant environmental aspects. These systems provide businesses with tools to aid management of environmental impacts across the business supply chain. They include ISO and WBCSD standards which are internationally recognised. The UK Biodiversity Indicator (A5) provides an indication of business action associated with these228 through two sub-indicators: (i) Percentage of large companies that use of an EMS, and (ii) Percentage of large companies that consider environmental issues in their supply chain. The latest indicators available are for 2013 as the survey on which the indicators were based was discontinued and no replacement source found229. • Indicator A5a - Use of EMS: In 2013, 77% of large companies had an EMS in place (out of which 53% were certified to ISO 14001), compared with 83% of companies in 2012 and 79% in 2011 (JNCC, 2015)230. More recent data on the use of the ISO 14001 certification specifically (the most commonly used EMS), for 2015 231, show that the absolute number of businesses using it has been steadily increasing. Figure 10 shows that between 2011 and 2015 the UK has seen an increase of 17% in the number of ISO 14001 certificates. However, there is no data to confirm whether this corresponds to an overall increase in the use of EMS or a switch to ISO14001 of companies previously using other forms of EMS. • Indicator A5b - Environmental consideration in supply chains: There was an increase in the number of large companies considering environmental issues in their supply chain from 78% in 2012 to 92% in 2013232.

Number of ISO 14001 certificates in the UK 19000 18000 17000 16000 15000 14000 13000 2011 2012 2013 2014 2015

228 The proportion of large businesses (250+ employees) in a range of sectors that are taking steps to minimise their environmental impact as measured using an Environmental Management System (EMS), based on the Environmental Protection Expenditure (EPE) survey. 229 Defra (2019). UK Biodiversity Indicators 2018. http://jncc.defra.gov.uk/page-6072 230 http://jncc.defra.gov.uk/page-6072 231 The ISO Survey of Management System Standard Certifications (1999-2015). Dataset available online at: http://www.iso.org/iso/iso_14001_iso_survey2015.xls 232 The indicator is based on a survey which has been discontinued hence data only provide a snapshot of progress between 2011 and 2013. 59

Figure 10 Number of ISO 14001 certificates in the UK (Analysis of ISO Survey of Management System Standard Certifications data for 2011-2015)

3.5.2.3 Biodiversity reporting and disclosure Business reporting - as identified here to include Strategic documents, Corporate Responsibility (CR) and sustainability reports and climate and sustainability-related disclosures - incorporates to varying degrees information on the business’s impact(s) on the natural environment and action taken to reduce and/or mitigate those impacts. This type of reporting can be linked to regulatory requirements but is increasingly the result of voluntary business initiatives. Existing tools and voluntary reporting frameworks used by companies in the UK include a range of standards, certifications and initiatives233 supporting both financial and non-financial reporting of biodiversity by businesses. There is some data to suggest an increase in biodiversity-related reporting. A recent survey (KPMG, 2017) of the world’s 250 largest companies showed that in 2017 the UK was amongst the countries with the highest national rates of CR information in annual financial reports (92%), with 60% of these companies acknowledging climate change as a financial risk in their reporting. The GRI234 Performance Indicator on biodiversity (GRI 304)235, effective since July 2018, collects data on biodiversity-specific disclosures236 which when published will provide a better picture on biodiversity considerations incorporated in business reporting. A global review (UK-specific studies are not available) of 101 randomly selected businesses who reported biodiversity using the GRI framework found that the majority reported on at least one biodiversity indicator and that across sectors, financial sector companies were the majority of those reporting (11 out of 77 companies reporting on biodiversity) (Potdar et al., 2016)237. However, there is no known evidence on the extent to which reporting on biodiversity indicators actually influences decision making and the effect that has on businesses. Potdar et al. (2018) highlight the need for businesses to report on “the returns from taking initiatives towards biodiversity conservation” to allow for an assessment of actions. Smith et al. (2018) note that climate change is a more common concern than biodiversity. Yet, even amongst companies disclosing some form of climate-related information, the financial implications, whether those are the financial impact of climate change on the company or the impact of the company on the environment, are less frequently disclosed (TCFD, 2018)238.

233 Global Reporting Initiative GRI; International Financial Reporting Standards (IFRS); Principles for Responsible Investment (PRI) Framework; Global Reporting Initiative GRI; Integrated Reporting (IR); International Accounting Standards Board; International Integrated Reporting Council; International Organization for Standardization (ISO); The Carbon Disclosure Project (CDP); The Climate Disclosure Standards Board (CDSB) 234 According to the KPMG survey on CSR, in 2017 GRI Sustainability Reporting Standards remained the most commonly adopted framework for sustainability reporting (KPMG, 2017). 235 Developed in 2016 but effective since 1 July 2018. No data are publicly available at the time of authoring this Evidence Review. 236 304-1 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas; 304-2 Significant impacts of activities, products, and services on biodiversity; 304-3 Habitats protected or restored; 304-4 IUCN Red List species and national conservation list species with habitats in areas affected by operations 237 Potdar, A., Gautam, R., Singh, A., Unnikrishnan, S., & Naik, N. (2016). Business reporting on biodiversity and enhancement of conservation initiatives. International Journal of Biodiversity Science, Ecosystem Services & Management, 12(3), 227-236. https://www.tandfonline.com/doi/full/10.1080/21513732.2016.1145144 238 http://www.fsb.org/wp-content/uploads/P260918.pdf

A number of biodiversity-specific indicators have also been established (e.g. the Global Biodiversity Score for biodiversity footprint239) and reviewed and guidance developed by the UK Government240 and a range of global initiatives241 to help businesses choose the appropriate indicator to assess their environmental performance (Addison et al., 2018; Berger et al., 2018242; Biodiversity Core Initiative, 2018; UNEP-WCMC, 2017). Different options exist based on the business application, impact on the environment, audience and scale of application. No data was identified on the extent to which these different indicators are used by businesses. 3.5.2.4 Businesses and the natural capital approach An increasing amount of guidance and tools are available to businesses on adopting and implementing a natural capital approach, assessing natural capital and incorporating natural capital into accounting. Some of these, addressed to practitioners across government and business, have been reviewed in previous sections, while additional resources can be found across business and biodiversity networks and projects in the UK and beyond, such as, the Natural Capital Coalition (NCC), Valuing Nature, The Economics of Ecosystems and Biodiversity (TEEB), the System of Environmental-Economic Accounting (SEEA) and more. The Natural Capital Protocol, developed by the NCC, provides an increasingly recognised framework for businesses seeking “to better understand and manage their relationships with the environment” (NCC, 2017)243. Despite stakeholders suggesting the Protocol offered sufficient guidance, pilot studies demonstrated companies struggled to “manage or even recognise impacts and dependencies on biodiversity” (NCC, 2017). To support businesses in the application of the Natural Capital Protocol, an Application Programme244 was set up providing webinars, additional material and linking companies with technical advisors for further support and training. As much of the knowledge and guidance developed is sector-specific, a Supplement to the Natural Capital Protocol was launched in 2018 drawing links between Natural capital and applications in the Finance sector245. A recent review of 42 businesses suggests an increasing number of businesses carrying out natural capital assessments (Pritchard & van der Horst, 2018). 3.5.2.5 Financial accounts and biodiversity Since 2014, the NCC had noted that there is a growing interest in the “incorporation of natural capital into non-statutory accounts e.g., ‘shadow’ balance sheet and profit and loss” (NCC, 2014). In

239 http://www.mission-economie-biodiversite.com/wp-content/uploads/2017/11/N11-TRAVAUX-DU-CLUB- B4B-INDICATEUR-GBS-UK-BD.pdf 240 Although the UK’s Companies Act (2013) only requires companies to report on greenhouse gas emissions, the UK Government has published Environmental Reporting Guidance (HM Government, 2019) available to help companies identify and address environmental impacts and effects on biodiversity. The guidance explains how companies can set targets or key performance indicators (KPIs) to measure and improve their environmental performance. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/775601/ environmental-reporting-guidance-including-secr.pdf 241 E.g. National Capital Coalition 242 Berger, J., Goedkoop, M.J., Broer, W., Nozeman, R., Grosscurt, C.D., Bertram, M. and Cachia, F. (2018). ‘Common ground in biodiversity footprint methodologies for the financial sector: working paper’. Paris, 3 October, 2018. 243 NCC (2017) Biodiversity and Natural Capital. 244 https://naturalcapitalcoalition.org/protocol/protocol-application-program/ 245 https://naturalcapitalcoalition.org/connecting-finance-and-natural-capital-a-supplement-to-the-natural- capital-protocol-launched-today-in-hong-kong/

‘Taking Stock: Existing initiatives and applications’246 the NCC review a range of initiatives, guides, and tools relevant to financial accounting and reporting which remains relevant today. A three-step approach for setting up Natural Capital Accounts developed by the NCC which includes: 1) setting up a Natural Capital Asset Register (i.e. an inventory of assets and their condition); 2) completing a Natural Capital Risk Register (i.e. expert-based assessment of current and future risks to the assets) and; 3) setting up Natural Capital Accounts (Turner et al., 2019)247. The type of accounts248 developed depends on the actor developing the accounts and the purpose that they aim to serve, with ‘satellite’ accounts to address a specific target or information need most relevant for businesses. Case studies are available on varying applications of the natural capital approach in different contexts, some making use of monetary valuation methods. An evaluation of a natural capital assessment for Anglian Water demonstrated the use of the Natural Capital Asset Register and Natural Capital Register in helping the company understand where pressures on natural capital lie. This was used by the company to inform their future planning and identify areas in need of action. Evidence exists that suggests an increasing trend of businesses incorporating natural capital accounting in their Environmental Profit & Loss (EP&L) (CISL, 2016). Biodiversity can be incorporated in the context of natural capital assessment and accounting although the extent to which this is happening is less clear, in part because the available methodologies vary to the degree that they capture impacts related to biodiversity. There is a small number of private business initiatives to develop a biodiversity indicator for EP&L (CISL, 2016). Progress in the area of natural capital accounting for businesses is assessed by EU Business @ Biodiversity Platform (2018)249, which reference to a selection of 10 biodiversity accounting approaches, concluding that despite progress and a growing interest, both businesses and financial institutions are “struggling to identify approaches to measure their biodiversity performance that are on the one hand practical and pragmatic and on the other hand meaningful and relevant.” The key findings of the comparative assessment provide insights into the existing strengths and weaknesses of biodiversity accounting approaches. The key findings reveal that most of the biodiversity accounting approaches reviewed: • were still under development or testing and frequently the result of collaboration between business and academia • were “applicable across sectors” • relied on a similar set of steps, models and data sources • relied on one biodiversity metric • focused on avoiding and minimising negative impacts with little to no reference to positive impacts

246 Natural Capital Coalition (2014). Valuing natural capital in business. Taking Stock: Existing Initiatives and Applications. https://naturalcapitalcoalition.org/wp- content/uploads/2016/07/Valuing_Nature_in_Business_Part_2_Taking_Stock_WEB.pdf 247 Turner, K., Badura, T., Ferrini, S. (2019) Valuation, Natural Capital Accounting and Decision Support Systems: Process, Tools and Methods. CSERGE, University of East Anglia, Norwich. http://ec.europa.eu/environment/nature/capital_accounting/pdf/EUNCA_SynthReport_4_2_CSERGE_Year2_1 90115_sent.pdf 248 Other types of accounts include accounts compatible with the System of National Accounts (SNA) used by national governments and the wider public sectors or Wealth accounts measuring changes in total wealth commonly used by international organisations such as the UN and World Bank (Turner et al., 2019). 249 Business @ Biodiversity (2018) Assessment of biodiversity accounting approaches for businesses and financial institutions. Discussion paper. 62

• had the potential to adapt score performance in response to actions taken to minimise biodiversity impacts. However, they • faced challenges in incorporating the most relevant impacts “i.e. those that are most material for the business and its stakeholders” • did not include ecosystem services were “not particularly aligned with NCA approaches” 3.5.2.6 Assessment Evidence suggests that businesses are increasingly trying to understand and measure their impact on the natural environment. However limited evidence exists to assess the extent to which this information effects business decision-making. This may be partly due to the multitude of ways/forms in which ‘integration’ takes place and to a lack of standardised approaches. A significant gap and challenge remains in evidencing the impact of any integration – and resulting actions taken by businesses - on biodiversity (Smith et al., 2018). Doing so places additional data, time and resource demands on companies (Smith et al., 2018). A recent review in the UK (Congreve & Cross, 2019) reports that the integration of ecosystem services amongst institutions and organisations may be limited to those that had existing environmental concerns (i.e. those which may already be incorporating environmental considerations into decision making). 3.5.2.7 Challenges and opportunities Challenges for engagement: • Relevance of biodiversity goals: Smith et al. (2018)250 note that one of the key reasons that biodiversity goals have “failed to resonate with and inspire action from the private sector” is that they are “perceived by many businesses as having been written by Governments for Governments”. There is limited visibility of biodiversity goals, lack of alignment across the different national, EU and global biodiversity- related goals and a lack of understanding of how these translate to business practices and what businesses can actually contribute (Smith et al., 2018). Reframing biodiversity goals and tailoring the arguments to illustrate relevance to particular stakeholders, in this case businesses, has been reported elsewhere in literature too (JNCC, 2018; NCC, 2017). Some argue that framing around ‘natural capital’ can provide an economic lens to look at the environment, which is more relatable to businesses and can inform economic-based decision-making (NCC, 2017; Business@Biodiversity, 2018). The process of integrating natural capital into decision making is characterised by Congreve & Cross (2019) as “top-down, technocratic and linear”. Increased engagement with business stakeholders is suggested across literature. • Lack of appropriate political, economic and social drivers to encourage take-up (Patt & Smith, 2016) and support the use of natural capital assessment “as a decision-making rather than just a reporting tool” (Pritchard & van der Horst, 2018). Challenges in application:

250 Smith, T., Addison, P., Smith, M. & Beagley, L. (2018) Mainstreaming international biodiversity goals for the private sector: Main Report & Case Studies, JNCC Report No. 613, JNCC, Peterborough, ISSN 0963-8091. http://jncc.defra.gov.uk/pdf/Report_613_Full-Report_Final_v2_WEB.pdf

• Methodological rigour in Corporate Reporting: Common critiques regarding corporate reporting and non-financial disclosures include a lack of transparency, methodological rigour, and hence reliability of reports. The UK’s Financial Reporting Council (FRC)251, noted an increased number of disclosures of “judgements and estimates and alternative performance measures (“APMs”)” which dilute trust in CR. • The “bewildering array” of tools and toolkits to support decision-making and the integration of natural values is such that is difficult for users to navigate options (Congreve & Cross, 2019). This has resulted in the development of toolkits to support decisions around the use of tools – e.g. EKN’s ‘Tool assessor’. Practical considerations, such as data availability, budget and timing will limit options and should be considered during the choice of an appropriate method or tool (Valuing Nature, 2016) • Lack of practical, industry-specific guidance (Patt & Smith, 2016) for some sectors. Efforts are underway in the development of business case studies showcasing the application of biodiversity indicators assessing a company’s impact on the environment across different sectors (Addison et al, 2018). More practical examples and facilitation of open dialogue between practitioners to share knowledge and lessons (Patt & Smith, 2016; Defra, 2019). Guidance is also missing clarifying the particular business application (e.g. assessing performance, comparing options etc.) for which an approach or tool are appropriate and not just the sector or impact (Business@Biodiverity, 2018). • Lack of a standardised approach: Whilst there is an increasing number of approaches for measuring and incorporating natural values into business decision making, there is no standardised approach that can offer businesses a consistent way to measure their impacts (CISL, 2016). This is highlighted as a barrier across the: o Application of natural capital assessment (Defra, 2019252) o Environmental valuation o Integration of biodiversity into EP&L (CISL, 2016) • Gaps in natural capital assessment: o Biodiversity values are not fully captured: The Natural Capital Protocol recognised challenges in capturing all aspects of the value of biodiversity. Values that are generally harder to capture, but generate most of the benefits, refer to “the interactions within and between biodiversity and non- living resources” (NCC, 2017) o Non-financial values are not adequately captured (NCC, 2017) o Specific ecosystem services assessments are lagging or missing (Patt & Smith, 2016)253 • Gaps and challenges in business biodiversity accounting approaches (Business@Biodiverity, 2018): o There is a lack of integration of real data – the majority being modelled. o Biodiversity accounting approaches and tools are not aligned with NCA approaches o There is no consideration of the positive impacts on biodiversity in the rating of a business’s biodiversity performance.

251 FRC (2018). Annual Review Of Corporate Governance And Reporting 2017/2018 https://www.frc.org.uk/getattachment/f70e56b9-7daf-4248-a1ae-a46bad67c85e/Annual-Review-of-CG-R- 241018.pdf 252Defra (2019) Evaluation of the 25 Year Environment Plan Pioneers. (To be published) 253 Parr, T. & Smith, M. (2016) Monitoring for Biodiversity, Natural Capital and Ecosystem Services: Development of a Monitoring Action Plan. JNCC Report No. 583. JNCC, Peterborough. 64

o There is a lack of a science-based, specific and (ideally) internationally agreed biodiversity target for businesses • Resource requirements related to data access: o Challenges in accessing sufficient, high quality data at the right scale (Defra, 2019; RSPB, 2017; CISL, 2016) and a need to better align high-level scale and local scale data, considering how national data requirements and business data requirements can be aligned (Business@Biodiverity, 2018) o Technical capacity and expertise available to understand natural capital baselines and establish KPIs (Patt & Smith, 2016) o Financial cost related to implementing new systems and approaches (Patt & Smith, 2016)

Patt & Smith (2016) suggest that collaborative working across businesses, organisations and government to share data, knowledge and lessons on specific approaches can support integration of these in decision-making and help address some of the challenges described above. A review of successful ecosystem services projects (Congreve & Cross, 2019) and evaluations of Defra’s recent Natural Capital pilots (Defra, 2019) concur that strong partnership approaches involving businesses, local government and public sector bodies and local communities can enhance the delivery of projects.

3.5.3 Integration of natural values into public sector decision making 3.5.3.1 Introduction The Biodiversity Strategy identifies ways in which the Government can drive action in the integration of natural values into decision-making. Previous sections have reviewed Government-funded research and pilots exploring green market opportunities for UK businesses and guidance developed to support the integration of biodiversity values in Impact assessments and wider business thinking. This Section provides an overview of the current policy landscape and explores in more detail the key government actions detailed in the Strategy – including establishing a Natural Capital Committee and supporting the inclusion of natural capital in UK’s national accounts 3.5.3.2 The role of the Natural Capital Committee In 2012 the Natural Capital Committee (NCC)254 was established as an independent committee to provide advice to the Government on a broad remit of issues around natural capital. The committee run its initial term between 2012-2015 and was reinstated for a second term running from 2016- 2020 with “a mandate to advise the government on the development of its 25 Year Environment Plan and to report on progress towards its delivery.” (NCC, 2017)255 During this period the NCC has been instrumental in:

254 https://www.gov.uk/government/collections/natural-capital-committee-documents 255 NCC (2017) Improving Natural Capital: An assessment of progress. Fourth report to the Economic Affairs Committee.https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/fi le/585429/ncc-annual-report-2017.pdf

• piloting and developing the Natural Capital Framework (NCC, 2015)256 and guidelines for corporate natural capital accounts (NCC, 2015)257,258 • developing guidance on cost-benefit analysis (NCC, 2015)259 • developing natural capital metrics (NCC, 2014)260,261 • advising on the implementation of the 25 Year Environment Plan (NCC, 2017)262 • producing an overview of methods in economic valuation of natural capital and working with Defra and HM Treasury to incorporate these into the revised Green Book (NCC, 2018)263 • producing a guide on natural capital approaches in decision-making (NCC, 2017)264 According to the Committee’s latest Annual report (NCC, 2019) embedding the natural capital approach in decision-making will require an escalation of efforts across multiple fronts, starting with the establishment of a legislative framework for the 25 Year Environment Plan in the upcoming Environment Bill and embedding the natural capital approach and the three principles (“public money for public goods; the polluter pays; and net environmental gain”) in public sector and infrastructure decision-making. Recent progress in these areas includes the publication of the revised Green Book bringing the natural capital approach into government appraisal. The Natural Environment Valuation Online (NEVO) tool supports policy makers understand the outputs of the tools available so these can inform public spending options. 3.5.3.3 Biodiversity in public Policy Key steps in strengthening biodiversity in policy include the 25 Year Environment Plan, revisions to the National Planning Policy Framework and a Government consultation on

256 NCC (2015) Introduction to the Natural Capital Committee’s Corporate Natural Capital Accounting Project https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/516945/ ncc-working-paper-capital-accounting-intro.pdf 257 NCC (2015) DEVELOPING CORPORATE NATURAL CAPITAL ACCOUNTS: Guidelines. A report by eftec, RSPB and PWC for the Natural Capital Committee. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/516971/ ncc-research-cnca-guidelines.pdf 258 NCC (2015) DEVELOPING CORPORATE NATURAL CAPITAL ACCOUNTS: Final report. A report by eftec, RSPB and PWC for the Natural Capital Committee. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/516968/ ncc-research-cnca-final-report.pdf 259 https://www.gov.uk/government/publications/natural-capital-committee-research-improving-cost-benefit- analysis-guidance 260 NCC (2014) Towards a Framework for Defining and Measuring Changes in Natural Capital https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/516946/ ncc-working-paper-measuring-framework.pdf 261 Supporting evidence and reports are available at: https://www.gov.uk/government/publications/natural- capital-committee-research-developing-metrics-for-natural-capital 262 NCC (2017) Advice to Government on the 25 Year Environment Plan https://www.gov.uk/government/publications/natural-capital-committee-advice-on-governments-25-year- environment-plan 263 Natural Capital Committee: Annual Report 2018. Fifth report to the Economic Affairs Committee. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/677873/ ncc-annual-report-2018.pdf 264 NCC (2017) How to do it: a natural capital workbook https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/608852/ ncc-natural-capital-workbook.pdf

incorporating biodiversity net gain in the UK’s planning permission process. A range of government policies and strategies have incorporated references to biodiversity and natural capital including, but not limited to: The Clean Growth Strategy (HM Government, 2017), and the Industrial Strategy (HM Government, 2017)265. A number of government-funded programmes, projects and pilots have taken place exploring - in collaboration with partners - the integration of environmental values in policy and practice through the application of various approaches in a variety of contexts. These include Defra’s Nature Improvement Areas Programme (2012-15), Biodiversity Offsetting Scheme (2012-14), Payments for Ecosystem Services Pilot Projects (2012-15), Catchment Based Approach (CaBA) (2011-12), and the Natural Capital Pioneers (2016-19), providing lessons on how the approaches tested might be integrated within local and national policy. A common lesson and barrier identified by the evaluations of these initiatives is the need to develop new and legal and institutional structures that can offer legitimacy, provide the necessary confidence in the policy, support actors and facilitate / enable new arrangements to be put in place, particularly in the outset. A mitigating or facilitating factor can be incorporating new ideas and processes into existing institutional and regulatory arrangements and governance/organisational structures. An example of how integration in existing policy can be achieved is presented in 0.

Box 1 Integrating biodiversity in existing Policy

A revision to the National Planning Policy Framework (NPPF) in 2018, advocates for a net gain approach to biodiversity encouraging measurable improvements where feasible. The NPFF stipulates the need for planning policies and decisions to enhance the natural environment by “minimising impacts on and providing net gains for biodiversity” (Section 15:170d). It further refers to the need for biodiversity plans that “…identify and pursue opportunities for securing measurable net gains for biodiversity.” (Section 15:174b). References to ‘measuring’ biodiversity gains are strengthened further in Section 15:175d whereby “…opportunities to incorporate biodiversity improvements in and around developments should be encouraged, especially where this can secure measurable net gains for biodiversity” (Ministry of Housing, Communities and Local Government, 2018).

Further, a Government consultation was recently launched (closed 10 February 2019) on making biodiversity net gain a criterion when considering planning permission (Defra, 2018)266. 3.5.3.4 Natural capital and valuation informing public decision-making Valuation methods can provide evidence as to the benefits and costs of policies and programmes so that it informs decisions around investment, choice of policy options and budget allocation decisions (Valuing Nature, 2016)267. Different valuation methods and approaches exist which “can be tailored to suit and inform different policy purposes” (Turner at el., 2019). The selection of the appropriate one depends on underlying assumptions and the purpose it means to serve in the decision-making process. Monetary and non- monetary environmental valuation is used in the public sector to provide evidence and inform

265 https://www.gov.uk/government/publications/industrial-strategy-building-a-britain-fit-for-the-future 266 https://consult.defra.gov.uk/land-use/net-gain/ 267 Valuing Nature (2016) Demystifying Economic Valuation. http://valuing- nature.net/sites/default/files/images/VNN-Demystifying%20Economic%20Valuation-Paper.pdf

policy-makers on the benefits and outcomes of past, current and future policy (e.g. ex-ante policy evaluation), as well as informing decisions around policy alternatives (Turner et al., 2019). Some of these methods can be used in combination. For instance, the UK National Ecosystem Assessment (UK NEA) combined multiple valuation methods to model policy alternatives268,269. Non- monetary valuation methods are also helpful to capture biodiversity values which tend to be neglected. Harrison et al. (2018), informed by a review of 27 EU case studies carried out as part of the OpenNESS programme, developed guidance on choosing the appropriate valuation method. In the UK, the Green Book (HM Government, 2018) reviewed in Question 1 also provides up to date information on valuation methodologies used in public policy and decision making. Turner et al. (2019) further offer a helpful review of existing methods, tools and approaches to valuing ecosystem services and informing decision-making. Specific policy area reports on natural capital have also been developed by various organisations including the Valuing Nature network projects and synthesis reports on soil natural capital valuation, the function of floodplains, peatlands and temporary rivers270. National Natural Capital Accounts The integration of environmental accounting into public policy decision making has the potential to provide multiple benefits including: • “contribute to a more systematic compilation of an evidence base and identification of key data gaps to underpin policy making” (Turner et al., 2019) • “provide a basis for the continual quantitative monitoring of progress towards sustainability and other policy objectives.” (Turner et al., 2019) • Indicate “human progress in terms of welfare and well-being trends over time” (Turner et al., 2019) In 2012, the Office for National Statistics (ONS) published a roadmap “which set out a strategy to incorporate natural capital into UK Environmental Accounts by 2020” (ONS, 2014). In 2014 Defra and the Office for National Statistics (ONS) developed the Principles of Natural Capital Accounting271, which were later updated (2017). The Principles provided guidance to support practitioners in developing national and sub-national Natural Capital Accounts. Though the work is ongoing, several broad habitat accounts have been developed and an interim review by ONS (2018)272 suggests that by 2020, a complete suite of accounts for all eight broad habitats in the UK will be issued. Further work is carried out on the UK aggregate accounts with two more updates to those expected leading up to 2020 (NCC, 2019).

268 Bateman, I. J., Harwood, A. R., Abson, D. J., Andrews, B., Crowe, A., Dugdale, S., Fezzi, C., Foden, J., Hadley, D., Haines-Young, R. & Hulme, M. (2014). Economic analysis for the UK national ecosystem assessment: synthesis and scenario valuation of changes in ecosystem services. Environmental and Resource Economics, 57(2), 273-297. 269 Bateman, I. J., Harwood, A. R., Mace, G. M., Watson, R. T., Abson, D. J., Andrews, B., Binner, A., Crowe, A., Day, B.H., Dugdale, S. & Fezzi, C. (2013). Bringing ecosystem services into economic decision-making: land use in the United Kingdom. science, 341(6141), 45-50. 270 Available here: http://valuing-nature.net/natural-capital-synthesis-reports-0 271 https://www.ons.gov.uk/economy/environmentalaccounts/methodologies/principlesofnaturalcapitalaccounti ng 272 ONS (2018) UK Natural Capital: interim review and revised 2020 roadmap https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/methodologies/uknaturalcapitalinteri mreviewandrevised2020roadmap 68

Some gaps in coverage exist, such as the cross-cutting biodiversity and soil accounts which are yet to be developed (ONS, 2018). Methodological challenges are reviewed in the following section. 3.5.3.5 Assessment The NCC has been supporting Government by providing evidence and developing guidance on the integration of natural values across public and private decision-making. Despite a flurry of activity and initiatives around natural capital accounts, there is literature to suggest that the resulting information has not been utilised to inform decision-making to the extent it was envisaged (Turner et al., 2019; Vardon et al., 2016). A review of Impact Assessments in Government in 2014 (eftec, 2014) reveals the following key issues: • There was a tendency to ignore environmental impacts that are identified as of ‘Low’ significance. • Environmental impacts were assessed in a primarily qualitative / descriptive manner, while impacts on cultural services were frequently overlooked. • Quantification and monetary valuation were rare, and most likely encountered with reference to waste and air quality. “Around one in eight treats environmental impacts in a primarily quantified or monetary fashion.” • Environmental impact assessments lacked in analytical rigour (half of the assessments reviewed were of “low or no rigour at all”) compared to the assessment of economic impacts, which in 80% of the cases were characterised as of medium or high rigour • The consideration of ‘wider impacts’ needs to be better integrated and linked with ecosystem services. The same review further identified ‘cultural’ issues which may inhibit the use of guidance within government. These are linked to people i) treating environmental impacts with the same importance as economic impacts and ii) not feeling the need to use guidance for what might be considered a ‘standard’ appraisal. Training on the use of guidance and tools could seek to address this issue as well. Since eftec’s review the revised Green Book has been published offering up to date guidance and access to evidence and support tools on incorporating natural values into decision-making. A requirement has also been introduced embedding natural capital into i) the appraisals of alternative options in public spending decisions and ii) infrastructure decisions (NCC, 2019). However, there is no evidence yet as to the implementation of the Green Book and new requirements across government departments. Atkinson et al. (2018)273 provide an assessment of the extent to which environmental valuation has been used in Impact Assessments, with specific reference to areas of water quality improvements and natural capital. They suggest that policy officials in the UK “routinely” use some form of environmental valuation to inform “policy and investment project decisions” or discussions on the broader policy agenda. However, despite an overall positive assessment, their evaluation recognises that environmental valuation is only one of the inputs to informing decisions and that identifying the particular gravity of this information on actual decision-making remains a challenge. 3.5.3.6 Challenges

273 Atkinson, G., Groom, B., Hanley, N., & Mourato, S. (2018). Environmental valuation and benefit-cost analysis in UK policy. Journal of Benefit-Cost Analysis, 9(1), 97-119. http://eprints.lse.ac.uk/87615/1/Mourato_Environmental%20Valuation.pdf 69

Across the evidence reviewed the following challenges and lessons emerge. Some are common with the challenges faced by businesses (see Section 3.5.2.7) and include challenges relating to the use of tools and approaches that are common across the private and public sector. These include: • Methodological and data challenges: o There is a need for high quality data that is easily accessible, regularly updated, and of appropriate geographic scale and granularity (RSPB, 2017; ONS, 2018), lessons that also emerge from relevant pilots in Biodiversity Offsetting and Natural Capital Pioneers. o There are data gaps in economic and environmental data and indicators o A standardised approach for incorporating biodiversity into natural capital assessments and NCA, that is recognised and accepted across stakeholders and can be applicable in different habitats and scales • Tailored engagement and guidance: o Engagement with decision-makers on natural capital and valuation needs to be tailored to their needs, so it can demonstrate relevance “to the choices and constraints they are facing” and clarify the types of decisions it can be used to inform (Valuing Nature, 2016). ONS (2018) further suggests that case studies, practical examples, best practice guides and peer-to-peer learning have been identified as particularly valuable across stakeholders. o Clarity in use of language: Consistency in the use of terminology and avoiding the use of technical jargon are suggested in literature and emerging from stakeholder engagement practice. When referring to environmental valuation, clarification is frequently lacking on what is included in the economic value estimate and what is not (Valuing Nature, 2016)

Specific to the challenges faced in policy decision-making: • Institutional challenges: o There are cultural issues, linked to the adoption of guidance in Impact Assessment (and wider) which may vary across government departments, but can impact the take-up and implementation of new guidance (eftec, 2014) o Where new requirements are introduced in policy and practice there is a need to ensure the appropriate institutional structure is available to support changes (PES evaluation) o Building capacity within central and local government where that is lacking and with reference to the introduction of new approaches and guidance is crucial for success. This may include training staff where necessary. (Biodiversity Offsetting evaluation) o There is a need to recognise links between relevant policies and strategies as well as synergies with wider goals and commitments. • Facilitating engagement and coordination between key stakeholders is key to knowledge sharing (ONS, 2018) • Uncertainty introduced by the EU Exit was highlighted in Atkins et al. (2018)

4 Priority Action 3: Innovative financing mechanisms 4.1 Evaluation framework

4.1.1 Intervention logic Priority action 3 aims to “develop new and innovative financing mechanisms to direct more funding towards the achievement of biodiversity outcomes” (Defra, 2011)274. The actions stated in the strategy focus on promoting and expanding schemes where beneficiaries provide payments for the provision of ecosystem services i.e. Payment for Ecosystem Services (PES). A business-led Taskforce was set up to provide support on this and similar schemes and funding was provided to further test innovative funding mechanisms and develop best practice guidance on how these can be designed. Specified activities under this Priority Action include: • Publishing an action plan on PES, underpinned by supporting research • Introducing a PES research fund, publishing best practice guidance and encouraging PES pilot projects • Set up Ecosystem Markets Taskforce to review the opportunities for UK business from expanding green goods, services, products, investment vehicles and markets which value and protect nature’s services

Figure 11 presents the Logic model for Priority Action 3, describing the Activities, Outputs, Intermediate (or short term) Outcomes and the Long term Outcomes that actions under this Priority Action aim to achieve. The Long-term Outcomes of this Priority Action, along with those of all other Priority Actions across Themes, eventually feed into the wider Strategy Impacts (not visualised in Figure 11).

Figure 11 Theme 2 Priority Action 3 Logic model

274 Defra (2011) Biodiversity 2020: A strategy for England’s wildlife and ecosystem services. 71

Priority Actions Activities Outputs Intermediate Long term Outcomes Outcomes

Develop new and Expand and New tools and New tools and Biodiversity innovative promote PES innovative innovative funding increased financing funding funding mechanisms for Fund research mechanisms mechanisms Wider take-up of nature developed / and publish best direct funding to tools and implemented practice guidance biodiversity financing outcomes mechanisms Set up Ecosystem Markets Taskforce Biodiversity/ environment integrated into work of key sectors

4.1.2 Evaluation questions The evaluation of Priority Action 3 intends to answer the following evaluation questions: 1. Are new tools or innovative mechanisms making a meaningful contribution to overall funding levels for nature?

2. Have new/innovative financing mechanism been taken up by more widely by organisations / the market?

a. Are some tools more widely used? Why/why not?

b. Are there sectors that are more engaged than others? Why/why not?

3. Are there some (tools/financing mechanisms) that worked better that others? Why / why not? Have they directed more funding towards nature?

4.2 Theme 2 Priority Action 3: Key activities

Progress on the key activities identified in the Strategy under Priority Action 3 are summarised in Table 6. Table 6 Theme 2 Priority Action 3 – Strategy activities summary

Strategy Key reforms described by the Strategy Assessment of progress activities (Defra, 2011) Expand and ■ Publish an action plan to expand A Payments for Ecosystem Services (PES) Action promote PES voluntary schemes in which the Plan was published in 2013, identifying ways of provider of nature’s services is paid securing new and additional investment (Defra, by the beneficiaries (as originally set 2013)275. The Action Plan’s key building blocks to out in NEWP) enable PES included capacity building, areas of opportunities explored by Defra and evaluation of PES. Across the three themes, progress has been made with guidance developed, pilots in

275 Defra (2013). Developing the potential for Payments for Ecosystem Services: an Action Plan https://www.gov.uk/government/publications/payments-for-ecosystem-services-pes-action-plan 72

Strategy Key reforms described by the Strategy Assessment of progress activities (Defra, 2011) PES, Biodiversity offsetting, Woodland and Peatland Carbon schemes and evaluations carried out. Fund research, ■ Set up a new research fund According the NEWP implementation update encourage ■ Encourage the development of pilot (2014) the research fund was established and a pilots and schemes, such as PES, “across a number of pilots funded. Relevant pilots publish best broad spectrum of nature’s services include: practice and beneficiaries.” ■ Payments for Ecosystem Services pilots guidance ■ Publish best practice guides in ■ Biodiversity Offsetting pilot designing schemes PES-like schemes also exist providing payments to land managers to manage land in a way that generates benefits for biodiversity: ■ Environmental Stewardship ■ Countryside stewardship ■ England Woodland Grant Scheme

Lessons emerging through these pilots around existing opportunities in PES applications, capacity building, partnership working and monitoring and evaluation needs are explored in Section 4.5.2.

Research has been funded and guidance published on: ■ What nature can do for you - a practical introduction on how to use an ecosystems approach in policy and decision making (Defra, updated in 2015) ■ Payments for ecosystem services – an economic framework and key design principles for payments for ecosystem services (Defra, 2011) ■ Payments for Ecosystem Services: A Best Practice Guide - to assist with the design and implementation of PES schemes (Defra, 2013) ■ Review of Defra’s Payments for Ecosystem Services Pilot Projects 2012-15 - identifying barriers, opportunities and lessons from their use (Defra, 2016).

To these we could add a longer list of relevant guidance in environmental valuation and integration of biodiversity values in decision- making reviewed in Priority Action 2 Section 2. Set up ■ Set up the EMTF to advise on ■ The EMTF was set up in 2012 and delivered Ecosystem “opportunities for UK business from two reports identifying Opportunities for UK Markets expanding green goods, services, business that value and/or protect nature’s Taskforce products, investment vehicles and services, including an industry-specific markets which value and protect review of Business opportunities from the nature’s services.”

Strategy Key reforms described by the Strategy Assessment of progress activities (Defra, 2011) natural environment - a business sector approach. ■ The EMTF published its final report Realising nature’s value in 2013, which includes a Government response to the taskforce’s recommendations.

4.3 Overview of the main innovating financing mechanism being used in the UK

As risks and liabilities from biodiversity loss increase, so does the need and potential for Innovative Financing Mechanisms (IFMs) (TEEB, 2012)276. In global conservation literature (CBD, 2011277; OECD, 2011278; Eftec, 2012; OECD, 2013279) IFMs are identified as opportunities for scaling-up finance for biodiversity. There is a growing body of work on such mechanisms, and their opportunities and challenges, involving actors across national governments, private sector businesses and global organisations (e.g. OECD) (ten Brink et al., 2012)280 IFMs include a range of opportunities for scaling-up finance for biodiversity (CBD, 2011281;OECD, 2011282;Eftec, 2012; OECD, 2013283), which the Convention on Biological Diversity identifies in the following six categories: 1. Environmental fiscal reform

2. Payments for ecosystem services

3. Biodiversity offsets

4. Markets for green products

5. Biodiversity in climate change funding

276 TEEB (2012). The Economics of Ecosystems and Biodiversity in Business and Enterprise. Edited by Joshua Bishop. Earthscan, London and New York. 277 CBD (2011) Collection of Submissions on Innovative Financial Mechanisms. https://www.cbd.int/financial/doc/compilation-innovative-financial-mechanisms-2011-09-en.pdf 278 OECD (2011) Information concerning Innovative Financial Mechanisms. https://www.cbd.int/financial/doc/oecd-innovative-financial-mechanisms-01-2011-en.pdf 279 OECD (2013) Scaling-up Finance Mechanisms for Biodiversity. http://www.oecd.org/env/scaling-up-finance- mechanisms-for-biodiversity-9789264193833-en.htm 280 ten Brink P., Mazza L., Badura T., Kettunen M. and Withana S. (2012) Nature and its Role in the Transition to a Green Economy. http://img.teebweb.org/wp-content/uploads/2013/04/Nature-Green-Economy-Full- Report.pdf 281 CBD (2011) Collection of Submissions on Innovative Financial Mechanisms. https://www.cbd.int/financial/doc/compilation-innovative-financial-mechanisms-2011-09-en.pdf 282 OECD (2011) Information concerning Innovative Financial Mechanisms. https://www.cbd.int/financial/doc/oecd-innovative-financial-mechanisms-01-2011-en.pdf 283 OECD (2013) Scaling-up Finance Mechanisms for Biodiversity. http://www.oecd.org/env/scaling-up-finance- mechanisms-for-biodiversity-9789264193833-en.htm

6. Biodiversity in international development finance

IFMs can support positive outcomes for biodiversity in a range of ways including: “i) by raising additional revenue that is then used to achieve biodiversity outcomes; (ii) by mainstreaming biodiversity in the production and consumption landscape (e.g. green markets; offsets) and (iii) by reducing the cost of achieving biodiversity conservation and sustainable use (e.g. environmental fiscal instruments)” (CBD, 2012)284. What is important to note is that IFMs do not strictly raise funds – per se, but can include a wider range of instruments and measures that promote actions that can minimise biodiversity loss and generate positive biodiversity outcomes. Additional literature from the EU and UK (EMTF, 2012285; Ten Brink et al., 2012, Business@Biodiversity, 2014286; Illes et al., 2017287, RSPB, 2018288) identify the main IFMs in use, or under development (see Table 7), for which we review their contribution to biodiversity funding (Section 4.4.2.2) and lessons emerging from their use in the UK (Section 4.5.3). Table 7 Key IFMs in use in the UK

IFM category Description UK examples / Sources of evidence Payments for PES are voluntary programmes that ■ 16 Payments for Ecosystem ecosystem provide direct monetary or in-kind Services (PES) Pilot Projects (2012- services incentives to enhance the provision of 15) set up by Defra ecosystem services. In PES “payments ■ PES-like schemes including the are made by the beneficiary of a natural Peatland and Woodland Carbon service to the provider of that service” Code voluntary markets (Defra, 2011). These payments are ■ Some evidence can also be found in essentially compensation for the Catchment Based Approach (CaBA) additional cost of implementing a pilot (2011-12) and follow up and particular land use or resource agri-environmental schemes management decision that will provide additional ecosystem services (OECD, 2013). PES can be financed by public bodies, private companies or a combination of the above (Illes et al., 2017). Biodiversity Biodiversity offsets refer to ■ Six pilots as part of Defra’s offsets conservation activities designed to Biodiversity Offsetting Scheme deliver “measurable conservation (2012-14), set up by to test outcomes” in compensation for losses, voluntary biodiversity offsetting. in ways that achieve no net loss for ■ Government Impact Assessment on biodiversity, or preferably net gain. biodiversity net gain Conservation outcomes result from actions “designed to compensate for

284 CBD (2012) Finance Mechanisms for Biodiversity: Examining Opportunities and Challenges. https://www.cbd.int/doc/meetings/fin/wsfmb-eoc-01/official/wsfmb-eoc-01-chairs-summary-en.pdf 285 EMTF (2012) Opportunities for UK business that value and/or protect nature’s services 286 Business@Biodiversity (2014). B@B Workstream 3: Access to Finance and Innovative Financing Mechanisms. http://ec.europa.eu/environment/biodiversity/business/assets/pdf/b-at-b-platform-finance- workstream-final-report.pdf 287 Illes, A., Russi, D., Kettunen, M. and Robertson M. (2017) Innovative mechanisms for financing biodiversity conservation: experiences from Europe, final report in the context of the project “Innovative financing mechanisms for biodiversity in Mexico / N°2015/368378”. Brussels, Belgium. 288 RSPB (2018). Bridging the finance gap. How do we increase financing for conservation? A discussion paper.

IFM category Description UK examples / Sources of evidence significant residual adverse biodiversity ■ Government consultation on a impacts arising from project mandatory net gain approach development after appropriate (2018-2019) prevention and mitigation measures have been taken” (BBOP, 2013). Biodiversity offsets can be delivered through the use of habitat banking289. Other financing Fiscal reforms and the integration of ■ Hunting / fishing licences mechanisms biodiversity in fiscal mechanisms ■ Nature reserve entrance fee including environmental taxes, reforms (including car park fees) and incentives and a range of environmental charges and fees (Illes et al., 2017) Wider market-based mechanisms ■ Expanding green markets and use of certification schemes (Progress has been reviewed as part of the PA2 Evidence Pack). Financial instruments and vehicles used ■ Visitor Payback Schemes in conservation finance. ■ Funding leveraged through, for instance, investment in Natural capital and the use of financial vehicles such as Green bonds listed in the London Stock Exchange

4.4 Are new tools or innovative mechanisms making a meaningful contribution to funding for nature?

4.4.1 Introduction This section presents the available evidence on the financial contribution on each of the main innovative mechanisms (Section 4.4.2 on Evidence), and the changing significance of such mechanisms in the biodiversity funding landscape. In assessing the ‘contribution’ of innovative mechanisms to funding, the focus is on the financial contribution that they make to the delivery of biodiversity actions. The wider financial and economic benefits (or co-benefits)290 that such biodiversity actions can provide are not considered. There is no national or trend data on the take up and overall contribution of innovative finance mechanisms. Some evidence can be found in wider European literature, reviews and scheme evaluations, as well as local examples and case studies291. However, these tend to vary in their scale and usually refer to a specific tool or mechanism. There is some evidence that presents the

289 I.e. “a market where the credits from actions with beneficial biodiversity outcomes can be purchased to offset the debit from environmental damage. Credits can be produced in advance of, and without ex-ante links to, the debits they compensate for, and stored over time” (eftec and IEEP, 2010) 290 These benefits may include savings for businesses (e.g. reduced operational costs), employment benefits for the local economy (e.g. jobs created), health benefits for the community (e.g. improved health) and environmental benefits (e.g. biodiversity loss averted, habitat restored or created) (ICROA and Imperial College London, 2014; 2016 291 These can be found on NERC, EKN, JNCC and more. 76

contribution and additional funding secured through a given mechanism case example, but the majority of insights are qualitative and focus on levels of stakeholder engagement, challenges encountered, and lessons learned (which are discussed in Section 4.5). Challenges reported with reference to obtaining data on the contribution of key mechanisms in funding for nature (Ecosystem Marketplace, 2017; RSPB, 2018; Defra, 2017) include: • Sensitivities in sharing / obtaining financial information meaning only a fraction of the participating organisations and private companies provided any data. • Challenges in accuracy of estimates and isolating costs / contributions of offsets or payments (depending on the mechanism) from the cost of implementation and project development • Lack of private investment data that are disaggregated to a UK scale or to investment that relates to biodiversity (e.g. social impact investment masking values that are relevant to biodiversity) • Lack of information and/or clarity in existing / provided estimates of what is and is not included (i.e. project costs etc. as above)

4.4.2 Evidence Where available, evidence is presented below with reference to the funds raised by the key IFMs. The evidence is at best fragmented with some providing an indication of the global- or EU-level contributions of particular mechanisms, and others providing evidence of funding generated by case studies and pilots in the UK. 4.4.2.1 PES Global and EU The State of Watershed Investment report (Ecosystem Marketplace, 2017) reports that in 2011 transactions via PES programmes totalled more than $8 billion with evidence suggesting a substantial increase in 2012. A recent review of PES schemes in the EU (Illes et al., 2017) identified a total of 29 PES projects (out of which 12 were financed by public bodies;13 by private actors; and 4 were hybrid schemes) with the majority of them addressing issues in agricultural and water catchment areas, where payments are usually linked to benefits provided by upstream users. The Ecosystem Marketplace identified an additional 15 pilot PES projects across Europe and estimated that in total, across Europe, 44 pilot and operational PES projects “support investments in watersheds, with a value of $60.8 million”. (Illes et al., 2017) The Ecosystem Marketplace watershed investment report (2017) states that across Europe in 2015, “€5.7 billion in payments for watershed protection flowed to landowners and public land managers”, out of which €39.4 million refers to user-driven investments. These include “direct contracts between landholders and water users, or contributions from water users to a collective action fund” and have been growing in numbers. UK Evidence available for the UK is found mainly in the Ecosystem Marketplace reports (2017), Illes et al. (2017), private water companies and the water industry regulator (Ofwat) and the PES pilot schemes.

Summarised below are the key examples where information was available on the financial sums raised through292 the use of PES in the UK. These include: • Across Europe, the UK holds the highest number of user-driven watershed investment programmes (12 out of 34) with a flow of €5.6 million in watershed payments (Ecosystem Marketplace, 2017)293. This is primarily a result of regulation in the water industry and support from the government (Illes et al., 2017). • The Ecosystem Marketplace Watershed investment report (2017) states that water utilities in the UK have invested €77 million in catchment management schemes since 2015. The OFWAT Price Review (2014) reveals further water company plans of €30 million investment between 2015 and 2020, bringing the total to more than €100 million. This is likely an underestimate due to only a small number of water companies disclosing spending. However, these figures need to be caveated as to the extent to which investment in catchment management represents investment and improvements in biodiversity. Watershed investment primarily refers to investment in the maintenance, restoration or improvement of ecosystem services associated with hydrological functions (Ecosystem Marketplace, 2017). • The Sustainable Catchment Management Programme (SCaMP): a programme set up by United Utilities and co-financed by Natural England and the Forestry Commission. The programme was deemed a success for improving ecological conditions, with Natural England’s assessment revealing that “land in favourable or unfavourable recovering condition increased from14% to 99.4%” (United Utilities, 2016 in Illes et al., 2017). “During the first phase of the initiative (SCaMP I 2005- 2010), UU invested £8 million and an additional £2.5 million of public support through agri-environmental measures grants was provided by Natural England and the Forestry Commission” (Smith et al, 2013)294. During SCaMP II (2010-2015) a further “£11.6 million was invested by the water company to improve the management of catchment areas across 30,000 hectares in Cumbria and South Lancashire (United Utilities, 2016 in Illes et al., 2017).” • The Upstream Thinking295: Following a successful pilot Upstream Thinking was extended across three catchments (Upper Tamar, Fowey and Wimbleball) in a partnership between South West Water (SWW) Westcountry Rivers Trust (WRT) and local farmers. According to the scheme “farmers are required to co-finance 50% of the investments”, which refer to changes in land management in order to improve water quality (Illes et al., 2017). Between 2010 and 2015, WRT invested £2.75 million296 (Cook et al., 2017)297, while the SWW’s project budget was approximately €12 million (Ecosystem Marketplace, 2017). SWW budgeted another €12 million for

292 It is worth noting that in the PES scheme in the UK is a hybrid scheme with funding from both private investors and the Government. Frequently, contributions are reported as sums or approximate percentages of total funding. 293 Ecosystem Marketplace (2017) State of European Markets 2017: Watershed investment report https://www.ecostarhub.com/wp-content/uploads/2017/06/State-of-European-Markets-2017-Watershed- Investments.pdf 294 Smith, S., Rowcroft, P., Everard, M., Couldrick, L., Reed, M., Rogers, H., Quick, T., Eves, C. and White, C. (2013). Payments for Ecosystem Services: A Best Practice Guide. London. 295 Part of the broader Upstream Thinking Initiative and Defra’s PES pilot project in the River Fowey 296 Across four target catchments: The Upper Tamar, Roadford Reservoir, Upper Fowey and Wimbleball. 297 Cook, H., Couldrick, L., & Smith, L. (2017). An assessment of intermediary roles in payments for ecosystem services schemes in the context of catchment management: An example from South West England. Journal of Environmental Assessment Policy and Management, 19(01), 1750003.

the period between 2015 and 2020, for a programme spanning 11 catchments (Ecosystem Marketplace, 2017). • The Westcountry Angling Passport: Farmers provide access to recreational anglers for a fee and in return maintain the waters and river banks. Tokens are required to permit fishing, with the number of tokens on each site determined collaboratively by farmers and land owners (Matzdorf et al, 2014)298. Anglers purchase tokens for the unit price of £2.50 online or from designated outlets and place them in boxes at the fishing grounds. The WRT annually monitors returns and usage to establish the number of tokens required for the fishing grounds. (Illes et al., 2017) • Pilot PES schemes: An evaluation of 11 out of the 16 PES pilot schemes highlighted benefits and challenges of PES (discussed in following sections) but offered little to no evidence as to their contributions to overall levels of funding. Illes et al. (2017) provide an indication, noting that the UK Government contributed £274,000 across the PES schemes between 2011-2013, with “an estimated additional 50% funding (...)secured through co-funding and partnerships with interested institutions”. For instance: The PES pilot project in the River Fowey, co-funded by South West Water and Defra, distributed £360,000 in grants to farmers in the catchment (Day & Couldrick, 2013)299. 4.4.2.2 Biodiversity offsetting Global The ‘State of Biodiversity Mitigation’ report (Ecosystem Marketplace, 2017)300, reveals “an estimated $4.8bn in mitigation bank credits and financial compensation was transacted in 2016, more than doubling annual transaction value since 2011...”. The majority of this funding was contributed by the private sector, particularly the energy, transportation, and mining sectors, with the US, Australia, Germany and Canada, concentrating the majority of funds. EU Biodiversity offsetting is a relative new concept in Europe, with a few exceptions such as Germany. In a nascent market, regulation is a key trigger in the EU - biodiversity offsetting embedded in the Habitats Directive requirement for developers to “compensate for unavoidable impacts (i.e. offset) on the EU conservation network (i.e. the Natura 2000 network)” (Illes et al., 2017). The State of European Markets report on biodiversity offsets and compensation mechanisms in Europe “identified 65 programmes and 180 implemented or in-development projects as of 2015” – out of which 14 programmes and 8 projects were in the UK. They report the transacted value across European biodiversity offsets and compensation projects at €62.7million for the five-year period 2011-2015 (Ecosystem Marketplace, 2017)301. This is likely to be an underestimate of the actual contribution of offsetting, since the above figure estimated on data obtained by 75 of the180 identified projects (due to sensitivities in obtaining financial data).

298 Matzdorf, B., Biedermann, C., Meyer, C., Nicolaus, K., Sattler, C. and Schomers, S. (2014). Paying for Green? Payments for Ecosystem Services in Practice. Successful examples of PES from Germany, the United Kingdom and the United States. Müncheberg. 299 Day, B. and Couldrick, L. (2013). Payment for Ecosystem Services Pilot Project: The Fowey River Improvement Auction 300 Ecosystem Marketplace (2017). State of Biodiversity Mitigation 2017. Markets and Compensation for Global Infrastructure Development. https://www.forest-trends.org/wp-content/uploads/2018/01/doc_5707.pdf 301 Ecosystem Marketplace (2017). State of European Markets 2017. Biodiversity Offsets and Compensation. https://www.ecostarhub.com/wp-content/uploads/2017/06/State-of-European-Markets-2017-Biodiversity- Offsets-and-Compensation.pdf

UK Progress in biodiversity offsetting in the UK was reviewed as part of the Evidence pack on Priority Action 2 and in the context of the Government’s Biodiversity Offsetting Pilots (2012-2014). Despite a lack of any significant progress following the six pilots concluding in 2014, the Government has recently (end of 2018) published a public consultation on net gain for biodiversity. The Environment Bank, as the sole broker of biodiversity offsets in the UK, noted that there has been an increase in interest with “77 planning authorities in 34 counties of England engaged in the work to varying extents”, although this only represents a fifth of planning authorities in England (Hill, 2019)302. Credit sales associated with the Environment Bank’s biodiversity offset projects, were reported to total £1.67 million303 in 2017 (Ecosystem Marketplace, 2017) 304, whilst the value of the biodiversity offsetting market in the UK has been estimated in the order of £700m – £1.2bn per annum (Hill, 2019). As part of the Government’s net gain consultation, an Impact Assessment (Defra, 2018)305 was published in 2018 suggesting that if Defra’s proposed policy on biodiversity net gain is implemented, the estimated potential contribution of the private sector to offsets over the next 20 years would be £60.5 million per year306 (Defra, 2018). Amongst the assumptions is a tariff set between £9,000 and £15,000 per biodiversity unit (Defra, 2018). 4.4.2.3 Voluntary carbon markets The Ecosystem Marketplace (2015)307 in a global review of voluntary carbon markets and private sector participation estimate a total spending of $888 million in “new results-based finance for forests” in 2015, with 94% of the voluntary market demand for forest offsets driven by the private sector. However, a review of markets in Europe (Ecosystem Marketplace, 2015)308 reveals that the majority of offsets purchased originated from projects outside Europe. Similarly, although the UK voluntary carbon market transacts a total of €48.8 million only a small percentage of that refers to projects located in the UK. Although an exact value is not available, from a total of 16 organisations purchasing voluntary offsets in the UK only three included sales of UK forestry-based carbon offsets309, corresponding to a volume of 259 KtCO2e in 2015 verified through the UK’s Woodland Carbon Code310. The UK’s Woodland Carbon Code (WWC) was launched in 2011 and by the end of 2016, 243 projects were registered. 138 of these projects were validated creating “almost 5 thousand hectares of woodland and are predicted to sequester 2.3 MtCO2e over their lifetime”. These projects are verified

302 Article by David Hill (of the Environment Bank) on 20 February 2019. ‘Can UK Build its Restoration Economy on the Principle of “Net Gain”?’ Available at: http://www.ecosystemmarketplace.com/articles/uk-builds- restoration-economy-principle-net-gain/ 303 The total reports in the Ecosystem Marketplace report (2017) was €1.9 million, which was converted to GBP using the 2017 average exchange rate of 0.88. 304 Ecosystem Marketplace (2017). State of European Markets 2017. Biodiversity Offsets and Compensation 305 Defra (2018) Net gain Consultation proposals. https://consult.defra.gov.uk/land-use/net- gain/supporting_documents/netgainconsultationdocument.pdf 306 2016 prices, 2017 present value 307 Ecosystem Marketplace (2015). THE BOTTOM LINE: Taking Stock of the Role of Offsets in Corporate Carbon Strategies. https://www.forest-trends.org/wp-content/uploads/imported/buyers-report-032015-pdf.pdf 308 Ecosystem Marketplace (2015). Ahead of the Curve: State of the Voluntary Carbon Markets 2015. 309 Ecosystem Marketplace (2017) State of European Markets. Voluntary Carbon Offsets. https://www.ecostarhub.com/wp-content/uploads/2017/06/State-of-European-Markets-2017-Voluntary- Carbon.pdf 310 Forestry Commission (nd) UK Woodland Carbon Code. https://www.forestry.gov.uk/carboncode

every five years, with the first three projects verified in 2016 “converting ‘potential’ to ‘actual’ sequestered carbon. These three projects cover 150 hectares and in five years have sequestered 730 tCO2” (Ecosystem Marketplace, 2017). In terms of market size, the Forestry Commission in their latest update (2018) identify four verified developers and another 19 developers who have validated projects311, while the Ecosystem Marketplace review in 2017 revealed “at least 70 different corporate buyers”. No price estimates are available for contributions to date, but Smyth et al. (2015)312 note that carbon prices “achieved under the WCC reportedly fall in the £3/t to £15/t range (compared with £3.40/t to £5.70/t for forest carbon globally)”. The former price range needs to be updated as it reflects Forestry Commission prices before the establishment of the PCC, when a lot of uncertainty existed regarding the initial and ongoing certification and management costs. Another contributor to the voluntary carbon market in the UK is the peatland carbon market with carbon credits from peatland restoration, measured, verified and purchased according to the Peatland Carbon Code (PCC)313. The Peatland code development started with three government- supported pilot projects in 2013 and following their conclusion the first PCC was launched in 2015. An updated version was circulated in 2017314. The market is relatively new in the UK - the Peatland Code Registry315 reveals a total of five projects out of which one is validated - hence no estimates of value currently exist. 4.4.2.4 Other financing mechanisms Environmental taxes, fees and charges Environmental fiscal reform as recognised can include a range of tax reforms, the introduction of environmental taxes and relevant fees and charges (OECD, 2013). Illes et al. (2017) in their review of financing mechanisms, note that “tax shifting”, used as an umbrella term for the above, is rarely used in the context of biodiversity, with the overwhelming majority of environmental taxes identified in Europe (and in the UK) referring to energy taxes and to a lesser degree transport- related taxes. Hunting and fishing fees and natural park fees are amongst the environmental charges in the UK that could be seen as relevant in the context of biodiversity (Illes et al., 2017). Environment Agency data reveal annual income from sales of freshwater fishing rod to range between £21-24 million per year between 2009-2016 (EA, 2018)316. Similar data for hunting is not readily available. Whilst national parks in the UK are free to visitors, Kettunen et al. (2017)317 suggest “significant fees”

311 Forestry Commission (nd) Where to buy carbon from WCC projects https://www.forestry.gov.uk/forestry/INFD-9N7FRU#retail%20aggregator (Last updated: 14th September 2018) 312 Smyth, M.A., Taylor, E.S., Birnie, R.V., Artz, R.R.E., Dickie, I., Evans, C., Gray, A., Moxey, A., Prior, S., Littlewood, N. and Bonaventura, M. (2015) Developing Peatland Carbon Metrics and Financial Modelling to Inform the Pilot Phase UK Peatland Code. Report to Defra for Project NR0165, Crichton Carbon Centre, Dumfries. 313 http://www.iucn-uk-peatlandprogramme.org/peatland-code 314 http://www.iucn-uk-peatlandprogramme.org/sites/www.iucn-uk- peatlandprogramme.org/files/170331%20Peatland%20Code%20V1.1_FINAL.pdf 315 http://www.iucn-uk-peatlandprogramme.org/peatland-code-registry 316 Data available from https://data.gov.uk/dataset/2b303513-bc81-4bef-880f-8a587db9b3a1/annual- summary-of-rod-licence-sales 317 Kettunen M. and Illes, A. (eds.) (2017) Opportunities for innovative biodiversity financing: ecological fiscal transfers (EFT), tax reliefs, marketed products, and fees and charges. A compilation of cases studies developed in the context of a project for the European Commission (DG ENV) (Project ENV.B.3/ETU/2015/0014), Institute for European Policy (IEEP), Brussels / London.

are collected through car park fees though no overarching estimates are provided in this or relevant literature reviewed. Other types of parks and reserves do in some instances charge entrance fees (e.g. many RSPB nature reserves). In their reporting of biodiversity financing integration, Kettunen et al. (2017) note the UK is amongst a small number of countries that use tax reliefs for biodiversity conservation. This can range from capital gains tax exemptions when assets of significant biodiversity value are donated to Gift-Aid tax relief for donations. No data are readily available for the contributions of such mechanisms. Finally, visitor payback schemes can also be included in this category (although can, depending on their construct, be classified as PES schemes) with some innovative approaches being applied in the UK including the Nurture Lakeland visitor giving scheme which is reported to have raised millions of pounds since it was launched in 1994. In 2013/14 it raised a total of £111,674 (Nurture Lakeland, 2014 in Kettunen et al., 2017). Financial mechanisms for conservation investment Targeted research on private capital invested in conservation shows that globally $8.2 billion were committed from 2004 to 2015, which represents a fraction of public investment in conservation318, but an increase of 62% compared to private investment in 2013 (Ecosystem Marketplace, 2016)319. With reference to investment in natural capital, a recent UK review found that investment in natural capital has been funded mainly by “public agencies, conservation organisations and landowners with a social and environmental imperative, such as the Wildlife Trusts or National Trust” and that to date “there has been a lack of interest from mainstream investors in this market” (Aldersgate Group, 2017). Amongst the limiting factors, reviewed in detail in Section 4.5.4, are the long-term nature of investments, lack of track record and early-stage of projects which tend to “lack the returns to appeal to venture capital”. The Aldersgate Group (2017) review offers no data on the value of existing investment. Another review (Defra, 2017320), aimed to collate evidence on private sector natural capital projects in the UK (where a return on investment was provided) was also unsuccessful, with the authors noting that they were unable to obtain such information due to: a lack of evidence on private return on investment; challenges in establishing causality between investment and improved financial standing; and “commercial sensitivities” limiting the amount of available data. There is a range of financial vehicles available to investors in the conservation finance market, such as Environmental Impact Bonds and direct investments in Green bonds. Latest data collated by the Green Finance Initiative reveal that globally there has been a rapid increase in the issuance of green bonds, whilst the 90 green bonds currently listed on the London Stock Exchange have “raised in excess of $25.3 billion in seven currencies”321. However, this data includes investment in areas, such as urban infrastructure and renewables, which do not directly relate to biodiversity. In addition, the UK green bond market refers to is where the investment is

http://ec.europa.eu/environment/nature/natura2000/financing/docs/Kettunen_2017_financing_biodiversity_ case_studies.pdf 318 Estimated at $31.7 billion in public capital committed between 2009 and 2015 (Ecosystem Marketplace, 2016) 319 Ecosystem Marketplace (2016) State of Private Investment in Conservation 2016: A Landscape Assessment of an Emerging Market. http://www.naturevesttnc.org/pdf/Investing-in-Conservation-2016-full.pdf 320 Defra (2017). Natural Capital Projects Review – Private Sector Investment Models and Scale Up. http://sciencesearch.defra.gov.uk/Default.aspx?Menu=Menu&Module=More&Location=None&Completed=0 &ProjectID=19886 321 http://greenfinanceinitiative.org/facts-figures/

raised, it is not necessarily where the funding is directed or spent. No data is available on the value of green bonds (or other financial instruments) focussed on UK biodiversity.

4.4.3 Assessment There is limited evidence on the overall contribution of different mechanisms to funding levels for nature. Reporting on the ‘State of European Markets’ (Ecosystem Marketplace, 2017)322 reveals that across “voluntary carbon, watershed investments, and biodiversity offsets and compensation” the green economy in Europe is “transacting an estimated €5.8 billion every year”. Some references are highlighted in the previous section that provide insights into the contribution of specific funding mechanisms across a range of geographic scales. UK evidence is limited and tends to refer to data obtained through pilots and emerging market assessments. Overall in the UK there is a notable contribution of water companies towards funding for nature, through the use of PES that is driven by regulatory reforms in the sector and support by the Government. PES-like schemes and systems are in place across areas of water, woodland and peatland management offering payments to farmers and landowners with the aim of maintaining and enhancing local biodiversity. The contribution of such schemes is less clear with little to no quantified data on their contribution. Similarly, there is little evidence on the benefits of Biodiversity Offsetting to date, with the Environment Bank providing the only source of evidence and noting a total of £1.67 million in biodiversity offsetting credit sales in 2017 (Ecosystem Marketplace, 2017). Some innovative financial instruments in conservation investment, such as green bonds, show promising potential although as noted above it is difficult to disaggregate their contributions to funding that is available for nature and that is also spent within the UK. Ten Brink et al. (2012)323 note that overall “investment funds, insurance companies and banks, or rating agencies have not generally played a major role in financing nature’s role in the transition to the green economy”. However, lessons could be learned from impact investment in the renewable energy market, which the Government has been a leader in promoting, to promote financial instruments and “guide successful approaches to environmental impact investing” RSPB (2018)324. RSPB (2018) estimates current spend on conservation in the UK at £476 million per year325,326, compared to an estimated total cost of achieving national conservation targets of £2.3 billion327, suggesting a shortfall in necessary spend for biodiversity in the UK of a scale of £1.8 billion.

322 Ecosystem Marketplace (2017). State of European Markets 2017. Voluntary Carbon, Watershed Investments, and Biodiversity Offsets and Compensation. https://www.forest-trends.org/publications/state- european-markets-2017/ 323 ten Brink P., Mazza L., Badura T., Kettunen M. and Withana S. (2012) Nature and its Role in the Transition to a Green Economy. http://img.teebweb.org/wp-content/uploads/2013/04/Nature-Green-Economy-Full- Report.pdf 324 RSPB (2018) Bridging the Financing gap: How do we increase financing for conservation? A discussion paper. March 2018. 325 Public sector funding for biodiversity in the UK in 2016/17 was £445 million a decrease of 17% over the last 5 year (E2. Expenditure on UK and international biodiversity available from JNCC, 2018 at http://jncc.defra.gov.uk/page-4251) 326 “The estimated actual Spend of £476mn per year is calculated by augmenting the DEFRA UK biodiversity spend estimates with European Union LIFE spending in the UK. NGO spend is estimated at a further £200 million but it is impossible to prevent very significant double counting with the figures available.” (Appendix to the RSPB, 2018) 327 Includes only land management costs as calculated in Rayment, M. (2017). Assessing the costs of Environmental Land Management in the UK. 83

Evidence reviewed in previous sections indicate that across innovative financing mechanisms (such as PES and Biodiversity offsets) there is an investment in the scale of tens of millions (£), which yet remains a relatively small contribution. Scaling up efforts and moving from discrete cases to a “fundamental systemic transition” to a green economy could help generate additional funding via schemes and instruments sustained over the longer term (ten Kate et al., 2013). 4.5 Are there some tools or mechanisms that worked better that others and why?

4.5.1 Introduction This section draws on academic and grey literature, existing evaluations of IFMs, and - where available - stakeholder feedback from existing schemes testing these mechanisms, to provide an assessment of how well IFMS have worked, identify barriers and enablers, and learn lessons for scaling up and facilitating their uptake. The following sub-sections review specific challenges and lessons emerging from PES, Biodiversity Offsetting and other instruments in facilitating private investment, before drawing together a summary of the cross-cutting challenges and lessons.

4.5.2 PES Although there is a set of common principles that tend to characterise PES, such as their voluntary nature and the existence of direct (albeit conditional) payments to the ecosystem service provider, in practice PES schemes often differ (Defra, 2013)328. As part of this Evidence pack we present evidence available from the UK PES Pilot and its evaluation, as well as PES-like schemes (including Environmental and Countryside stewardship, the Woodland and Peatland Carbon Codes, visitor payback schemes etc) and relevant literature. 4.5.2.1 Challenges, enablers and lessons The following are recognised as the key building blocks in facilitating the development of PES (Defra, 2013): • demonstrating ‘proof of concept’ for PES applications through piloting • capacity building • adaptive management • removing barriers (informational, technical, financial, institutional) that could enable PES opportunities to develop • disseminating best practice

Experience from PES captured in evaluations and wider literature highlights the following challenges, lessons and enablers:

Challenges: • “Identifying and engaging potential beneficiaries” (Defra, 2016) • Initial set up cost of the scheme, transaction costs and ongoing costs of implementing, monitoring, validating and enforcing PES were commonly mentioned in PES and Peatland Code pilots (Defra, 2016). • Contractual issues “linked to achieving long-term improvements in ecosystem services” appeared as a challenge across multiple PES (Defra, 2016). Different pilots

328 Defra (2013). Developing the potential for Payments for Ecosystem Services: an Action Plan. 84

explored mitigating options, such as the introduction of contracts of varying lengths (e.g. 10-25 years in the Fowey pilot), setting aside ‘buffer savings’ or establishing payments that are either action or outcome-based. • Concerns around stability and changes associated with EU Exit and how it may impact on grants and environmental payments more widely was reported by O’Brien et al. (2018). • “Cultural and equity considerations” impacting potential buyers’ willingness to participate in PES (Defra, 2016). • Technical challenges identified by the evaluation of PES pilots (Defra, 2016): o identifying a baseline for the ecosystem service assessment o establishing a clear link between interventions and outcomes o availability of technical staff to manage PES scheme o identifying and implementing appropriate payment mechanisms O’Brien et al (2018), reveals stakeholder concerns around the challenges in assessing, valuing and pricing ecosystem services and benefits as part of PES. The British Woodlands Survey (2017)329 survey shows that three quarters of land owners and agents did not know or were uncertain of the value of ecosystem services provided by their land (Hemery et al., 2018 in O’Brien et al., 2018). • Institutional challenges, such as free-riding where multiple beneficiaries exist, linked to a lack of a structured market mechanism (Defra, 2016) • Lack of understanding (and integration) of the interactions (both synergies and trade-offs) between PES and existing UK and EU legislation.

Lessons and enablers: • Targeted engagement with stakeholders supports improved identification of PES opportunities and boosts interest from potential ecosystem service buyers /investors (Defra, 2013; 2016330). Research and practice (Defra, 2015331; 2016) highlight a need to further efforts in raising awareness amongst beneficiaries of the interdependencies between nature and businesses and the benefits the former can provide to be able to provide potential buyers/investors with a “credible economic case…either at sector or spatial level”. Positive framing and communication can also facilitate engagement. • ‘Stacking ecosystem services’ can attract a wider range of beneficiaries and increase investment per hectare. However, the approach is not without challenges, as it can be “difficult to discern the exact proportions of benefits and how ecosystem services will be stacked and who should pay” (Defra, 2017) • Increase awareness of PES amongst land managers to support the identification of opportunities by ecosystem service providers. Recent research with a sample of woodland managers (O'Brien et al., 2018) found that more than half (24) stated they had never heard of PES and another 10 had limited understanding of the concept. • Developing market infrastructure can boost investor confidence: Guidance, best practice (e.g. Best Practice Guide on PES)332, metrics and validation mechanisms (e.g. Woodland and Peatland Carbon Codes) are key to ensuring that benefits can be

329 https://www.woodlandtrust.org.uk/blog/2018/03/british-woodlands-survey-2017/ 330 Defra (2016). Defra’s Payments for Ecosystem Services Pilot Projects 2012-15. Review of key findings. 331 Defra (2015). Developing the evidence on beneficiaries for Payment for Ecosystem Services - NR0164. http://randd.defra.gov.uk/Default.aspx?Menu=Menu&Module=More&Location=None&ProjectID=19007&Fro mSearch=Y&Publisher=1&SearchText=beneficiaries&SortString=ProjectCode&SortOrder=Asc&Paging=10 332 Defra (2013). Payments for Ecosystem Services: A Best Practice Guide. https://www.cbd.int/financial/pes/unitedkingdom-bestpractice.pdf 85

quantified in a consistent manner, which can offer assurance and boost investor confidence (Defra, 2013). The Woodland and Peatland Carbon Codes demonstrate how metrics can be developed to boost confidence in investors (Defra, 2013), with an increased interest emerging from potential investors. Yet further development of the market is required to catalyse private investment (Defra, 2016). • Building capacity amongst key stakeholders through training (e.g. Government webinars on PES best practice), dissemination of guidance and case studies can enable the development of PES. In a survey of environment professionals, participants indicated that more examples of implemented PES are required (Waylen & Martin-Ortega, 2018)333. Encouraging ex-post evaluations of PES applications and schemes can also help capture and share lessons and good practice. The PES Pilot Scheme evaluation identified a range of case studies with potential to be scaled up or to act as a ‘model’ transferable in other contexts. • Regulatory and legal framework: A regulatory driver can influence a beneficiaries’ demand, as witnessed in the water sector PES. A regulatory driver (along with a formal carbon trading system) could also boost Woodland and Peatland codes’ carbon prices and support growth. In response to “the challenge of ensuring permanent land management”, reported in a number of PES pilots, the Law Commission following public consultation recommended the introduction of conservation covenants as a statutory measure (Defra, 2016). Conservation covenants introduce a contractual / legal basis for PES payments offering more security in the long-term protection and benefit delivery (Defra, 2013). The Government has now published a consultation (closing on 22 March 2019) on plans to introduce legislation for conservation covenants in England (Defra, 2019)334. • The role of intermediaries: Intermediaries can help build trust between buyers and sellers and facilitate payments particularly where key stakeholders are geographically dispersed (Defra, 2013). The PES pilots showed that whilst identifying potential providers was not an issue, the negotiations on an appropriate renumeration were potentially challenging and that is where intermediaries were most critical. The type of organisation suited to taking the role of an intermediary can vary, however environmental knowledge, an understanding of how to access funding streams and skills in building trust were deemed essential (Defra, 2016). One of the PES pilots also made a distinction between the role of intermediaries in the initial stages of PES development - where their role is that of a facilitator- and that in later stages, where an intermediary would be needed to monitor and enforce the scheme. • “Planning for ecosystem services on a spatial basis” can facilitate PES (Defra, 2013; 2011335) by identifying opportunities for synergies between stakeholders in a spatially defined area. By doing so links can be drawn with existing partnerships (e.g. CaBa, Nature Improvement Areas and Local Nature Partnerships), that can “increase the efficiency and effectiveness of existing funding sources” (Defra, 2013). A place- based PES approach can also help attract and combine private and public sources of funding. For instance, the SCaMP pilot secured funding from the agri-environment schemes as well as funding from a private water company. The pilot also made use

333 Waylen, K. A., & Martin-Ortega, J. (2018). Surveying views on Payments for Ecosystem Services: Implications for environmental management and research. Ecosystem services, 29, 23-30. 334 Defra (2019) Open consultation: Conservation covenants https://www.gov.uk/government/consultations/conservation-covenants 335 Defra (2011). PES Barriers and Opportunities Report. 86

of the Woodland Carbon Code for measuring delivered benefits and facilitating payments to providers. In such cases, a challenge exists in ensuring additionality of the combined funding sources, and that “the public and private schemes do not have contradictory objectives” (Defra, 2013). • Increasing understanding of payment mechanism options. A majority of PES schemes have used fixed-price subsidies for participants, but some have explored alternative mechanisms such as reverse auctions and visitor payback schemes, with lessons emerging on their appropriateness in different contexts. a. Auction and reverse auction: The pilot project in the River Fowey, used a ‘reverse auction’ mechanism to distribute funds, meaning that farmers bid for grants (Defra, 2013). Day and Couldrick (2013) note this improved the cost efficiency of investments by 20-40% compared to a fixed-price mechanism, as it introduced competition between suppliers and involved lower administrative and transaction costs. It also offers the opportunity for the PES scheme to be scaled up and extended to a wider geographic area with minimal additional cost (Defra, 2013). However, the approach offers less certainty in the environmental outcomes and might be seen as more complicated by farmers who are requested to specify the minimum payment they are willing to accept (Illes et al., 2017). Therefore, the approach may be particularly useful in cases of “distributing funds for a single type of investment, particularly when the benefits of those investments can be estimated reasonably accurately without site- specific knowledge” and where “there are a large number of potential suppliers or providers” (Defra, 2013). Conversely, it will be less appropriate when implemented in an area with a smaller number of stakeholders who are less receptive / familiar to PES and where uncertainty exists in the estimation of benefits. b. Visitor payback mechanisms usually aim to collect small contributions from a large number of visitors (Nurture Lakeland, 2013)336. They are considered “suitable for a broad range of places such as National Parks, Areas of Outstanding Natural Beauty, and natural spaces where specific recreational activities occur” where visitors contribute financially to the maintenance and enhancement of a natural site (Defra, 2013). However, these need to be carefully designed for a particular area / recreation activity, which may involve a high start-up cost (Defra, 2016).

4.5.3 Biodiversity offsetting

The majority of lessons around the application of Biodiversity offsetting emerge from the Evaluation of 6 pilots funded by Defra between 2012-2014. The Evaluation report (Defra, 2014)337 and relevant literature (Baker et al., 2014338; Baker et al., 2018339) identified the following key challenges and lessons:

Challenges:

336 https://www.visitengland.com/sites/default/files/downloads/visitor_giving_helpsheets.pdf 337 Defra (2014). Evaluation of the Biodiversity Offsetting Pilot Programme. Defra project code: WC 1051. 338 Baker, J., Sheate, W.R., Papadopoulou, L., Bennett, T., Payne, D., Bull, J. (2014) Indicative costs of current compensation arrangements for biodiversity loss: illustrative case studies. DEFRA, London. 339 Baker, J., Papadopoulou, L. and Sheate, W.R. (2018) United Kingdom in Wende, W., Tucker, G. M., Quétier, F., Rayment, M., & Darbi, M. (Eds.). (2018). Biodiversity Offsets: European Perspectives on No Net Loss of Biodiversity and Ecosystem Services. Springer. 87

1. Technical challenges included identifying suitable offset sites, and the use of the biodiversity offsetting metrics to assess sites, and the impacts from development. a. Ecological expertise was necessary and somewhat lacking within local authorities. Natural England’s role in providing technical advice and accrediting offset providers and projects was welcomed, although due to the novelty of the approach, more active involvement and support from the Government and/or capacity building within local authorities would have been helpful. b. Challenges in the application of the Biodiversity offsetting metric related to the above lack of expertise but also a lack of clarity in some of the key terms provided in relevant Guidance. This resulted in varying interpretations of terms, such as, the management of offsets ‘in perpetuity’, which tend to be translated as a 20-30 year duration. All the potential providers had concerns about the requirement for long term management, which tended to be 20–25 years, and the reduction in flexibility this meant. They were also reticent to develop management plans with no assurance of receiving funding; as planning permission for the related development may be refused. Concerns were also raised on specific aspects of the assessment criteria and the use of multipliers in the biodiversity offsetting metric. A detailed assessment of the challenges in the use of the metric can be found in Defra (2014) and are also briefly discussed in Baker et al (2018). The updated metric published by Natural England in 2018340 goes some way in addressing these. 2. The pilots reported significant resource demands and constraints for local authorities, relating to: a. Set up costs: Each pilot area set up a biodiversity offsetting ‘strategy’ which depending on its complexity involved costs ranging from “a few days of time” to up to £13,000 (Defra, 2014). b. The development of a management plan identifying offsets and a habitat restoration and recreation plans (which both developers and offset providers were reluctant to take on) c. Ecological expertise (as seen above) d. Time spent in negotiations with developers (see below) 3. Lack of demand and (to some extent) provision of biodiversity offsets, linked to: a. Increased costs to address residual biodiversity loss made developers apprehensive: Compared to previous practice, the introduction of the metric and biodiversity offsetting presented higher standards and hence increased the costs of compensation for developers. A number of pilots noted that “costs for offsets were subject to significant negotiation between applicants and LPAs, with applicants refusing to meet full costs and not pursue biodiversity offsetting (and therefore no-net-loss) in many instances.” b. A perceived lack of support in planning policy (i.e. a legal grounding for biodiversity offsetting): The lack of a legal requirement along with an increased cost led to restricted take-up by developers. A number of pilots used section 106 legal agreements of the NPPF to try to legally ground offset agreements341. c. The uncertainty resulting from a lack of demand for offsets and a lack of certainty in the policy, led to limited interest by landowners in the provision of land suitable for offsetting. Landowners were also “reticent to develop

340 Natural England (2018) Defra Biodiversity Metric - Introduction to the Proposed Updated Metric (BD2020- 10) http://publications.naturalengland.org.uk/publication/6020204538888192 341 The Evaluation noted that “16 application were expected to result in s.106s including offsite compensation” (Defra, 2014). 88

management plans with no assurance of receiving funding; as planning permission for the related development may be refused.” (Baker et al., 2018)

Lessons: 4. The Biodiversity offsetting metric was found helpful as a tool to frame discussions around the impacts of development and increase the “visibility of biodiversity loss” (Baker et al., 2018): While few actual ‘offset’ projects were agreed or delivered (in terms of offsite habitat creation on land owned by a third party and funded by developer contributions), the metric was widely used in discussions with developers as a means of encouraging increased onsite mitigation and compensation. The pilots fed back a number of lessons (and some concerns) regarding the use of the metric (Defra, 2014) and the principles attached to it, which have been taken into consideration in Defra’s updated Biodiversity metric published in 2018342. • Capacity building and additional resources will be required in local authorities to address some of the technical challenges and resource constraints identified above (Defra, 2014). Further clarity on the roles and responsibilities of local and national government would also be helpful (Baker et al., 2018). • A market structure with intermediaries to facilitate the transactions, reduce costs and provide confidence to the market • An existing registry of offsets, similar to the ones available and reviewed in other mechanisms (e.g. Peatland Code Registry), could help streamline the process and offer offset providers and buyers certainty in the costs and related benefits. The Environment Bank, currently the only biodiversity offset broker in the UK, has developed an online platform to connect landowners and developers and facilitate the exchange. • A legal grounding for Biodiversity offsetting could support market liquidity and bring about benefits for biodiversity: The pilot evaluation, as well as literature and practice from other countries implementing biodiversity offsetting, suggested that the voluntary approach is not sufficient to generate demand that could achieve no net loss / net gain for biodiversity. In recognition of the above, the Government published a consultation considering options for introducing a net gain approach to biodiversity in England’s planning system343.

4.5.4 Other mechanisms A number of mechanisms are identified in the literature, and the challenges of their applications for environmental finance discussed. However, there is little evidence focussed specifically on the application of these mechanisms to finance biodiversity. Some of the challenges and lessons emerging from the use of other mechanisms for conservation finance are likely to be, to some extent, transferable to the case of biodiversity finance. Across the range of financial vehicles to support investment in conservation, some will be more appropriate than others depending on the project stage and investors’ appetite for risk. Currently debt and equity funds are the most commonly found financial vehicles used in conservation finance (and natural capital investment) as they facilitate pooling investment from multiple sources. At an early stage in a project, equity investment is likely more appropriate “due to the lack of proven or

342 Natural England (2018) Defra Biodiversity Metric - Introduction to the Proposed Updated Metric (BD2020- 10) http://publications.naturalengland.org.uk/publication/6020204538888192 343 https://consult.defra.gov.uk/land-use/net-gain/supporting_documents/netgainconsultationdocument.pdf

stable financial returns that are needed to pay a set interest rate on debt” (eftec, 2019)344. Direct investment (debt or equity) or through the use of green bonds is also found in the conservation investment market. There is extensive literature on the choice of appropriate financial vehicles with a helpful overview provided in Huwyler et al. (2016) and eftec (2019)345. A brief summary of the pros and cons of typical conservation finance vehicles is presented in 0.

Figure 12 Typical conservation finance vehicles (Taken from Huwyler et al., 2016)

The following list briefly presents the challenges most commonly found in wider environmental finance with specific references made to natural capital and green bonds, as areas that have recently experienced growth. Challenges and barriers to investment in conservation: • The lack of a “reliable and recognised revenue stream” and lack of evidence on return on investment, have been identified as key challenges in attracting investors in natural capital (Aldersgate Group, 2017; Defra, 2017). Returns on investment in natural capital, are frequently only a fraction of the actual benefits, some of which, such as benefits to biodiversity and wellbeing, are difficult to quantify (Aldersgate Group, 2017). The lack of evidence of financial returns impacts on investor confidence, making investments in natural capital more risky compared to investments in end-of-pipe solutions (Defra, 2017). Nonetheless, recent research by Credit Swiss and McKinsey shows that increasingly, investors seek opportunities to invest in projects that generate “both a market-rate financial return and a nonfinancial impact (i.e., environmental and/or social)”

344 Eftec (2019). Greater Manchester Natural Capital Investment Plan. Final Report from eftec, Environmental Finance and Countryscape to Greater Manchester Combined Authority (GMCA). 345 Although focussed on the Greater Manchester area, the report offers insights into potential investor categories in natural capital identifying the form and typical size of investment, expected returns, and readiness to invest.

(Huwyler et al.,2016)346. Research with UK private sector stakeholders who have invested in natural capital, also revealed that their motivations for investing extended beyond securing a return on investment, with CSR and expected operational improvements emerging as the primary incentives for private investors in natural capital projects (Defra, 2017)347. An exception were companies pursuing certification “whereby price premiums or access to new markets provides a definitive and quantifiable return.” Defra (2017) The results of this study (Defra, 2017) must be caveated on a small number of responses received and the fact that the majority of projects reviewed were financed by grants. 5. Lack of standardised framework for capturing and monitoring the impact on the environment. In the area of natural capital, the Natural Capital Accounting framework and Finance Supplement348 to the Natural Capital Protocol, address some of the wider issues though the issue of aspects of biodiversity not being captured remains (Defra, 2017). Monitoring of the impacts is essential to ensure that financing is directed at projects that yield conservation benefits (Huwyler et al., 2016). • Market structure, scale/replicability and liquidity: a. The existence of multiple beneficiaries causes issues around free-riding and investors may be discouraged from investing “as they feel that others are unfairly benefiting” (Aldersgate Group, 2017349; Defra, 2017). b. The small scale of current projects (eftec, 2019350; Aldersgate Group, 2017; Huwyler et al., 2016). Investors tend to favour larger projects, which can offer benefits that can more readily cover the cost involved in research, project identification and due diligence (Aldersgate Group, 2017) and are also large enough to stand alone as marketable investment products (Huwyler et al., 2016). Small scale projects, which are characteristic of the conservation finance market, tend to have “high transaction costs driven by a larger number of heterogeneous transactions” (Huwyler et al., 2016) c. The limited number of conservation projects which fulfil investors’ criteria, means high search costs for investors (Huwyler et al., 2016). The Ecosystem Marketplace (2016) also identified challenges faced by investors in conservation in “finding deals that meet their guidelines, including size, track record, and risk/return parameters”. What is more, a number of opportunities which do not fall in standardised investor processes for identifying opportunities, are likely to be completely missed (Huwyler et al., 2016). d. There is a regulatory burden on potential investments in natural capital linked to a range of regulatory requirements that apply across larger and smaller projects, including administrative burden, impacts assessments, reporting requirements etc. with increased cost and risk implications (Defra, 2017). e. The lack of sufficient assets to be used as collaterals, limits access to some key financing tools, such as debt finance (Aldersgate Group, 2017; Huwyler et al., 2016).

346 Huwyler, F., Käppeli, J., & Tobin, J. (2016). Conservation Finance From Niche to Mainstream: The Building of an Institutional Asset Class. Last modified January. 347 Defra (2017). Natural Capital Projects Review – Private Sector Investment Models and Scale Up. 348 Natural Capital Coalition (2017) Connecting Finance and Natural Capital: A Supplement to the Natural Capital Protocol’ 349 Aldersgate Group (2017). Increasing investment in natural capital. 350 Eftec (2019). Greater Manchester Natural Capital Investment Plan. 91

f. There is an opportunity cost in investment activities, with some stakeholders suggesting that investment in natural capital, for instance, is not providing sufficient incentives to outweigh opportunity costs of investments which could yield higher returns. • Lack of the appropriate mix of expertise/capacity. The novelty of this type of investment and range of factors to consider, means there is currently limited coverage of skills across conservation, investment and financial literacy within one organisation. Project developers frequently lack the skills to “bring projects to a stage of investment readiness” (Aldersgate Group, 2017), while overall “NGOs know how to evaluate environmental impacts, product developers and investors have ample experience in assessing the investability of particular assets” yet “neither is typically experienced in evaluating how to assess and balance risk, return, and impact” (Huwyler et al., 2016). The novelty of the market also means developers with a lack of track record which can also “impede the matching of project funding needs with experienced investment capital.” (Huwyler et al., 2016). Recommendations and enablers: A number of reports have suggested actions necessary to promote the use of other mechanisms for biodiversity finance. These include: 1. Conservation investment can be facilitated by bundling projects together to create larger investment opportunities, addressing the challenges related to scale (discussed above) and attracting investment from a wider range of beneficiaries. 2. A common framework for identifying and assessing the impacts of investment on biodiversity, similar to the one developed for Natural Capital Accounting, could support investor confidence and market development. (Defra, 2017) 3. Regulatory drivers and incentives ranging from tax relief to planning requirements, could drive investment. (Defra, 2017) 4. The Government can encourage investment in biodiversity in a number of ways from setting up dedicated investment funds to acting as a buyer of services and biodiversity benefits and introducing regulatory measures, such as the ones discussed above, to create a supportive financial environment for investment. (Huwyler et al., 2016; eftec, 2019) 5. Third party technical assistance and/or capacity building to ensure skills and competencies in identifying investable opportunities and developing robust investment cases in the first instance and successfully manage the project at a later stage (eftec, 2019). Coalitions across actors (and sectors) have also been created to support conservation investment, such as the Conservation Investment Accelerator. Similar initiatives to support and guide green investment have been developed to try to address the challenges associated with other IFMs (Ecosystem Marketplace, 2016)351.

4.5.5 Overarching challenges and lessons The challenges found across literature and practice relate to those discussed in Priority Action 2 and include challenges around incentivising the private sector to explore opportunities and new mechanisms available for funding for nature. Although each mechanism reviewed faces challenges that are linked to the design of the mechanism and its practical application, it is worth highlighting shared challenges and recognising lessons to be learned across these:

351 Ecosystem Marketplace (2016). State of Private Investment in Conservation 2016: A Landscape Assessment of an Emerging Market. 92

• Legal and institutional structures: A common lesson and barrier identified is the need to develop new and legal and institutional structures that can offer legitimacy, provide the necessary confidence in the policy, support actors and facilitate / enable new arrangements to be put in place, particularly in the outset. A facilitating factor can be incorporating new ideas and processes into existing institutional and regulatory arrangements and governance/organisational structures. For instance, following the slow take-up of biodiversity offsetting attributed to large extent the voluntary nature of the scheme (lack of policy grounding), the Government is now seeking to integrate biodiversity net gain in policy. At an institutional level, offsetting markets in both biodiversity and carbon require a supporting market structure to inspire investor confidence, while in PES, demonstrating how payments can work within existing legislation and land ownership as well as drawing links with other institutional partnerships was found helpful. • “Governance of the transition” (ten Kate et al., 2013): Ensuring that the adopted approach to governance takes account of the different roles, responsibilities and motivations across stakeholders recognising interests and incentives across levels. This information can be critical to identifying and addressing potential resistance and understanding “how to best catalyse change” and harness stakeholders’ potential. Tailored communication to potential beneficiaries / investors according to their particular needs and incentives is crucial to secure stakeholder buy-in in new financial mechanisms. The Natural Capital Coalition (CNN) also identified the “lack of enabling frameworks” as one of the key reasons that businesses are failing to invest at scale in the protection and restoration of the natural environment (NCC, nd)352. In considering what would be an appropriate governance framework the following should be taken into account: o Linking goals with global commitments across areas of biodiversity and climate change can drive progress (ten Kate et al., 2013) o Tools and guidance reviewed in previous sections as well as overarching business benefits reviewed (operational, reputational, access to new markets etc.) are also valid here. o Transparency and institutional credibility, as an aspect of governance, are key (ten Kate et al., 2013). • The opportunity, transition and ongoing costs should not be underestimated. Across literature there is recognition of the “costs associated with developing the institutional and procedural processes to establish an IFM” (CBD, 2012; ten Kate et al., 2013). These costs are also identified in key mechanisms, such as PES and biodiversity offsetting with reference to upfront set up costs, ongoing administrative and transaction costs and costs for monitoring and enforcement. • Importance of intermediaries across PES and offsetting: Intermediaries are key in bringing together buyers and suppliers, introducing legitimacy to new schemes and mechanisms and facilitating transactions in new markets (virtual or not). NGOs, private companies and public bodies alike can carry out the role of an intermediary (Illes et al., 2017). In the Upstream Thinking Initiative by South West Water, the Westcountry River Trust played a crucial role in “building a strong relationship with the farmers and gained a good understanding of the area. The trust built between WRT and farmers proved to be essential and greatly helped the operation and establishment of the

352 https://naturalcapitalcoalition.org/why-we-rebranded-ourselves-from-the-carbonneutral-company-to- natural-capital-partners/ 93

scheme” (Iles et al., 2017). Their role included identifying eligible locations for the scheme, organising payments and providing support to participants. • Raising awareness and building capacity will be required to different extents to address the range of technical challenges for those managing applications of IFMs and those participating in projects as providers of ecosystem services or beneficiaries / investors. • Partnership-working and new organisational structures or delivery bodies may be required to facilitate and deliver IFMs. Business, government and NGO coalitions and initiatives are already leading the way in carbon offsetting, natural capital and biodiversity related investments including the Carbon Pricing Leadership Coalition, Natural Capital Coalition, Valuing Nature and We Mean Business. • Market liquidity, scale of opportunities and revenue remain the key challenges in conservation finance. A range of mechanisms and financial vehicles are now available but need to be further developed and scaled-up. • Metrics and a credible system for measurement of impacts on biodiversity along with monitoring and reporting is key to avoid potential trade-offs, assess performance and ensure credibility and investor confidence: “Effective monitoring, reporting and verification is key to assessing performance and ensuring that the mechanisms deliver adequately on all fronts” (CBD, 2012).

As Colgan et al. (2017)353 note, there is “no single appropriate financing mechanism”, with the selection of the appropriate tool or mechanism dependent on several local factors, including local natural conditions and local governance (Colgan et al., 2017). No single tool or financing instrument will offer a silver bullet that addresses funding needs in contemporary natural resource management. Efforts need to be focused on identifying how these mechanisms “can best complement or build on existing initiatives and institutions in the UK, including existing legislation and policy mechanisms, with different land ownership and tenure arrangements, as well as existing site-specific management interventions” (Waylen et al., 2015)354.

353 Colgan, C. S., M. W. Beck, S. Narayan (2017). Financing Natural Infrastructure for Coastal Flood Damage Reduction. Lloyd’s Tercentenary Research Foundation, London. http://conservationgateway.org/ConservationPractices/Marine/crr/library/Documents/FinancingNaturalInfras tructureReport.pdf 354 Waylen, K., Howard, B., Kyle, C. and Martin-Ortega, J. (2015). Applying Payments for Ecosystem Services. https://ecosystemsknowledge.net/sites/default/files/wp- content/uploads/15%2005%2005%20PES%20REPORT%20Final.pdf 94

5 Priority Action 2 and 3 Workshop Note 5.1 Introduction

As part of the evaluation of Theme 2 – Putting people at the heart of the environment, an evaluation workshop was held in London on Wednesday the 27th March 2019. The main focus of the workshop was on Priority Actions 2 and 3 of Theme 2, respectively: the integration of biodiversity values in decision-making, and innovative mechanisms contributing to funding for nature. In addition, the workshop considered the role of evidence and knowledge sharing – Theme 4 of the Biodiversity Strategy – specifically in relation to Theme 2 Priority Actions 2 and 3. The workshop presented evidence and facilitated expert discussions on each of the above- mentioned Priority Actions. The workshop agenda can be found in Appendix 2. Findings from this workshop provide one of the evidence sources used to inform the evaluation. There were 12 participants at the workshop including experts from across academia, businesses, civil society organisations, Defra and its agencies. A list of participants can be found in Appendix 1. This Annex presents a summary of the workshop proceedings. It is structured in line with the agenda.

5.1.1 Workshop methodology The workshop elicited expert opinion using a Delphi-type approach, implemented as follows: 1. Prior to the workshop participants received an Evidence Pack which presented the existing evidence (from literature, data and evaluations) for each evaluation question. Participants were asked to complete a brief online survey providing their views on progress towards the Theme 2 objectives and identifying key facilitating and hindering factors. Participants were also asked to rate the confidence in their assessment. 2. The results of the survey, along with the emerging findings of the evidence review were briefly presented to participants at the workshop. Participants were then able to share, explain and discuss their opinions and the evidence. At the end of each workshop session participants were asked to re-score their responses to the questions on progress towards Theme 2 objectives. This workshop note presents the re-scored opinions of participants regarding questions on progress towards Theme 2 objectives, along with notes of the key discussion points and views across all aspects of the agenda, as well as group opinions on future priorities for Defra’s consideration. 5.2 Integrating biodiversity values into decision-making

5.2.1 The extent of integration Figure 13 presents the opinion of workshop participants on the extent to which biodiversity is integrated into decision making, provided separately for the public sector and for business. The scoring reflects the participants’ opinion following discussion at the workshop.

Are biodiversity values integrated into decision making? 12

0 No progress Minor Significant Substantial Don’t know High Medium Low progress progress progress Progress Confidence

Biodiversity values are being integrated into public sector decision-making Biodiversity values are being integrated into business decision-making

Figure 13 Are biodiversity values integrated into decision making? Rescored survey results (n=12)

5.2.1.1 Discussion on the extent of integration Biodiversity values and natural capital values The group raised the point, and were broadly in agreement that, biodiversity values are different to natural capital (or nature, environment, etc.) values; with biodiversity values considered to be narrower in scope. It was recognised that focus on integrating wider natural capital values may have indirect benefits for biodiversity. However, a number of participants expressed the view that if the focus is on integrating biodiversity, then it should be an explicit aim to integrate biodiversity values. Natural capital values were not considered good proxies for biodiversity. There is a risk that biodiversity will be side-lined if focus is on natural capital values. Whilst there is evidence on natural capital being considered in decision making; it is not clear the extent to which this is specifically considering biodiversity. Values, monetary values and assets The group recognised that biodiversity values do not necessarily equate to a monetary construct of value. It may therefore be preferable to use the expression ‘values of biodiversity’ rather than biodiversity values. It was noted that adequate consideration of the values of biodiversity may need an approach that does not seek to monetise those values. If one is too focussed on what can be valued, then the range of values of biodiversity considered can become very narrow. Instead it makes more sense to focus on the ‘asset’. This allows a more direct link, or representation, of what one is really trying to get at via biodiversity objectives: the assets. Some approaches to natural capital valuation/accounting do include such a direct link back to the state of the asset. Sectors Examples of participants’ awareness of business and other organisations engaging with biodiversity issues and integrating biodiversity into decision making were given. The sectors identified included

water, forestry, energy companies and other large landholders. Notably, those sectors are likely to have the biggest impacts on biodiversity. However, it was cautioned that the known examples may not be representative of all actors in a particular sector, but rather represent those most keen to take a lead on sustainability issues. It was also noted that progress across these known examples varies – from those setting targets for biodiversity impact mitigation, to those just starting to try to measure their impacts. It was questioned what the judgement criteria would be for ‘adequate integration’ of biodiversity into decision making – is undertaking monitoring and assessment sufficient? It was suggested that the number of processes that take economic values of biodiversity into considered was likely small; whereas others (e.g. water companies) may more routinely implicitly consider biodiversity. The extent of meaningful progress was questioned. It was pointed out that some of the larger property developers already integrate biodiversity via efforts to deliver biodiversity ‘net gain’ through their developments. The Biodiversity Net Gain Consultation Impact Assessment (Defra, 2018)355 states that “Of the nine largest housing developers (which together account for 52% of residential completions), six have some form of habitat mitigation and creation policy, ranging from partial to comprehensive. These six account for 29% of residential completions”. The water industry has had a massive step change over the last three or four cycles. References to natural capital are now very common in water company business plans and is used to justify action regarding both biodiversity and natural capital / catchment approach. Industry jointly funds research via UKWIR and is developing a sector guide on accounting for natural capital. However, there is a wide range of progress across companies, with regards both to the approaches and extent of integration. Explicit consideration of biodiversity is lagging – the sector is looking at metrics, but it is much harder to deal with. Public sector In Government, members of the break out group reported that consideration of natural capital (and hence biodiversity by proxy) via Regulatory Impact Assessments remained poor. It was pointed out that Defra’s Biodiversity Net Gain Consultation Impact Assessment does not provide any monetised benefits; hence it was questioned whether other Departments (or organisations) could be expected to consider monetary values of biodiversity if Defra is not able to take a lead in doing so. With regard to Local Authorities (LAs), it was suggested that there are only a few examples of LAs who appear to be active on biodiversity net gain. In general, LAs do not employ ecologists and may only have access to a shared ecologist. Whilst LAs have a key role to play on biodiversity, this lack of staff ecologists can be seen as an indicator that biodiversity is not a priority for them. A number of Government-backed projects and major economic and transport initiatives are thought to be incorporating biodiversity considerations into their decision making. For example, there are biodiversity-related aspirations for the Oxford-Cambridge Corridor356, and HS2357 has an element of biodiversity no net less embedded in it.

355 https://consult.defra.gov.uk/land-use/net- gain/supporting_documents/181121%20%20Biodiversity%20Net%20Gain%20Consultation%20IA%20FINAL%2 0for%20publication.pdf 356 https://www.gov.uk/government/publications/helping-the-cambridge-milton-keynes-oxford-corridor- reach-its-potential 357 https://www.hs2.org.uk/

It was noted by one participant that the National Infrastructure Commission (NIC) – the Government’s advisor on major long-term infrastructure challenges – do not consider biodiversity opportunities and impacts as part of their advisory remit358. Whilst the Commission have reportedly shown interest, and have discussed with Natural England the potential role of biodiversity metrics, this has not been taken forward.

Green market opportunities 12 10 8 6 4 2 0 Strongly Slightly Slightly Strongly High Medium Low disagree disagree agree agree Agreement Confidence

Businesses and organisations have increased awareness of green market opportunities Businesses and organisations are increasingly taking-up green market opportunities

Figure 14 Awareness and take-up of green market opportunities. Rescored survey results (n=12)

5.2.2 Factors influencing integration of biodiversity considerations by businesses Recognising the relevance of business relationships with biodiversity Due to global supply chains, most businesses are a few steps away from biodiversity, which makes it difficult for them to understand and identify the links between biodiversity and their business. Those with a direct relationship with biodiversity, such as businesses in extraction, water and land management, have proven more likely to integrate biodiversity considerations in their business planning. For the rest, integration of biodiversity considerations becomes more about supply chain management. Regulation Regulation is needed in order for biodiversity considerations to be integrated into business decision making at the speed and scale that is required to halt biodiversity loss. There was overall agreement across workshop participants that voluntary approaches will not work i.e. they are insufficient. Looking at examples (found in literature and/or shared by businesses) where biodiversity has successfully been integrated in decision making, these frequently refer to the extractive industry and

358 Post-workshop note: The Natural Capital Committee have previously recommended that the National Infrastructure Commission (NIC) should incorporate natural capital into long term infrastructure plans. Defra responded noting that they strive for all publicly funded infrastructure investments to make a positive contribution to protecting and enhancing our natural environment. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/585429/ ncc-annual-report-2017.pdf 98

the restoration of extraction sites. One of the participants highlighted that the reason this has worked well is because it is built into the planning process and backed up by regulation. Regulation can also help with levelling the playing field, ensuring there is buy-in by multiple actors, and engaging businesses with less direct links to land and biodiversity. Supermarkets were brought up as an example by one of the participants, highlighting some positive private initiatives which could usefully be ‘encouraged’ further by regulation. If Defra were to suggest that regulation will be introduced in the near future that requires businesses to consider biodiversity net gain, then that would incentivise businesses to look for solutions. Facilitating business action/investment through collaborations A number of participants suggested that there is an issue around the ability of smaller businesses to act. Aggregation of effort is key to enable such action, as most small businesses do not have the capacity to act on their own, but would be able to contribute to something bigger. This would also help to deliver biodiversity benefits of a more meaningful scale. To enable such action, a systems approach is needed, breaking away from people working in siloes and bringing actors together linked into a bigger vision. An example mentioned that facilitates aggregation of business effort was Business Improvement Districts (BIDs) – collaborations of local businesses in a geographical area investing together to improve the environment. The role of BIDs was strengthened in 2014 following proposals taken forward by the Department for Communities and Local Government (DCLG, 2015)359, while reviews and evaluations (e.g. Regeneration Committee, 2016360) of specific BIDs have indicated their strengths and areas for further improvement. The Landscape Enterprise Network (LENs) programme was mentioned by one of the participants. The LEN pilot in the Hampshire Avon catchment was presented as a successful example of a place- based collaborative approach that encouraged private sector investment by Nestle and Tesco, amongst others. The pilot was also referenced in the 25YEP with a note to further explore how take- up of such initiatives can be encouraged, and was included in a wider review of case studies by CISL aiming to provide businesses with compelling cases for action on natural capital (3keel, 2018361; CISL, 2018362). This example is also useful in demonstrating good communication by businesses on what worked well. Collaborations could be encouraged through catchment and landscape scale approaches. For instance, water companies already come together to jointly commission research. Other players in the catchment areas could piggyback on this. In each of the above examples, the premise is that environmental investment can be incentivised by an anticipated commercial return i.e. there is a link with some products with commercial value. Such a link is considered a pre-requisite. Achieving a meaningful scale of impact

359 DCLG (2015) Review of Business Improvement Districts: Consultation. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/418008/ BIDs_Consultation_Document.pdf 360 Regeneration Committee (2016). Business Improvement Districts: The role of BIDs in London’s regeneration. https://www.london.gov.uk/sites/default/files/final_bids_report_0.pdf 361 https://www.3keel.com/3keel-referenced-in-25-year-environment-strategy/ 362 University of Cambridge Institute for Sustainability Leadership [CISL] (2018). Modelling better business. Nestlé trials natural capital premium with UK dairy farmers. Cambridge, UK: the Cambridge Institute for Sustainability Leadership. Cambridge, UK: the Cambridge Institute for Sustainability Leadership. 99

With reference to net gain and housing development, one participant noted that industry is too small to have a positive impact on declining biodiversity trends. What was proposed in the group discussion was a tariff or a requirement through a Section 106 agreement to contribute to a pot of money – by pooling funds, larger more significant investments in biodiversity could be made. The decision on how to spend that to provide the best impact for biodiversity at scale would then be made in consultation with local stakeholders, such as the environmental NGOs. What is missing to enable these collaborative solutions is the mechanisms and brokers that will bring these businesses together. The role of a broker could be taken by either government or NGOs. At the moment there is no environmental framework to roll this out. An institutional shift would be required. The lack of ambition and environmental governance at a large scale was mentioned as a limiting factor. This is demonstrated in pilots and schemes such as the Community Resilience Pathfinders or Nature Improvement Areas, where there is no approach rolled out at a national scale following the end of the testing period. One of the participants noted that further involvement of the private sector in such pilots and schemes, either in a stakeholder advisory capacity or in a review of the findings and lessons emerging, could help identify not only what works but what is investable. However, a number of participants expressed the view that schemes and pilots offer lessons that are not always applicable across sectors and that more attention is required in identifying links across industries and translating findings so that they are relevant to a wider audience. Leadership Examples exists of larger businesses that have stepped up and provided positive leadership – such as Sky’s financial contribution to WWF in support of marine reserves in North Devon. There was overall agreement in the group, of a need to better understand and encourage such leadership. At the moment it can be a ‘hit and miss’, in the sense that such funding may be driven by a person within the organisation and funding may end up drying up with a change in personnel. It is also a supporting factor that – important as it may be – it is difficult to replicate or scale up. Assessment tools With reference to the plethora of tools and approaches available to businesses creating confusion on which to choose, one of the participants noted that some of the approaches can also be competing. The example provided referred to the approaches available for integrating natural capital; the Natural Capital Protocol and the approach promoted by the Natural Capital Committee. Despite the number of tools available there is a short supply of data to inform these, which also tend to be costly to obtain and may require expertise that lies beyond the business skillset.

5.2.3 Factors influencing integration of biodiversity for the ‘public sector’ The following presents the points raised during break-out group discussions. Understanding the positive role of biodiversity and the environment in general The LEED toolkit363 was referenced by a member of the break out group. It was explained that LEED is a tool that was used by Local Enterprise Partnerships (LEPs) when writing their ‘growth plans’. The aim of LEED was to present the opportunities (as opposed to limitations) the environment could offer economies. The pilots were relatively successful, but LEP growth plans more widely did not seem to successfully integrate the environment in this way. LEPs are currently drafting their ‘local industrial strategies’ – however they appear to only be thinking of the environment as a constraint.

363 https://ecosystemsknowledge.net/apply/local-economy/LEED 100

They do not recognise the possible positive synergies between the environment and economy. Any consideration of the environment is just a short ‘blot on’ at the end. The group broadly agreed that there is a potential role for Defra to better educate decision makers on the role of biodiversity and the environment. Politics, policy and short term competing priorities The group broadly agreed that there is a need for strong political leadership and will to integrate biodiversity, as appears to have been the case for biodiversity net gain. Question marks remain on whether integration of biodiversity is anything more than a ‘nice to have’ in most policy areas. Demonstrating the benefits of biodiversity for people – and hence stakeholders and voters – is difficult. Other priority issues evolve and change for more quickly and hence require more immediate attention. An example was provided of the Northern Distributor Road, Norwich: a break-out group participant suggested that the new road appears to have a lot of public support, despite its expected negative impacts on biodiversity, which demonstrates that people are more concerned about addressing their immediate transport priorities than protecting biodiversity. A number of group participants suggested that Defra alone cannot achieve the Strategy’s biodiversity objectives. It is good that the 25YEP is a Government plan and not just a Defra plan, as it puts responsibility on wider Government to integrate environmental issues. However, it was suggested that Government operates in silos, as does policy discourse in general. There are housing issues, health issues, etc., all led by different Departments with their own policy priority targets. This was thought to limit the extent to which other departments may address their responsibilities to the 25YEP. To address the issue of competing priorities, rather than Defra approaching other Departments with requests to account for biodiversity, it was suggested that a more solution-based approach could be taken. For example, demonstrating that local housing development needs might be more rapidly met (i.e. proposals receive approval faster) if developers give greater consideration to issues such as green infrastructure. Another example: there is evidence that green infrastructure can improve health and wellbeing – such evidence can be used to understand how green infrastructure might be used by other Departments to delivery public health targets or labour productivity targets. Defra need to better understand what the priorities of other Departments are and the potential positive role of the environment, and engage on that basis. Biodiversity concept/definition It was agreed that biodiversity remains a confusing term. Even within this workshop or within Defra there will no doubt be countless different definitions of the terms and of what it means or how one can reflect it in decision making. Defra should better consider how biodiversity is reflected in natural capital approaches and give attention to the sort of indicators and quality of habitats and assets being targeted. Defra could work to better articulate the links between the biodiversity strategy and wider policy (both Defra policy and other Departments), so that the concepts and relevance are better understood. Insufficient obligation to adequately assess environmental impact in Regulatory Impact Assessments The role of the Green book and Impact Assessments (IAs) was discussed. It was reported that despite changes to the Green Book that enhance approaches and requirements to address environmental impacts, their treatment remains poor. This is the case in Defra and other Departments. It was noted that IAs have to be signed off by the Regulatory Policy Committee (RPC), with a key point being the

101

sufficiency of assessment of impacts on small businesses. However, there is no similar level of scrutiny on the assessment of environmental impacts, which do not appear to be a key concern of the RPC. This issue has been discussed with the RPC before. If there was significant RPC-type scrutiny of environmental impacts this would be a game changer. A lack of obligations or incentives There appears to be a lack of targets or other incentives to motivate public sector decision makers to integrate biodiversity. For example, the NPPF places targets on local government in terms of housing numbers, but no such targets exist for biodiversity (or the wider environment).

5.2.4 Priorities for Defra action

Business Public sector

Priority Votes Priority Votes 364 365 Regulation/Statutory requirements 9 Incentives, such as targets or 8 for business to better address metrics that can be embedded in biodiversity issues policy Funding cycles with greater longevity 8 Stronger requirement to consider 7 and a longer-term framework for biodiversity in Impact piloting approaches Assessments e.g. via the RPC Place-based mechanisms for 2 Better communication on 2 biodiversity-business win-win biodiversity strategy targets – actions/investment indicators, quality, assets that [This could be facilitated by a local can be used in decision making pot where businesses contribute. A prerequisite would be a process for agreeing priorities at a spatial level] Clear expression / steer on what it is 2 Working with other policies 4 we want for biodiversity, setting clear /departments to understand their goals, targets and identifying priorities and the positive role opportunities for businesses. biodiversity can play in delivering Better communicating and planning 2 them from Defra (overall) and more specifically with reference to lessons emerging from pilots and trials Plenary feedback Across the two groups – business and public sector – priority issues broadly related to (i) better communication, and (ii) stronger incentives. It was noted that the 25YEP provides various longer term targets, which hopefully will provide for some level of commitment across Government and provide improved certainty for businesses. However, it was thought to require further elaboration and an action plan with clear translation of responsibilities; Who is responsible for delivering what by when.

364 A total of 23 votes were received across 12 participants, where each was allowed 2 votes which could be cast on the same option. 365 A total of 21 votes were received across 12 participants, where each was allowed 2 votes which could be cast on the same option. 102

It was noted that ‘more tools and guidance’ was not raised as a priority to improve integration. However, points on communication, understanding and better use of existing tools were noted. It was pointed out that there is a plethora of tools; more is not the answer. It was suggested that developing a better understanding of what we need tools and guidance for, would be a more appropriate next step. Better understanding of what any given organisation needs to do, what good biodiversity looks like, etc., is needed before one can know what tools are needed.

Tools and Guidance 7 6 5 4 3 2 1 0 Strongly Slightly Slightly Strongly Don’t High Medium Low disagree disagree agree agree know Agreement Confidence

Effective guidance and tools are available to support the assessment and integration of biodiversity values in public sector decision-making

Effective guidance and tools are available to support businesses in the assessment and integration of biodiversity values in decision-making

Figure 15 Availability of effective guidance and tools. Rescored survey results (n=12)

5.3 Innovative financing mechanisms

Figure 16 presents the opinion of workshop participants on the extent to which innovative financing mechanisms are contribution to funding for nature. The scoring reflects the participants’ opinion following discussion at the workshop. Figure 17 presents participants’ level of confidence in the above responses.

103

Contribution to levels of funding for nature 12 10 8 6 4 2 0 Payments for Biodiversity Voluntary Environmental Visitor Payback Financial ecosystem offsets carbon marketstaxes, fees and Schemes instruments services charges e.g. Green bonds

No contribution Minor contribution Significant contribution Substantial contribution Don’t know

Figure 16 IFM contribution to levels of funding for nature. Rescored survey results (n=11)

Confidence levels

Financial instruments e.g. Green bonds

Visitor Payback Schemes

Environmental taxes, fees and charges

Voluntary carbon markets

Biodiversity offsets

Payments for ecosystem services

0 2 4 6 8 10 12

Confidence High Confidence Medium Confidence Low

Figure 17 Respondents’ level of confidence in the responses provided to the question on IFM contribution (presented in Figure A1.4) (n=11)

5.3.1 Discussion on the extent of contribution Additional sources of innovative funds not included in the IFM evidence review It was suggested that the following sources of resources were relevant, despite not being included in the evaluation’s definition of Innovative Financing Mechanisms (IFMs), and could be further exploited to support biodiversity: • Voluntary actions and initiatives, where people give up their time (as opposed to money).

104

• Charitable / philanthropic donations. References were made to impact investment with the Big Issue brought up as an example of an impact investment portfolio of around £100 million. It was questioned whether there are similar foundations with a focus on biodiversity. It was suggested that philanthropic investment from ultra-high net worth individuals could be considered – it was questioned whether this part of the market had been tapped into for biodiversity. • Crowd funding: it was suggested that crowd funding is an IFM that is not being tapped into for biodiversity. Crowd funding might be a way of accessing smaller investors who may be more open to small and innovative investment projects. Scale of funding from IFMs CAP Pillar 2: It was noted that CAP Pillar 2 payments are a type of PES scheme. They are ‘the’ major contributor of funds for biodiversity. It was suggested that the evaluation should be clear that this is not considered within the definition of IFM PES. Taxes, fees & charges: It was suggested that fees and charges have more of an impact than taxes. It was noted that taxes are not hypothecated. However, a wider range of environmental taxes and charges may be relevant depending on how narrow a definition of biodiversity is adopted. These could for instance include landfill taxes, levies and other. It was suggested that information on relevant taxes might be available via Policy Instruments for the Environment PINE (OECD), which includes a lot of entries are from Defra, HMRC etc. Green bonds: It was noted that the UK green bond market is worth billions; however very little (if any) of that is related to biodiversity and nature. One participant argued that green bonds did not generate any additional investment than would have been made available via regular bonds – that participant viewed green bonds as ‘green washing’, in the sense that they are not encouraging any greater environmental benefit than would have occurred anyway. Despite the relatively small contribution of the green bond market (for biodiversity) to date, participants agreed there is great potential, but a number of barriers in accessing it. Biodiversity funding in general: More generally, one participated noted that the same suit of IFMs have been talked about for the last 7/8 years, with not a lot of progress to show for it. There is a lot of money in traditional sources e.g. the CAP, environmental liability directive etc., but it is not spent very well. A number of participants agreed with this sentiment, suggesting that there is an opportunity to think about how to better channel existing (and IFM) money rather than simply pursuing more/new sources of funding.

5.3.2 Discussion on factors influencing the extent of contribution High uncertainty and risk It was generally agreed that biodiversity investment opportunities are characterised by high uncertainty, lack of knowledge around potential risks and a relatively low return on investment – this combination of high risk and low return is unconducive to investment. It was suggested that reducing uncertainty/risk in something that has not been tried and tested, requires long term thinking, holding open discussions across public and private sector to jointly address uncertainty, and publicising success stories. An alternative option is sharing the risk through blended public-private finance, or investment subsidies, whereby the regulator bears more of the risk and enables a higher rate of return to be made by investors. It was suggested that the long term nature of many biodiversity projects (and hence investments) is problematic – increasing the risk. There is a need to address risks associated with such long term

105

investments. There may be a role for Government policy to provide greater long term certainty. The 25YEP may be the first such opportunity to provide longer term policy signals. Size of investment The primary barrier in investment in biodiversity is the small value of investment required. I.e. it has to be big projects, it would be difficult to finance pilots that way. Participants across the group agreed that the supply of projects in biodiversity does not satisfy the scale of investment needed to access such financing. Institutional investors, as well as the majority of private investors, require an investment much greater in size to reduce the uncertainty or increase the return and make the risk worthwhile. Effort needs to put into the pooling or bundling of biodiversity investment opportunities in order to reach the scale demanded of institutional investors. By way of example, a participant suggested that working at a landscape or catchment scale may provide an opportunity to identify a wider range of issues that an investment could address increasing the potential scale of the opportunity and its returns. It was suggested that incentives are needed if we want land managers to work together to address landscape scale issues. Accessing smaller investors It was suggested that smaller investors may be more open to small-scale investments and more open to new thinking (i.e. untested projects) than large investors. Such investors are not really targeted. Crowd sourcing may provide an opportunity to target such investors (there are examples of such crowd sourcing platforms in other sectors e.g. for raising capital from retail investors for small developers). CSR marketing It was suggested that biodiversity objectives and investment opportunities could be better linked to frameworks such as the Sustainable Development Goals. This might help to make biodiversity investments more relatable to business or others trying to achieve particular goals or solve particular problems (e.g. Corporate CSR goals, philanthropic institution objectives). Lack of innovation and coordination of biodiversity actions It was suggested that there is a lack of innovation when seeking to tackle root causes of biodiversity problems. One participant noted that investment in the environment tends to be focused on avoiding one-off negative incidents rather than addressing more systemic issues. Root causes are often big and outside of the control of any given organisation – so there is a tendency for organisations to focus back on that they can more readily tackle. Suggested solutions included: Bringing in new thinking via organisations not commonly involved in biodiversity projects may help to bring more innovation. Bringing in the right people with the right skills to help organisations deal with setting up projects and finance on a larger scale. It was widely agreed that there is a lack of coordination of biodiversity (and wider natural environment) investment across the Defra family and other players (as indicated by investment mapping actions undertaken by the Landscape Pioneer). Better coordination may help existing funders to better target root causes, and make more effective use of existing funds. There is a need for leadership and a shared vision to drive improvements in cooperation and overcome issues such as unaligned funding cycles between organisations, or expenditure planning undertaken on a short term (e.g. one year) basis. There does not appear to be any mechanism or existing leaders who can do this area-based coordination. There may be an opportunity for Defra to

106

take this role. One of the participants proposed a combined cross-government (i.e. coordinated) fund for biodiversity. Other options raised for their potential to be used act as conduits for improve coordination were Local Natural Capital Plans, Neighbourhood plans and Area Integrated Plans. Lack of monitoring and understanding about successful biodiversity investment There is a lack of monitoring of expenditure and private initiatives. A number of businesses are taking actions but there is no recording of that effort. We don’t know what they are doing, where or how much innovative financing they raised. There needs to be a way to better identify, record and work with companies to track what is happening and to share what works and provide examples and guidance, taking into consideration commercial sensitivities. 5.4 Priorities for Defra action

Priority Votes 366 More effective, co-ordinated use of biodiversity funds 9 i) Defra-family: e.g. via shared priorities, joint business planning, Area Investment Plan (AIPs)) ii) Wider Defra + non-Defra – geographically defined coordination of biodiversity investment Public finance support i.e. public input to enable greater returns on private funds – 5 addressing high risk, low return issue Target smaller, more ‘nimble’ investors e.g. Crowd funding platforms for 3 biodiversity Work to address the issue of project scale, incentivising collaboration to address 3 major environment issues Explore ways for Natural Capital / biodiversity to piggyback (seek win-win) on 0 successful climate finance (i.e. attach biodiversity objectives to climate finance) Shift to joint (investors/government) long term thinking to improve investment 0 certainty – leverage the 25YEP and SDGs Longer term / more widespread monitoring of use of IFMs and of investment 0 outcomes and lessons Longer term business planning cycle 0

5.5 Evidence and knowledge sharing

Participants to the workshop thought that the issue is not so much around sharing of information, rather than the availability of data on which to base decision-making. What is also missing is a lack of familiarity on how to apply tools and knowledge and transform these into practice. A number of national monitoring schemes exist, the majority of which make use of existing volunteer networks, predominantly monitoring species and reporting on UK and wider European goals. There needs to be a better understanding of how the private sector use such monitoring data and where monitoring gaps exist that could be filled with strategic, targeted investment. Major gaps exist at a smaller spatial scale.

366 A total of 20 votes were received across 10 participants, where each was allowed 2 votes which could be casted on the same option. 107

There is also a lot of uncertainty in funding allocation and as to the extent that this investment is directed towards biodiversity per se. Advance sharing of funding priorities over a suitable time horizon would be beneficial for businesses and key stakeholders.

108

5.6 Appendix 1: Workshop participant list

Name Organisation Breakout group

1. Matt Smith JNCC Business

2. Dr Jo Traill-Thomson Natural England Business

3. Dr Patricia Rice Natural England Public sector

4. Thomas Harle Natural England Public sector

5. Alastair Johnson Defra Public sector

6. Naomi Mervin Forestry Commission Public sector

7. Paul De Ornellas WWF Public sector

8. Dr Katharine Bolt RSPB Business

9. Dr Steven Smith AECOM Business

10. Jonathan Westlake Thames Water Business

11. James Peacock EnTrade Business

12. Dr Cath Tayleur CISL Business

109

5.7 Appendix 2: Evaluation workshop agenda

Date and time: 27 March 2019, 10:30 – 14:30 Location: ICF London Office, 33 Cannon Street, London, EC4M 5SB Rooms 604 and 606

Session Time Welcome tea/coffee 10:00 1. Introduction 10:30 • Introduction to the evaluation • Agenda and objectives of the day • Roundtable introductions 2. Integrating biodiversity values into decision-making 10:45 a. Presentation of emerging Evidence Pack findings and pre-workshop survey results. b. Plenary: Are nature values better integrated into decision making? Discussion of 10:50 progress and ‘scoring’ opinions. Rescore survey opinions. c. Breakout session: Workshop participants break out in 2 groups. The first group 11:10 discusses biodiversity integration with reference to business decision-making and the second group with reference to public sector decision-making. Business Group • What are the factors that have supported the integration of biodiversity values into Business decision-making? • What are the factors that have hindered the integration of biodiversity values into Business decision-making? • What are the top five things Defra should focus on to support businesses in better integrating biodiversity into their decision-making going forwards? Public sector Group • What are the factors that have supported the integration of biodiversity values into public sector decision-making? • What are the factors that have hindered the integration of biodiversity values into public sector decision-making? • What are the top five things Defra should focus on to support public sector in better integrating biodiversity into their decision-making going forwards? d. Plenary discussion: 5 minute feedback of discussion by each group, by group 12:00 participants, followed by discussion on cross-cutting issues. Participants indicate their priorities for the Defra actions presented [sticker vote]

Lunch break 12:30 3. Innovative financing mechanisms (plenary) 13:00 a. Presentation of emerging Evidence Pack findings and pre-workshop survey results. b. Plenary: Are innovative financing mechanisms making a meaningful contribution 13:05 to funding for nature? Discussion of financing mechanisms’ contribution and ‘scoring’ opinions. Rescore survey opinions. c. What are the factors supporting the use of innovative financing mechanisms? 13:20 d. What are the factors hindering the use of innovative financing mechanisms? 110

e. What are the top five things Defra can do to support take-up of innovative 14:00 financing mechanisms? Participants indicate their priorities for the Defra actions presented [sticker vote] 4. Evidence and knowledge sharing (plenary) 14:15 a. Presentation of Evidence Pack findings and pre-workshop survey results. b. How can we best share evidence and knowledge across stakeholders moving 14:20 forwards? c. What should the priorities be for Defra to improve evidence and knowledge- sharing? Thank you and close 14:30

111

Evaluation of Biodiversity 2020

112