Natural capital: adding value to urban environments
Keynote speaker Ian Dickie (eftec - economics for the environment) shares his thoughts on how natural capital can add value to the city environment.
Like any other spending, attracting investment in the environment, from governments or businesses, requires sufficient evidence showing their effectiveness and benefits. For many years this was bad news for environmentalists, as often the evidence needed isn’t available, particularly in an ‘appropriate’ (monetary) form. But this reality has ultimately led to a new wave of thinking about sourcing, supplying, and communicating, and has in part acted as a catalyst to the concept of Natural Capital.
Throughout the development of Natural Capital concepts and Natural Capital Accounting the aim has been to give decision-makers what they need to know, to gather that information, and to produce it in formats that allow them to compare their options. Our existence, health and happiness depend on the natural environment, so if we can capture how specific investments will help maintain what we depend on, human well-being can benefit.
The need for Natural Capital analysis to inform decision-making is vitally important where developments are happening quickly, where there are a large number of people at risk of being affected, or where natural resources are most strained, as is the case in many cities. What can further complicate the issue in urban environments is the lack of available space and increasing financial and environmental pressures from multiple industries and users.
"Our existence, health and happiness depend on the natural environment, so if we can capture how specific investments will help maintain what we depend on, human well-being can benefit."
However, what innovations have shown us is that investments in green infrastructure within an urban environment do not need to create or acquire ‘new’ areas of land. For example New York City’s High Line Park, which involved planting vegetation along an existing disused railway 2 floors above street level (shown left), has been lauded as a huge economic success. It is responsible for billions of dollars of investment in the surrounding area, and for attracting millions of tourists each year (it quickly became one of the most popular tourist destinations in the City).
The High Line highlights the basic economic rule that scarcity influences value – its value is high due to the lack of other green space in New York City (Central Park being the only real exception). It also illustrates that creating new green space need not block development – in cities it largely means being creative and innovative with what is there already.
Another example is from London’s Beam Parklands, where enhancements undertaken within an existing urban park to increase flood storage capacity, improve amenity value and increase interconnectivity are estimated to have added £22m to its natural capital asset value.
"Natural Capital valuation tools and accounting methods can guide us, and better still, help us make better decisions for our natural environment that result in cleaner air, water, and land for us all."
For more High Line Parks to be created or Beam Parklands to be enhanced, evidence must be found to communicate the benefits of these different natural capital investments. This involves understanding what benefits are provided, to whom, and what would change with the investment. For example, for an urban park this would involve identifying the benefits the park provides, who the beneficiaries are and how these would change with an investment. Quantitative assessment would be based on measuring or estimating the number of current and potential users who live in close proximity to the park, and how they use it – the number and frequency of visits, the types of activities undertaken within it, the number of properties that enjoy a view of the park, etc. Monetary assessment could involve looking at the (avoided) medical costs due to exercise, the value of price premiums for adjacent property, and/or individuals’ willingness to pay to avoid development.
Sourcing, using, and translating the relevant information for decision-making can be a complex process. Helpfully, Natural Capital valuation tools and accounting methods can guide us, and better still, help us make better decisions for our natural environment that result in cleaner air, water, and land for us all.
Ian Dickie is a Director at eftec - economics for the environment consultancy. eftec provides economic analysis for sound, effective and sustainable environmental policy and management. For more details on thier work on the value of urban natural capital and green infrastructure, contact Erin Gianferrara.
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