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NATURAL DEVON’S 2017 LECTURE
Dieter Helm
6th April 2017
NATURAL CAPITAL
& SUSTAINABLE
GROWTH
QUESTIONS
Why natural capital?
Why is natural capital at the heart of the economy?
Why is the environment key to sustainable economic growth?
How does it work?
What are the immediate opportunities?
What could be achieved?
WHY NATURAL CAPITAL?
All about assets and opportunities and capabilities
Not simply about utility and immediate consumption
The renewable natural capital is what counts
For free, for ever, provided it remains
above critical thresholds.
WHY IS NATURAL CAPITAL AT
THE HEART OF THE ECONOMY?
• Key production inputs – think what deprival would mean
• Depletion and depreciation lowers future economic output
• GDP is a really bad measure
• Key implication:
We are living well beyond our means…
Current consumption is unsustainable … therefore it will not be sustained
Think China and its devastated natural capital
WHY IS THE ENVIRONMENT KEY
TO SUSTAINABLE GROWTH?
From 7 billion to
10-12 billion
people by 2100
Air? Water? Food? Oceans?
Space for Nature?
3-4% GDP growth
consumption x16
by 2100
+2°C climate;
-50% biodiversity
by 2100
• Only used once
• Optimal depletion rate
• Treatment of economic rents
• Taking externalities
Renewables
Non Renewables
• Reproduced for ever at zero
cost
• Value open-ended
• Thresholds define minimal
• Benefits define optima
Non Renewables
Renewables
HOW DOES IT WORK?
What nature gives us for free
HOW WOULD IT APPLY TO EXMOOR?
• Assets in perpetuity
• Core infrastructure (including green infrastructure)
• Capital maintenance
• Revenue for capital maintenance
• Economic rents for non-renewables
• Tax and other renewables
• Expenditure
• New budget +ve/-ve
FUNDING FOR NATURAL CAPITAL
Non Renewable Depletion
Rents Natural Capital
Fund
Green Taxes
Development Impacts Compensation
Major Green Infrastructure
Investment
Stop The Decline
Sustainable Economic
Growth
WHAT ARE THE IMMEDIATE
OPPORTUNITIES (AND RISKS)?
• The 25 Year Environment Plan
• The end of the CAP and BREXIT
• The housing and infrastructure developments & the Housing White Paper
• The Green Paper on industrial strategy and green infrastructure
The National Ecosystem
Assessment(2011)
The Natural Environment
White Paper (2011)
The Conservative Manifesto
(2015)
The NCC’s third State of
Natural Capital report
(2015)
THE 25 YEAR ENVIRONMENT PLAN
“to be the first
generation to leave the
natural environment in a
better state than it
inherited”
• The pioneers
• Cumbria
• Manchester
• North Devon
• Marine areas
• The green paper…
And then
• The full 25 Year Plan white paper
THE 25 YEAR ENVIRONMENT PLAN
THE END OF CAP
• CAP is dead! Hooray!
• But, long live the subsidies?
• End Pillar I
• Transfer Pillar II into “public money for public goods”
• Focus on uplands & key natural assets
Natural Capital
Network
Paper 5.
British
Agricultural
Policy after
BREXIT
Dieter Helm
Sep 2016
OTHER BITS OF BREXIT
• Habitats and Birds and Water Framework Directive?
• Chemical and air pollution?
• Regulatory structure?
• A new British Environment Policy and …. an EPA?
WHAT COULD BE ACHIEVED?
Weak aggregate natural capital rule:
The aggregate level of renewable natural capital should be kept at least constant,
and there should be general capital compensation for the depletion of non-
renewables.
Strong aggregate natural capital rule:
The aggregate level of renewable natural capital should be kept at least constant
and the value of the economic rents from the depletion of non-renewable natural
capital should be invested in renewable natural capital.
The Nature fund
Sustainable Economic Growth
OR: Unsustainable continued decline
FOR INFORMATION
Natural Capital
Network
Paper 1.
Catchment
management,
abstraction and
flooding
Dieter Helm
Feb 2015
Natural Capital
Network
Paper 2.
In defence of
the green belt
Dieter Helm
April 2015
Natural Capital
Network
Paper 3.
Flood defence:
Time for a radical
rethink
Dieter Helm
Jan 2016
Natural Capital
Network
Paper 4.
Green Bonds for
Natural Capital –
some issues
Dieter Helm
Jun 2016
www.dieterhelm.co.uk
Natural Capital
Network
Paper 5.
British
Agricultural
Policy after
BREXIT
Dieter Helm
Sep 2016
WWW.DIETERHELM.CO.UK

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Natural devon 6.04.17

  • 1. NATURAL DEVON’S 2017 LECTURE Dieter Helm 6th April 2017 NATURAL CAPITAL & SUSTAINABLE GROWTH
  • 2. QUESTIONS Why natural capital? Why is natural capital at the heart of the economy? Why is the environment key to sustainable economic growth? How does it work? What are the immediate opportunities? What could be achieved?
  • 3. WHY NATURAL CAPITAL? All about assets and opportunities and capabilities Not simply about utility and immediate consumption The renewable natural capital is what counts For free, for ever, provided it remains above critical thresholds.
  • 4. WHY IS NATURAL CAPITAL AT THE HEART OF THE ECONOMY? • Key production inputs – think what deprival would mean • Depletion and depreciation lowers future economic output • GDP is a really bad measure • Key implication: We are living well beyond our means… Current consumption is unsustainable … therefore it will not be sustained Think China and its devastated natural capital
  • 5. WHY IS THE ENVIRONMENT KEY TO SUSTAINABLE GROWTH? From 7 billion to 10-12 billion people by 2100 Air? Water? Food? Oceans? Space for Nature? 3-4% GDP growth consumption x16 by 2100 +2°C climate; -50% biodiversity by 2100
  • 6. • Only used once • Optimal depletion rate • Treatment of economic rents • Taking externalities Renewables Non Renewables • Reproduced for ever at zero cost • Value open-ended • Thresholds define minimal • Benefits define optima Non Renewables Renewables HOW DOES IT WORK? What nature gives us for free
  • 7. HOW WOULD IT APPLY TO EXMOOR? • Assets in perpetuity • Core infrastructure (including green infrastructure) • Capital maintenance • Revenue for capital maintenance • Economic rents for non-renewables • Tax and other renewables • Expenditure • New budget +ve/-ve
  • 8. FUNDING FOR NATURAL CAPITAL Non Renewable Depletion Rents Natural Capital Fund Green Taxes Development Impacts Compensation Major Green Infrastructure Investment Stop The Decline Sustainable Economic Growth
  • 9. WHAT ARE THE IMMEDIATE OPPORTUNITIES (AND RISKS)? • The 25 Year Environment Plan • The end of the CAP and BREXIT • The housing and infrastructure developments & the Housing White Paper • The Green Paper on industrial strategy and green infrastructure The National Ecosystem Assessment(2011) The Natural Environment White Paper (2011) The Conservative Manifesto (2015) The NCC’s third State of Natural Capital report (2015)
  • 10. THE 25 YEAR ENVIRONMENT PLAN “to be the first generation to leave the natural environment in a better state than it inherited”
  • 11. • The pioneers • Cumbria • Manchester • North Devon • Marine areas • The green paper… And then • The full 25 Year Plan white paper THE 25 YEAR ENVIRONMENT PLAN
  • 12. THE END OF CAP • CAP is dead! Hooray! • But, long live the subsidies? • End Pillar I • Transfer Pillar II into “public money for public goods” • Focus on uplands & key natural assets Natural Capital Network Paper 5. British Agricultural Policy after BREXIT Dieter Helm Sep 2016
  • 13. OTHER BITS OF BREXIT • Habitats and Birds and Water Framework Directive? • Chemical and air pollution? • Regulatory structure? • A new British Environment Policy and …. an EPA?
  • 14. WHAT COULD BE ACHIEVED? Weak aggregate natural capital rule: The aggregate level of renewable natural capital should be kept at least constant, and there should be general capital compensation for the depletion of non- renewables. Strong aggregate natural capital rule: The aggregate level of renewable natural capital should be kept at least constant and the value of the economic rents from the depletion of non-renewable natural capital should be invested in renewable natural capital. The Nature fund Sustainable Economic Growth OR: Unsustainable continued decline
  • 15. FOR INFORMATION Natural Capital Network Paper 1. Catchment management, abstraction and flooding Dieter Helm Feb 2015 Natural Capital Network Paper 2. In defence of the green belt Dieter Helm April 2015 Natural Capital Network Paper 3. Flood defence: Time for a radical rethink Dieter Helm Jan 2016 Natural Capital Network Paper 4. Green Bonds for Natural Capital – some issues Dieter Helm Jun 2016 www.dieterhelm.co.uk Natural Capital Network Paper 5. British Agricultural Policy after BREXIT Dieter Helm Sep 2016