Assessing the cumulative and cross-sector economic benefits of private investment in natural capital

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Introduction 1. The Scottish Government (SG) wishes to commission research to assess the cumulative, cross-sector economic benefits that are likely to flow from the development of regional and national markets in Scotland for responsible private investment in natural capital. The project will help to provide a stronger economic rationale for the SG’s policy development work on natural capital markets and the National Strategy for Economic Transformation (NSET). It will assess a wide range of economic benefits, looking at both the core economic indicators of jobs, gross value added (GVA) and inward investment but also assessing the wider economic indicators of value added to public sector spend, skills development, support for entrepreneurship and the associated supply chain impacts. 2. Natural capital is a concept that recognises the role of our natural environment, alongside its intrinsic value, as an asset that provides flows of ecosystem services (e.g. clean water, carbon storage, recreational opportunities) which benefit our society and economy, making human life both possible and worth living. Framing the natural environment in this way emphasises the need to invest in and manage this asset, within safe environmental limits, so that we can continue to enjoy these benefits. 3. Given the scale of the finance gap for natural capital (central estimates suggest a gap of 20 Billion GBP for Scotland over the current decade ), both public and responsible private investment in Scotland’s natural capital will be essential to meet the pace and scale of the challenge of delivering on our climate change targets and wider environment and land use policy objectives. However this challenge is also an opportunity – estimates suggest that UK private sector natural capital markets could be worth around 760 Million GBP annually by 2030 . 4. In recognition of the significant challenge and opportunity for Scotland, the SG’s updated NSET includes a commitment to developing a “values-led, high-integrity market for responsible private investment in natural capital, supported by a national project pipeline for nature-based solutions” . The Climate Change Plan update (CCPu) also includes commitments to increasing the woodland carbon market by 50% by 2025 and restoring 250,000 hectares of degraded peatland by 2030. Achieving both of these goals will likely require the further development and growth of natural capital markets in Scotland, in line with the NSET.