Natural capital accounting assesses the value of natural resources and services. This value may be many times greater than the market price of natural assets, because it factors in the benefits that nature provides to businesses and communities. Consequently natural capital accounting can provide a far more accurate reflection of value than previously revealed.
We applied this process to the 254,000 hectare Public Forest Estate (PFE), which is 18% of England’s forests, that we manage as Forest Enterprise England and have published our first natural capital accounts. This is the first time an organization has compiled natural capital accounts in this way for its entire land-holding. The accounts have been developed with eftec environmental economics consultants and use the Natural Capital Committee’s agreed framework.
The accounts show the natural capital value of the PFE to be £11.9 billion, which is an order of magnitude greater than the value shown in the Forest Enterprise England’s financial accounts. In addition to commercial returns from timber, the accounts provide values for outdoor recreation and climate regulation. Moreover, this figure is likely to be a significant underestimate of the full natural capital value, given some important benefits have not yet been included. A detailed register of the natural capital assets on the estate describes all the services which they deliver.
This set of accounts is very much a first attempt to demonstrate the full value to the nation of the benefits derived from the PFE. Work will be ongoing to refine existing estimates and expand the accounts to cover other possibly significant benefits. We are working with others to conduct further research and trials – for example on air and water quality and flood risk mitigation – before the accounts are expanded.
Natural capital accounts provide clear sight of the true value of the PFE in providing goods and services that support businesses, communities and the wider population. They show why it is important to invest in the maintenance of natural capital if society is to continue to receive these benefits.
The accounts will also become a valuable strategic management tool complementing existing decision-making processes. By including values for benefits such as recreation and climate regulation, as well as commercial benefits, the accounts provide a greater insight into the multi-purpose nature of forestry and the challenges in delivering sustainable forest management. They will help us to track the condition and value of natural capital and to see the impacts of different forest management scenarios in the future.
A copy of the accounts can be downloaded from the Forestry Commission website.
Pat Snowdon is Head of Economics and Climate Change at the Forestry Commission.