Viewing business problems through a natural capital lens can help identify risks and opportunities, improve business performance, and enhance the role of businesses within their communities. Natural capital consists of the stock of renewable and non-renewable natural assets, which combine to provide both abiotic and ecosystem services.
Yorkshire Water and AECOM completed a retrospective Natural Capital Assessment (NCA) of the alternative capital scheme options proposed for the Rivelin Wastewater Treatment Works upgrade project. A natural capital assessment is the process of measuring and valuing relevant (‘material’) natural capital impacts and/or dependencies, using appropriate methods.
The aims of the assessment were to:
- Trial the natural capital approach to examine how this maturing accounting methodology can inform Yorkshire Water’s risk management and decision making
- Pilot the methodology proposed under the draft Natural Capital Protocol (NCP) and provide feedback to the Natural Capital Coalition
The project compared the natural capital impacts of three alternative options:
- Continuing to use the existing SIROFLOC process for the next 40 years (baseline solution),
- A DAF + MIEX plant as proposed for programme planning purposes in 2012 (notional solution), and
- Traditional clarifiers (chosen solution). The NCA was conducted after the clarifier solution had already been chosen. As such, the NCA was not used to inform the selection of the chosen solution. Rather, the assessment was used to trial the natural capital approach and to understand how it could be applied in future decision-making.
The NCA identified the following ecosystem services as being materially impacted by the alternative capital scheme options:
- Global climate regulation (the capacity of ecosystems to help regulate the global climate),
- Air quality regulation (the capacity of ecosystems to regulate air quality and pollution),
- Pollination (the capacity of ecosystems to deliver pollination services), and
- Cultural and spiritual services (the benefits to human wellbeing that arise from the interactions between environmental spaces and cultural or spiritual practices. In this assessment this service represents the aesthetic beauty delivered by the site).
The assessment showed that all three options have overall negative impacts on natural capital, although theimpacts of the chosen solution on natural capital were valued at approximately £3.8 million less damaging than the baseline solution, and £0.6 million less damaging than the notional solution, over the next 40 years. The damage costs attributable to the on-site consumption of electricity and its impact on global climate regulation was the predominant driver of negative impact on the value of natural capital in all three scenarios (see Table 1). Whilst optioneering for the project delivered a significantly less environmentally damaging solution, a negative environmental impact was still necessary to meet the social imperative for safe and reliable drinking water. A total impact assessment, considering all relevant environmental, financial and social attributes of a scheme would demonstrate trade-offs and enable even richer decision-making than a focus on only natural capital.
Watch Gordon Rogers, Manager of Sustainability and Strategy at Yorkshire Water, speak on ‘Using the Natural Capital Protocol’ at the Irish Forum on Natural Capital’s 2016 conference, ‘Making Nature Count’, which was held in the National Concert Hall in Dublin on 4th October 2016.
Download the report here.