POST Report 370 January 2011 Living with Environmental Limits Page 1 Summary Human well-being is dependent upon assessment approaches. However, where renewable natural resources. Agricultural there is a risk of thresholds being systems, for example, depend upon plant breached and potentially irreversible productivity, soil, the water cycle, the impacts occurring, additional policy nitrogen, sulphur and phosphorus nutrient safeguards to maintain natural resource cycles and a stable climate. Renewable systems within environmental limits are natural resources can be subject to required. biological and physical thresholds beyond which irreversible changes in benefit Managing ecosystems to maximise one provision may occur. These are difficult to particular benefit, such as food provision, define and many are likely to be identified can result in declines in other benefits. only once crossed. An environmental limit The evidence base is not yet sufficient to is usually interpreted as the point or range determine the most effective ways to of conditions beyond which there is a maintain benefit provision within significant risk of thresholds being environmental limits, but a range of policy exceeded and unacceptable changes responses are seeking to optimise multiple occurring.1 benefit provision, including: Biodiversity loss, climate change and a agri-environment schemes range of other pressures are affecting generic measures to enhance renewable natural resources. If biodiversity, which may increase governments do not effectively monitor the the capacity of natural resource use and degradation of natural resource systems to adapt to environmental systems in national account frameworks, change the probability of costs arising from the use of ecological processes to exploiting natural resources beyond increase overall natural system environmental limits is not taken into resilience to address problems account. Appropriate measurement such as flood risk management. methodologies need to be developed and validated to assess the capacity of natural The consequences of large scale and resource systems to deliver benefits, such potentially irreversible changes in benefits as relevant sets of indicators. from natural resource systems, such as marine fisheries, could affect ecological Decisions at local and regional scales security to such an extent that it is rational need to reflect the implications and trade- to minimise the risks, even if there is offs for natural resource systems inherent uncertainty as to exactly where the limits in policy choices to determine possible lie. However, the policy response to consequences for current and future environmental risks to human wellbeing is wellbeing. Valuation of changes in the mediated by the public response to that benefits provided by natural resource risk, with public acceptance affecting systems are being incorporated into whether policies responding to a risk are existing Cost Benefit Analysis (CBA) enacted. There are significant challenges techniques used in policy impact to successfully communicating environmental risks to the public. POST Report 370 January 2011 Living with Environmental Limits Page 2 Contents 1 Introduction 7 1.1 Background 7 Ecological Points of No Return – Chapter 2 8 Accounting for Limits – Chapter 3 8 The Ecosystem Approach and Environmental Limits – Chapter 4 8 Managing Ecosystems to Ensure Resilience – Chapter 5 8 Environmental Risks and Limits – Chapter 6 8 2 Ecological Points of No Return 9 2.1 Natural Resources 9 2.2 Environmental Limits 9 Limits, Standards, Targets and Indicators 10 Applying Environmental Limits 11 2.3 Drivers of Change in Natural Resources 11 2.4 Role of Biodiversity in Ecosystem Services 13 Determining the Impact of Biodiversity Loss on Ecosystem Services 13 2.5 Declines in Biodiversity 16 Biodiversity Decline in the UK 17 Conservation Gains in the UK 18 2.6 Ecosystem Thresholds and Biodiversity Loss 19 Linear and Non-linear Regime Changes 19 Impact of Abrupt Non-Linear Regime Changes 20 Predicting Non-linear Changes 20 2.7 Global Environmental Limits 21 3 Accounting for Limits 23 3.1 Natural Capital 23 Critical Natural Capital 23 3.2 Accounting for Natural Capital Depletion 24 3.3 Valuing Natural Capital 24 Ecosystem Service Valuation 25 Structures, Processes, Functions and Services 25 Valuation Frameworks 26 Linking Ecological Systems and Human Well-Being 28 Ecosystem Accounting 28 Common International Classification for Ecosystems 30 Challenges to Developing Methodology 31 3.4 UK Environmental Accounts for Agriculture 33 Baseline of No Agriculture 33 Policy Uses of Environmental Accounts for Agriculture 35 3.5 Acceptable Limits of Benefits from Ecosystem Services 35 The Sustainability Gap 36 Climate Change Act 36 4 The Ecosystem Approach and Environmental Limits 38 4.1 Ecosystem Management 38 Applying Ecosystem Based Management 38 4.2 The Ecosystem Approach 40 The Ecosystem Approach and Environmental Limits 40 Implementing the Ecosystem Approach in England 40 Winners and Losers 41 4.3 UK National Ecosystem Assessment 42 4.4 Evaluating the Impact of Policy Changes on Ecosystems 43 4.5 Scale-specific Decision Making 45 POST Report 370 January 2011 Living with Environmental Limits Page 3 Quantitative Assessments of Ecosystem Service Provision 46 4.6 Ecosystem Valuation 47 Robust Valuations 48 4.7 Using Valuations in Policy Making 50 4.8 Institutional Frameworks 52 Impact Assessment Methodologies 53 Applicability of Cost Benefit Analysis 53 Incorporating Ecosystem Services 54 4.9 Trading Off Gains and Losses 54 Acknowledging Loss of Benefits 55 Stakeholder and Public Participation 56 Using Ecosystem Service Assessments 56 Participation, Assessments and Limits 57 Defining Stakeholders 58 Water Framework Directive 58 4.10 Accommodating Uncertainty 59 Discounting and Environmental Limits 59 Marginal Costs and Environmental Limits 62 Safe Minimum Standards 62 5 Managing Ecosystems to Ensure Resilience 64 5.1 Natural Responses to Environmental Change 64 Resilience and Resistance 65 Resilience and Biodiversity 65 Regulating Services and Resilience 65 5.2 Social Ecological Systems 66 Management of Natural Capital for Resilience 66 Use of Technology and Resilience 68 Social Systems and Environmental Limits 68 Resilient Natural Resources Systems 68 Complex Adaptive Systems 69 Vulnerability Approaches 70 Building Resilience 70 Resilience Accounting 71 5.3 Enhancing the Resilience of Ecosystem Service Provision 71 Ecological Restoration 72 Evidence Base for the Effectiveness of Restoration Measures 73 Ecological Networks 74 Agri-environment Schemes 75 Campaign for the Farmed Environment and Set Aside 76 Agri-environment Schemes and Biodiversity Loss 77 Agri-environment Schemes and Ecosystem Services 77 Funding for Ecosystem Service Provision 78 Offsetting and Ecosystem Services 79 Issues Arising from Offsetting 79 Property Rights 80 Payments for Ecosystem Services 83 5.4 Adaptive Management 84 Passive Versus Active 85 Monitoring 85 Monitoring Against Environmental Limits 86 6 Environmental Risks and Limits 87 6.1 Environmental Limits and Uncertainty 87 Values and Risks 88 Perceptions of Risks 88 Risks and Limits 89 6.2 Assessing the Risks to Natural Resources Systems 90 POST Report 370 January 2011 Living with Environmental Limits Page 4 Ecological Security 90 6.3 Food Security 91 Increasing Food Production 91 Sustainable Intensification 92 UK Food Security 92 Complexity and Uncertainty in Food Systems 93 Vulnerability of Food Systems 93 Agricultural Ecosystems 95 Ecosystem Service Declines 96 Resilient Food Systems 97 Monitoring Food Systems 98 Negotiating Trade-offs 98 6.4 Managing Environmental Limits 98 Environmental Policy Integration 98 Responding to Complexity 99 Local and Global Frameworks 100 Adapting to Environmental Change 100 Annex A Pressure on Natural Capital 102 A1 Biodiversity Loss 102 Functional Traits and Ecosystem Services 102 Functional Diversity 102 Direct and Indirect Interactions 103 Maintenance of Ecosystem Service Provision 103 Adaptation to Environmental Change 104 Biological Limits to Adaptation 104 A2 Land Use Change 105 Soils 105 A3 Water 108 Freshwater Systems 108 Impacts of Pressures on Freshwater Systems 109 EU and UK Water Use 109 Impacts on Marine Ecosystems 111 A4 The Atmospheric Environment 112 Air Quality 112 Climate Change 112 Annex B Natural Capital Indicators 114 B1 Natural Capital and National Accounts 114 Measuring Natural Capital Depletion 115 Implementing System of Environmental and Economic Accounts (SEEA) 115 National Accounting Matrix including Environmental Accounts (NAMEA) 115 B2 Adjusting Economic Indicators for Environmental Impacts 116 Adjusted Net Savings 116 B3 Aggregate Environmental Indicators 117 Indicators for Natural Capital Stock 120 Driving Force-Pressure-State-Impact-Response (DSPIR) Framework 120 Indicators and Environmental Limits 120 Ecosystem Indicators and Accounting 120 Ecosystem Services Indicators 120 Defining Suitable Indicators 122 Biotic and Abiotic Indicators 122 Adapting Existing Suites of Indicators 123 The Countryside Survey 124 Indicator Knowledge Gaps 125 Annex C Convention on Biological Diversity Principles of the Ecosystem Approach 126 POST Report 370 January 2011 Living with Environmental Limits Page 5 Annex D Impact Assessments and Planning Decisions 128 D1 Regulatory Impact Assessment 128 D2 Wider Environmental Specific Impact Test 128 Sustainable Development Specific Impact Test 130 D3 Planning Policy and Environmental Impacts 131 Planning Policy Statement