Green and Prosperous Land. Dieter Helm

us we should do our accounting properly, and set aside the costs of the maintenance. It is simple: not to do proper capital maintenance is to live beyond our means, and store up trouble, leading to lower living standards for the future. This is precisely what we have been doing: living off nature’s bounty without recognising the thresholds and safe limits.

      It works for a while. Sometimes it works for a long time. But eventually it catches up with us. The farmers who fail to take care of their soils will run into trouble eventually. The Fens will one day cease to deliver,³ just as swathes of the badlands in the USA did in the 1930s, and China’s expanding deserts are today. The loss of pollinators will cost farmers dear, and the loss of the urban parks is already having a detrimental impact on health. Just because we do not account for these costs properly does not mean they are going to go away.

      The first part of the prize – no more declines – is best seen as basic housekeeping. It will save us from a lot of costs later and provide natural capital to future generations that is at least as good as we inherited ourselves. This book sets out the sorts of measures necessary to achieve this – all practical and economic.

       Enhancements

      The gains from stopping the declines pale almost into insignificance when compared with the gains from enhancing the natural environment – not just holding the line, but improving our ecosystems across the board. This is the real prize for the next generation.

      If you ask what the main physical infrastructure networks of Britain will look like in 2050, in every case the answer is both different and much enhanced compared with now. Take the electricity system. By 2050 it will be digitalised and decentralised, and linked into the transport system and electric cars. It will be transformed from the passive, centrally controlled electricity grid of today. Take communications. By 2050 it will all be fibre; we can expect to have massively enhanced 5G mobile and fibre networks. Train networks will be more integrated at the international level, and there may be High Speed 2 (HS2), Crossrail 2 and full electrification, whether overhead or with batteries. Roads will be intelligent digital highways. We have a National Infrastructure Commission to look into all this and come up with a 30-year plan to present to each parliament.⁴

      When it comes to the natural environment – the critical infrastructure on which all else depends – this sort of ambition is largely absent. There are two possible reasons. First, it might be widely assumed that there is not much economic gain from an ambitious transformation. Second, the ambition itself might be thought to be beyond our capabilities. People have lowered their sights: they simply expect it all to get worse, and at best not to get much worse.

      Both of these are wrong. The economic gains from enhancing the natural infrastructure are considerable, and may be greater than some of those projected for physical infrastructures. A major enhancement is well within our grasp, and the costs are not that great in getting there, especially when compared with the costs of some of the physical infrastructure ambitions described above. If, for example, HS2 costs £50 billion and Crossrail 2, say, £25 billion, think what £75 billion of environmental enhancements might look like in comparison. Add in some all-too-predictable cost overruns and these two projects will cost over £100 billion. It is unlikely that the gains from the environmental enhancements would be less than those claimed for HS2 and Crossrail. It is not just a failure of imagination that holds us back, but also a basic failure to do the economics properly.

      Part three of this book tackles the economics head-on, showing why the benefits exceed the costs, and in many cases way beyond the narrow margin for HS2. The trick turns out to be all about how to measure economic prosperity properly. Once the costs are seen to be less than the benefits, the funding and financial frameworks can and should fall into place.

      But before we get into the economics, let’s raise our eyes to the prize itself: what our natural environment could look like in 2050. As with the measures necessary to halt the declines, more of the detail is provided in subsequent chapters; here we take a high-level look at the opportunities.

      There are two ways of going about this exercise. The first is to focus on the outputs. This looks at what we can expect to get out of the natural environment in the future. The second is to look at the underlying state of the assets, and the opportunities these assets provide for future generations. The first is very much about utility and hence is utilitarian; the second is about the capabilities and choices people will have about how they choose to live their lives. It is therefore a distinction between direct and narrow benefits and the broader opportunities natural capital offers to future generations.

      The two are of course related. You need the natural assets to get the utility; the ecosystem services and the natural assets that are going to be given priority are those that have the greatest direct benefit to people. The differences come in the practicalities as much as the philosophy. Natural assets come in systems, not discrete lumps, and hence mapping the outputs onto the assets is far from straightforward.

      Let’s take a look at the two approaches and see how the prize might be defined. Taking the outputs approach, there are some obvious direct-benefit prizes. In 2050 we can have much cleaner air. Children can grow up in cities without clogging up their lungs with particulates. By 2050 the air should be ‘clean’. Drinking water could be of better quality, drawn from cleaner rivers and aquifers. There should be increasingly diverse plant and animal populations. Wildlife should be thriving. People should get more out of nature, and benefit from landscapes that are more beautiful. These are all ambitions included in the 25 Year Environment Plan.⁵

      The great advantage of starting with the high-level outputs is that they are measurable. The content of air in different locations can be directly measured. The health outcomes can be measured too. The quality of drinking water is measured all the time already, and we can measure whether it is getting better. The number and diversity of plants and animals can be measured too. How many people spend how much time doing what in nature is measurable. We can also measure mental health and obesity and relate all these to the time spent with and experience of nature (or the lack of it).

      These outputs are every bit as measurable as the time saved by HS2 or Crossrail; by the speed of internet access, and the use time people get out of the internet; by the impacts on carbon emissions of renewable energy technologies; by the convenience and use of electric car charging and other outputs from physical infrastructures. Natural capital infrastructure is on an empirical par with physical infrastructure.

      The fact that these things can be measured gives the 25 Year Environment Plan traction. Governments can be held to account for identified failures. There may be many environmentalists who claim that we cannot measure the beauty and wonder of nature, or the spiritual values and so on. They are right. But the trouble is that this does not get us very far. The Treasury can easily wriggle its way out of the capital maintenance and investment in the enhancements. Whether the benefits of the prize can all be measured or not, the fact remains that the costs can, so there is no avoiding the question of how much should be spent on the various competing outcomes and ends. There is a good reason why the Treasury thinks in numbers.

      In narrow utility terms the value of these prizes can be assessed and compared with the value from investing in other infrastructures in the economy. Just as the value of HS2 depends on the other infrastructures that connect with it and support it, so too on the environmental side. HS2 will not work unless other bits of the road, railway and airport transport networks interconnect with it, and unless it has fast broadband fibre to facilitate its operations. Similarly, clean water depends on what happens in river catchments and in agriculture. The specific projects get their economic rationale from the coexistence and interaction of the rest of the networks. Ultimately, none of them works unless there is a natural environment to support them.

      This creates a big problem for the application of crude cost–benefit analysis. Take HS2. It makes little sense to calculate the costs and benefits of the link between Birmingham and London without including the rest of the high-speed rail network to the north. Similarly, whether or not HS2 is connected to HS1, and hence the main European cities, makes a big difference to the potential benefits in the cost–benefit calculation.⁶