Principles of Natural Capital Accounting – A Background from ONS & Defra

This article was originally published on ONS (Office for National Statistics). 

In December 2012, the Office for National Statistics (ONS) published a roadmap, Accounting for the value of nature in the UK, which set out a strategy to incorporate natural capital into UK Environmental Accounts by 2020¹. In 2014, the Department for Environment, Food and Rural Affairs (Defra) and ONS published a first version of an article, which established a number of important approaches to the development of natural capital accounts, and identified a range of issues that needed further work before an accounting principle could be determined. This article (version 2.0) updates that original article. It takes into account the experience gained in developing the first set of accounts and also reflects the progress made by the international community in developing the conceptual framework for ecosystem accounting².

With this experience behind us, the aims of this article are to:

• refine and revise the principles established in the original article, where possible setting out our position on previously unresolved issues
• offer general guidance on accounting issues, clarifying definitions and distinctions
• identify issues that remain unresolved and note where further research and testing is needed…”

Table of contents

1. Purpose and overview of this article
2. The scope of natural capital accounts for the UK
3. Accounting for ecosystem asset extent
4. Accounting for ecosystem asset condition
5. Physical accounts for ecosystem and abiotic services
6. Basic valuation principles in natural capital accounting
7. Valuing flows of services
8. Valuing ecosystem assets

“…A related initiative to natural capital accounting is the Natural Capital Protocol, launched in July 2016 by the international Natural Capital Coalition. The Protocol is a framework designed to help generate “credible and actionable information for business managers to inform decisions”. Natural capital accounting approaches can inform various stages of the Protocol, and in particular can enable monitoring of decisions taken as a result of applying the Protocol….”

Read on at ONS.