Valuing the intangible

Catherine Early reports back from the 2018 Valuing Landscape conference, where landscape and built environment professionals heard the latest thinking on how nature and its benefits can be valued

As the importance of nature for climate change mitigation and adaptation, flood alleviation, and health and wellbeing has risen up the political agenda and in the public’s consciousness, debate over how to put a number on these benefits has intensified. 

A failure to measure the value of natural assets such as trees, rivers and pollinating insects increases the difficulty of persuading those with the means to fund improvements – for example, politicians and developers – to clean up pollution or improve environmental protections. The situation is complicated by the fact that the benefits of a healthy environment often apply to people and communities other than those who pay for improvements made to it. 

“Humans derive most of the benefits of nature for free, which has rendered them invisible”

At a recent conference held by the Landscape Institute, delegates heard that healthy, well-designed landscapes are vital in helping to protect people from challenges including climate change, increased city densification, and health problems such as obesity and depression. All of these issues are partly driven by lack of access to green space. 

“Bringing the value of nature into decision-making is really key to halting the unsustainable patterns of environmental degradation that have accompanied economic growth,” said Karen Ellis, chief advisor on economics and development at the campaign group WWF.

Humans derive most of the benefits of nature for free, which has rendered these benefits invisible in economic decision-making, she says. Failing to put a price on assets, or underpricing them, leads to overexploitation – which is what is happening to nature. 

“We’ve assumed nature’s benefits will continue to be freely available, that there is an infinite supply,” said Ellis. “That’s not true, and we’re starting to hit environmental limits. This is starting to cause us social and economic costs, which will only get worse with economic and population growth.” 

WWF has therefore shifted its thinking towards arguing for conserving nature based on its economic and social value, following a realisation that a focus on the intrinsic value of nature has not been effective in protecting it, she said. 

Generating benefits

One way to embed natural capital thinking into the thinking of decision-makers is through landscape and planning approaches. For example, the 25-year environment plan includes the principle of ‘environmental net gain’ for development, which would require all housing and infrastructure development to generate a net environmental benefit. The principle covers biodiversity, flood prevention, water and air quality, and recreation. 

“It’s a bit controversial, and its outcome will depend on how it’s designed, but it could generate much better outcomes for nature,” said Ellis. “We’re working hard with other campaign groups to set out what design aspects we’d like to see, and that will garner our support for the scheme.” 

For example, she said, campaigners would like to see environment net gain included as part of a broader improvement to strategic planning, and implemented within a long-term strategy for enhancing nature. To embed the value of nature into public decision-making, natural capital should be incorporated into measures of economic success – using net national product (NNP) instead of gross domestic product (GDP), for instance.

NNP measures the total value of goods and services in a country for one year, but also allows for depreciation of capital goods – so could take changes in the value of natural capital into account. The concept has been promoted by Dieter Helm, chair of the Natural Capital Committee. NNP could then be reported on in the Budget, said Ellis. “GDP is very short term – you can push it up by using up all your natural assets, but that doesn’t take account of the fact that this will undermine your future income potential.” 

She suggested that the economy should be stress tested for its resilience to natural capital depletion, and all relevant government policy  – such as agriculture policy, infrastructure development and the industrial strategy – scrutinised to find out the impact on natural capital. 

“We need to consider natural capital so it becomes part of our psyche alongside GDP, which has really dominated economic performance assessment,” Ellis concluded. 


Hard numbers

Ian Hodge, professor of rural economy at the University of Cambridge’s Department of Land Economy, noted that there are rights and wrongs in valuing nature. Some argue that numbers are needed to persuade politicians to protect nature, he said. “For example, if we decide to create a park and forgo industrial development, there is a direct cost, which leads us to a value. 

“Many people will say that, in the absence of hard numbers, politicians won’t pay attention. That may be true. Even if the value is wrong, it might still give us some indication of importance.”

On the other hand, he said, the process of valuation might leave some features out, and these would then be discriminated against in the final decision. For example, the value of the park could be calculated, but its biodiversity could be omitted from the valuation simply because there was no agreed methodology for measuring it. 

Ursula Hartenberger, global head of sustainability at the Royal Institute of Chartered Surveyors (RICS), believes that consideration of sustainability should be integrated into property valuation. “It’s not rocket science,” she said. “We’re already valuing some aspects that would fall under that umbrella – for example, the proximity of the property to public transport.” 

Sustainability is included in the RICS’ guidance to surveyors, which states that valuers should be aware of the implications that sustainability features could have on property values in the short, medium and longer term. “It is about applying quantitative evidence and qualitative judgment to new value-influencing features and improving market efficiency by providing accurate information to the marketplace,” said Hartenberger.  

However, one challenge is that sustainability is a “moveable feast”, with elements that are constantly evolving in terms of public attitude and understanding of their impact, she noted. Consumer preferences can change fast – for example, people’s attitudes to single-use plastic. 

Ultimately, sustainability should be taken into account in property evaluations for a range of reasons: meeting professional duties and requirements; reflecting market conditions; avoiding mispricing assets (such as valuing conventional buildings too highly and sustainable ones too low); and to comply with mandatory requirements from professional organisations and jurisdictions. 



Catherine Early is a freelance journalist


Image credit | iStock

Catherine Early is a freelance journalist.

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