Resources By Theme Natural capital accounting

Natural capital accounting

There is growing interest in the use of accounting frameworks to understand the value of the natural environment. These have the potential to inform planning, management and investment decisions that minimise risks and maximise opportunities for public and private benefit. Alongside efforts to develop natural capital accounts for large organisations and countries, accounts are being produced for natural features across smaller areas of land and water. This includes private estates, public parks, and protected landscapes. 

This page is designed to provide ready access to guidance on how to produce accounts.

Workbook of England’s Natural Capital Committee

This guide was published in April 2017 and has been written for anyone who wants to use what the Committee refers to as “natural capital approaches” in making decisions about the natural environment. 

Corporate Natural Capital Accounting

Corporate natural capital accounting (CNCA) uses a balance sheet format for documenting natural capital assets and liabilities by organisations. A CNCA framework commissioned by the Natural Capital Committee was published in 2015. While primarily focused on business, the framework can be applied by other organisations. It was piloted by Lafarge-Tarmac, National Trust, The Crown Estate and United Utilities. It was used in the production of a Natural Capital Account for Beam Parklands in East London in 2015 (commissioned by the Greater London Authority).

UK ecosystem and habitat accounts

  • This type of assessment uses ecological units (principally habitats) to appraise a range of benefits (ecosystem services) provided by the natural environment such as flood risk reduction, carbon sequestration and recreational opportunities.
  • Defra and Scottish Government have commissioned experimental ecosystem accounts for two counties in Scotland, as well as three National Parks and one Area of Outstanding Natural Beauty in England. The method is explained in a detailed Technical Annex that helps with replication of the method elsewhere.
  • National habitat accounts are also available for woodland and marine areas, commissioned by the Office for National Statistics.

UK urban areas

  • A natural capital account for Greater Manchester was published in June 2018. The study estimated the natural environment to be a £25.2 billion asset to the people of Greater Manchester.
  • A natural capital account for the London Borough of Barnet was published in 2017. This report includes estimates of the monetary value of some of the largest benefits that
    natural capital assets within Barnet.
  • Alongside the natural capital account for Beam Parklands in East London (2015), an account for public parks in Sheffield was published in 2016 (this was presented at the Ecosystems Knowledge Network’s Building Prosperous Cities conference in 2016).

Natural Capital Protocol

The international Natural Capital Protocol has been developed by the business-led Natural Capital Coalition. It is a standard framework that covers four stages of incorporating the natural capital concept into business decision-making. Yorkshire Water used it in a retrospective assessment of options for its Rivelin Water Treatment Works.

National natural capital accounts

The UK Office for National Statistics has a natural capital project aimed at formulating methods suited to accounting for natural capital across the UK. This includes monetary estimates for select components of UK natural capital for the years 2007 to 2014, as well as experimental habitat accounts. The WAVES Programme, led by the World Bank, is encouraging incorporation of the value of the environment in national economic accounts. The UN System of Environmental-Economic Accounting is standardising methods to report on the relationship between the environment and the economy.