We have been delving deep into the collective overdraft and the view of the scientific community is clear; we are going to struggle to pay it off. The concept of Natural Capital may be the repayment plan.
As lawyers and advisers, we are seeing an increasing number of clients, in both the private and public sectors, seek advice on how best to improve their Natural Capital portfolios.
Simply put, Natural Capital is the world’s stock of natural assets including geology, air, soil, water and all living things. This includes all the habitats and ecosystems that provide social, environmental and economic benefits to humans. Scotland has a wide range of these habitats and ecosystems, each of which makes a contribution to the wellbeing of those who live and work here.
According to NatureScot's Natural Capital Asset Index, Scotland's Natural Capital deteriorated until the 1990s. Evidence suggests that it has grown slightly over the past 15 years and now is at its highest level since 2000.
However, it is not always simple to put a value on it and improving the way we deal with Natural Capital is challenging without having a working example of the difference between it and traditional capital.
A United Nations research group in 2018 settled on the comparison between felled timber and a living mangrove forest in Thailand. The value of a felled hectare of mangrove forest was estimated to be $1000 in comparison to $21,000 in value attributed to flood protection, carbon capture and improved ecosystems of the same living forest area. The global value of the timber industry was estimated at $400 billion. The global value of the same amount of forest to be conserved simply for carbon capture was estimated at $3.7 trillion.
Following Brexit, Scotland has a unique opportunity to redesign the land management support established via the EU Common Agricultural Policy. With more than 70 per cent of land area in Scotland designated for agricultural use, the farming sector is best placed to help adopt new approaches to Natural Capital. There must be greater focus on land use change in such a way as to benefit ecosystems, the economy and communities with an increased stewardship approach to land management in increasing woodland creation and peatland restoration. It would be encouraging if Scotland follows the proposed English system of public money for public good.
UK-based enterprises are also taking strides to improve their Natural Capital portfolios. Brewdog recently embarked on its Lost Forest project to plant over a million broadleaf trees over 1500 acres north of Loch Lomond, including over 500 acres of peatland restoration. On a slightly smaller scale, a number of garden centres are now striving to declare themselves as suppliers of peat-free soils. This may seem a gimmick but the abstraction and drying of peat has been established to be a major contributor to atmospheric carbon.
To achieve net zero by 2045, Scotland must take challenging strides and reassess priorities. We need to find solutions, often supported by government grant schemes, in order to meet our repayment plan to the world we live in.
Tom Gray is a Senior Associate in the Rural Economy team at Harper Macleod