The economic risks of environmental degradation need to be considered in the budget, according to WWF.
Chancellor George Osborne should put in place at the heart of the budget a ‘natural capital stress test’ to highlight the potential risks to the economy from environmental damage, the campaign group believes.
This stress test could assess the future consequences for business productivity if soil erosion continued at current rates or if water stress worsened, WWF said. It should also help identify the most appropriate course of action to mitigate risk, it added.
In a report outlining policy recommendations for the budget, due on 16 March, WWF gave examples of the economic costs of neglecting the nation’s natural assets. These include:
- Mismanagement of river catchments is a major contributing factor to flooding, which is estimated to have cost the UK at least £5 billion this winter.
- The economic value of the effect of small particulate (PM2.5) air pollution on mortality in the UK was around £16 billion in 2008, equivalent to 29,000 premature deaths.
- £1.4 billion in additional annual UK revenues could be generated if UK fish stocks recovered to the average levels seen before the 1970s.
Tackling these issues would insulate the economy and businesses from growing risks, cut public sector costs, generate hundreds of thousands of new jobs, create new market opportunities and improve UK competitiveness, the report concludes.
Trevor Hutchings, director of advocacy at WWF-UK, said: ‘George Osborne recently spoke of an economic ‘cocktail of threats’ related to short-term falls in commodity prices and stock markets – and yet he’s said little of the trinity of longer-term risks posed by environmental degradation, resource scarcity and climate change.’
WWF ambassador Lord Adair Turner said: ‘Creating a green economy through smarter use of taxes and targeted public spending should be a far higher priority for government. Free markets won’t deliver this on their own.’
Turner is also senior fellow at the Institute for New Economic Thinking and former chair of the UK Financial Services Authority.
Environment secretary Liz Truss yesterday announced six new members of the Natural Capital Committee. The independent advisory body will take forward the implementation of the government’s 25-year environment plan and advise the economic affairs cabinet committee on the state of English natural capital.
The committee is chaired by professor Dieter Helm, who was reappointed in December 2015. The six new members of the committee are:
• Paul Leinster, professor of environmental assessment at Cranfield University and former chief executive of the Environment Agency. He has held posts at BP International and Schering Agrochemicals, led a major environmental consultancy and been part of the environmental services directorate at SmithKline Beecham (now GSK).
• Colin Mayer, professor of management studies at the University of Oxford’s Saïd Business School. Mayer is an expert on all aspects of corporate finance, governance and taxation, and the regulation of financial institutions.
• Diane Coyle, professor of economics at the University of Manchester and director at consultancy Enlightenment Economics.
• Georgina Mace, professor of biodiversity and ecosystems at UCL and director of the Centre for Biodiversity and Environment Research. Previously a director of the NERC Centre for Population Biology at Imperial College she is currently a NERC council member, member of the Council of the Royal Society, and chair of the science committee for the DIVERSITAS global change research programme.
• Ian Bateman, professor and director of the Centre for Social and Economic Research on the Global Environment (CSERGE).
• Kathy Willis, director of science at the Royal Botanic Gardens, founding director of the Oxford University Biodiversity Institute and professor of biodiversity and head of long-term ecology laboratory at the University of Oxford. She has more than 20 years research and teaching experience in biodiversity, conservation and ecosystem management at the universities of Oxford and Cambridge.
