Published March 2018 Natural Capital Investment Plan for Surrey 2 Natural Capital Investment Plan for Surrey Authors: Finally we would like to thank the following for their contributions • Sarah Jane Chimbwandira to the Plan: • Mark Pearson • Paul Wickham • Jim Jones, SWT & Jon Stokes, The Tree Council (the ’Real’ Hedge Fund model) Acknowledgements • Antony Williams, Propeller Associates We would like to thank the Surrey (the business engagement model) Nature Partnership Board members • Chris Stanton, Guildford Borough for their comments and support. Council (local authority engagement We would also like to thank the with natural capital) following who have kindly provided • Matthew Woodcock, comments on this document at Forestry Commission various times during its preparation: (information on optimising • Dan Barwick, Estelle Bailey, Mike Surrey’s Biomass Resources) Packer, Simon Petley, Kevan Jones, • Alistair Yeomans, Peter Young, Paul Leinster, Paul Sylva Foundation (NaturEtrade) Mackie, Roger Wild, Mike Waite, Andrew Jamieson, Bruce Howard, • Bill Biddell, Hampton Estate (business Paul Krause, Richard Murphy. led investment funds) • The Way Design (design and printing) All images © Jon Hawkins unless stated. This page © Marcus Wehrle Natural Capital Investment Plan for Surrey 3 Contents Foreword 04 Executive Summary 05 Chapter 1 Introduction 06 Chapter 2 Surrey’s Natural Capital Approach 08 Chapter 3 Objectives of the Natural Capital 11 Investment Plan for Surrey Chapter 4 Taking Action: a transformative approach 12 – Role of SyNP in driving transformation in natural capital investment 12 Chapter 5 How investments will be made & 15 Opportunities for Investors Capital Investment 16 – Community led investment funds 16 – The ‘Real’ Hedge Fund 17 – Business led investment funds 18 – Guildford Borough Council Rural Economic Strategy 19 – Optimising Surrey’s Biomass Resources 20 – Hampton Estate (diversification, micro-businesses) 21 – Large scale equity and debt funds 21 – Surrey’s Natural Capital Investment Fund 22 Revenue Flow 22 – Payments for Ecosystem Services 23 Chapter 6 Where, and which, assets will be prioritised for investment? 24 Chapter 7 Implementation 2018 – 2023 27 Appendices Appendix 1 Making It Happen – Progress 2015 – 2017 30 Appendix 2 Strategic Priorities 31 Appendix 3 Implementation Activities for 2018 – 2023 32 Appendix 4 Evidence development for NCIP 34 Appendix 5 Investment Approach and Principles 34 Appendix 6 Project Assessment Framework (financial) 36 Appendix 7 Worked example for developing 38 investment products – woodlands 4 Natural Capital Investment Plan for Surrey Foreword This Plan is a follow on companion to the previously published naturally richer: A Natural Capital Investment Strategy for Surrey. This Natural Capital Investment Plan To put the development and maintenance Surrey’s natural capital approach set is a practical, yet visionary, document. of Surrey’s natural assets at the true out in this Plan shows that an integrated The Plan was heralded two years ago heart of economic and social planning and inclusive approach to sustainable by the publication of naturally richer: A is a big step. It depends on redressing economic prosperity, including investment Natural Capital Investment Strategy for the balance between public and private in natural capital, can start now. The Surrey. Since then much has happened to investment in accordance with the daily Plan lists imaginative ways to invest in support Surrey’s astute recognition that benefits (‘ecosystem services’) and the natural capital, ranging from community- new investment flows into natural capital long-term asset value (‘natural capital’) led funds, through local funds, to fully must be mobilised. The Government re- that both public and private interests commercial investment products, appointed the Natural Capital Committee enjoy. Public investment can be better depending on the maturity of the market. (NCC) (until at least 2020), and then asked directed to secure public benefit (not Combined with inspirational examples them to advise on the now published 25 least in farming) but finding mechanisms like the ‘Real’ Hedge Fund this Plan Year Environment Plan (25YEP). for private investment to take the lead is an effective call to action which all Alongside this the concept of public is the biggest challenge. Many receive stakeholders must heed. It provides the money for public goods has been benefits from natural assets without framework within which innovative and espoused by ministers, not least in paying anything, and as a result these bespoke solutions can be designed – underpinning a new Agriculture Act, assets are grossly underfunded. Yet local context and local community required to restructure farm payments there is increasing capital available and engagement being critical. It does so in a to replace the EU Common Agricultural a willingness to invest in natural capital way that can be replicated and scaled up. Policy. This concept is equally applicable markets, as soon as the risks and returns The Plan depends on more proactive across all natural capital assets to deliver can be crystallised. Early pioneers, as dialogue with Surrey’s two Local enhanced value. signposted by this Plan, will be at the Enterprise Partnerships, its Local forefront of these new natural capital- With similar prescience to the Investment Authorities, businesses and communities. based investment vehicles. Strategy, this Plan sets out tangible routes It does not shy away from the to create and maintain healthy natural A rapid transition from one-off examples considerable challenge ahead, not least assets in Surrey over the next 25 years. to a systemic approach is vital to in developing an investible project It should promote informed dialogue, confidently secure benefits in the long pipeline. The experience shared by Surrey as well as lead to a clear initial 5 year term. Hopefully Government will act publishing this plan, and future examples implementation programme to 2023. decisively to accelerate this process. The of its implementation, will help inform The Plan reflects the NCC’s recommended only unfulfilled recommendation of the national policy makers. Further policy approach, tailored to reflect the specific NCC was for legislation to underpin the and regulatory action to enable and needs, opportunities and priorities in 25YEP. This would provide credibility expand natural capital investment will be Surrey. The evidence amassed through and investment grade projects at scale, inevitable to deliver the 25YEP. But the reports produced by Surrey Nature accelerating delivery of this Plan, as ambition and initiative shown by Surrey Partnership as this Plan took shape, well as international commitments on in this Plan will be a lasting legacy for continues to emphasise the deep climate change and the UN’s Sustainable prompting how this transition can begin. connection between economic prosperity, Development Goals, which are all a healthy and thriving society, and a high dependent on local action. It would quality natural environment. The natural also recognise the natural capital capital approach developed in Surrey is a interdependence of local and national beacon of clarity which many outside the productivity and prosperity ambitions, as County would do well to replicate. This set out in the Government’s Industrial and plan shows complexity is not an excuse Clean Growth Strategies. Peter Young for inaction. Peter is a Trustee of the Green Purposes Company which holds a special share in the Green Investment Bank. He is a Trustee and Council member of The Wildlife Trusts. He is an individual member of Aldersgate Group, having been a Founding Director and Chair from 2007 to 2015. He is chair of the Business Interest Group for the Valuing Nature Programme, and a member of the Programme Advisory Board. He is also on advisory boards at the School of Business and Management at Queen Mary, University of London, and the British Standards Institute. Natural Capital Investment Plan for Surrey 5 Executive Summary • In November 2015 Surrey Nature • The Natural Capital Approach is • The most significant Partnership published naturally intended to drive a new way of richer; this document recognised the achieving systemic investment in investment opportunity at importance of Surrey’s natural capital Surrey’s natural assets and aims this stage is for a visionary assets to its economic and social to mobilise local delivery within a investor, or group of success in the past and the reliance strategic framework. This allows for investors, to provide the seed that continued and future success has the complexity of investments in on these natural assets. natural assets (in terms of scale, type) investment needed to create to be accommodated and managed in • The Natural Capital Investment Plan the transformation described a practical way. (NCIP) for Surrey sets out the broad in this Plan. The investment actions required to achieve and • Our approach in Surrey has evolved of £500,000 per year for maintain healthy natural assets in through recognising a close linkage Surrey over the next 25 years. It is between sustainable economic 3 years will be essential to designed to promote discussion and prosperity and a healthy natural leverage new funds to create comment. It also highlights the activity environment, resonating with the Surrey’s Natural Capital which has been undertaken over the ambitions of the 25YEP. Investment Fund of at least last two years as part of