Image credit RSPB Arne Dorset, Sam Turley(rspb-images.com)
Today's blog is written by William Riley, the RSPB's Senior Economist. He reflects that England was one of the first countries in the world to set legally binding biodiversity targets and calls on the UK to be the first to integrate these into our financial planning to help reverse natures decline.
The upcoming Autumn statement is due to be released on Wednesday and will be a chance for the government to announce new tax and spending plans, one of the last opportunities to do this before a general election, which looks likely next year.
Departmental budgets for the next year will be set, meaning it will be a chance to review how much the government has committed to biodiversity funding and assess how close this spending gets to the amount needed for nature’s recovery and for the government to meet its targets on halting species decline.
Unfortunately, in the analysis and rumours accompanying the Autumn Statement, nature is barely a footnote. This points to a failure in the way we understand economics. If each time we take stock of our public accounts and plan for the future, we fail to mention the natural world which our economies depend on, then we have a long way to go before we can fix the crisis that we’re in.
Horrible fiscal bind
According to the Institute for Fiscal Studies the UK finds itself in a ‘horrible fiscal bind’. High inflation, low growth and significant levels of public debt mean there are pressures on the public purse. This combined with other budgetary pressures on defence and healthcare, and a tight set of fiscal rules chosen by the government, means the government finds itself in a difficult economic position with very little fiscal room for manoeuvre.
Nature is also in a bind
It is not just our fiscal position that is teetering. The State of Nature Report found that species in the UK have declined 19% on average since 1970 and 1 in 6 species are now threatened with extinction. Only 14% of waterways in the UK are in a good ecological status and it is estimated that 80% of our peatlands are in a damaged and deteriorating condition.
Already the impacts of mistreating our planet are being experienced by many across the world. In the UK half of the 10 most important fish stocks are overfished or in a critical state. Climate change related weather shocks cost the world on average $143 billion per year between 2000-2019. And around 4,500 people are estimated to have died from extreme heat in 2022 and this is just the beginning.
Image Razorbill Shaint Islands, Chantal Macleod-Nolan (rspb-images.com)
Our economy is embedded in nature
In his seminal review, Dasgupta argued that our economies are embedded within Nature, not external to it. Without a stable climate the frequency of extreme weather events will increase, without fertile lands we cannot grow the food to keep us alive and without clean air we will struggle to breathe. Nature and climate are intrinsically linked with the wealth and health of the nation, so why are we not discussing nature at fiscal events and making significant commitments to turn the tide?
Analysis around the Autumn Statement often asks how the government will meet its fiscal rules; one of these rules is that debt should be on course to fall as a share of national income in five years’ time. This policy argues that self-imposed fiscal limits are what is needed for the economy to be sustainable. However, what it crucially omits is an admission of planetary limits and thus fails to acknowledge the condition of our natural capital and the critical role it plays in our economic prosperity.
We are in debt to nature
In effect, we are in debt to nature. We have exploited planetary resources at a far greater rate than we have been replacing them thus living beyond our planetary means. Another way of looking at this is that at current rates of resource demand it is estimated we would need 1.6 earths to live sustainably. We are building up enormous levels of planetary debt, which we will need to either repay or leave future generations to face the dire consequences.
At this Autumn Statement the government must, at a minimum, commit to protecting the budget for nature in real terms and ideally begin to reverse the declines seen since the global financial crisis. The government must also provide a plan to scale up public and private investment to meet the nature funding gap which exists and is in the tune of £56 billion over the next 10 years.
How do we fund it?
It is important that we first change the conversation around economics and acknowledge the role our natural systems play in it. The UK government must enhance and then integrate natural capital accounts into financial planning and set rules around how we maintain these. England was one of the first countries in the world to set legally binding biodiversity targets. Now, the UK must be the first to integrate these into our financial planning.
Private investment can be scaled rapidly if the right incentives are present. It is the job of government to ensure that the regulatory framework provides the right incentives to channel private finance into the restoration of our natural capital. For this to happen in some areas the public sector must be the first mover, providing seed funding and sharing the risk with the private sector to encourage investment.
Given the mood music we are hearing it is very unlikely that at the upcoming Autumn Statement the importance of nature will be recognised. Despite the short-term strains on our economy, it is essential that we begin to make this shift. At this Autumn statement, we call upon the Government to reframe the conversation around economic planning by reporting on how budgetary decisions will impact the UK’s natural capital. If this is done, and nature receives the funding that it needs, we will start to see nature’s role in the economy being full acknowledged.
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