Environmental laboratory
Bats and newts: why monitoring biodiversity will only become more important
Feb 02 2025
Recently, in announcing her deregulation of planning permissions, the UK’s Chancellor of the Exchequer declared that house builders can now ‘forget about bats and newts’ – but the question is: should they?*
Some commentators will argue that protections for habitats and ecosystems tend to make the construction of infrastructure more expensive – thus, these protections inhibit economic growth and make us all poorer than we might otherwise be.
However, our economies depend not just on offices, factories, airports or pylons, but on forests, topsoil, rivers and wetlands – all of which are maintained by a dense network of microorganisms, insects, fungi and animals.
Relatedly, avoiding climate-induced famines will require massive sequestration of carbon. As things stand, there are significant challenges with high-tech sequestration technologies, making us reliant on approaches like reforestation and trophic rewilding, both of which are products of biodiversity.
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Whilst it is possible that concerns over biodiversity can be used sceptically, we should understand that protecting natural capital – even if that means bending over backwards to accommodate bats and newts – makes us richer, even if GDP doesn’t rise as quickly.
What is natural capital, anyway?
Forests, wetlands, and agricultural lands constitute vital natural capital that supplies raw materials, clean water, and air purification, thereby underpinning economic activities, sustaining rural livelihoods, and ensuring ecological resilience.
Biodiversity, including diverse species and genetic resources, forms natural capital essential for pharmaceutical discoveries, sustainable agriculture, and ecosystem stability, ultimately fostering innovation, food security, and long-term economic growth.
Marine ecosystems represent crucial natural capital, offering fisheries, coastal protection, and tourism opportunities, while maintaining nutrient cycles and carbon sequestration processes that mitigate climate change and support robust economic sectors.
Freshwater resources, including rivers and aquifers, supply essential natural capital by providing water for drinking, agriculture, and industrial uses, thereby driving economic productivity, human well-being, and sustainable development.
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Going long on the biosphere: ecological economics
‘Do extra sawmills substitute for diminishing forests? … Do larger nets substitute for declining fish populations?’1
Today, everyone’s heard of the UN’s Sustainable Development Goals (or SDGs). But it wasn’t until 1990, when now-famous ecological economist Herman Daly published ‘Toward Some Operational Principles of Sustainable Development’ from his Washington D.C. office in the Environmental Department at the World Bank, that the world’s elite began to think in these terms:
‘Since the human economy is a subsystem of a finite global ecosystem which does not grow, even though it does develop, it is clear that growth of the economy cannot be sustainable over long periods of time. The term sustainable growth should be rejected as a bad oxymoron. The term sustainable development is much more apt.’1
But this wasn’t the only new concept that Daly introduced in that paper. In fact, it began its own wholly divergent, iconoclastic tradition:
‘As growth in the physical dimensions of the human economy pushes beyond the optimal scale relative to the biosphere it in fact makes us poorer. Growth, like anything else, can cost more than it is worth at the margin. Growth, which we have habitually come to refer to as ‘economic growth’ while we were below the optimum scale, becomes ‘antieconomic growth’ once that optimum has been passed.’1
In conventional economics, ‘capital’ is anything, whether money (‘financial capital’), computers (‘physical capital’), soil (‘natural capital’), or quantum physics (‘intellectual capital), used to produce (‘yield’) commodities.
As such, in market-value terms, the longer your capital lasts, the greater its potential yield – and therefore, the higher your capital’s price.
Under these assumptions, then, types of natural capital – that is, raw materials and their ecosystems - that are either highly durable or renewable must rank amongst the most valuable assets in any economy. The flip side of this proposition, however, is that these types of natural capital is more valuable than lots of the man-made capital on which so much of our industrial economies rely, since these resources both deplete over time and after use, turn, inevitably, into unproductive waste. In Daly’s language:
‘For the management of renewable resources there are two obvious princi- ples of sustainable development. First that harvest rates should equal regeneration rates (sustained yield). Second that waste emission rates should equal the natural assimilative capacities of the ecosystems into which the wastes are emitted. Regenerative and assimilative capacities must be treated as natural capital, and failure to maintain these capacities must be treated as capital consumption, and therefore not sustainable.’1
But what’s the price of the Amazon Rainforest today? Is the Great Barrier Reef bullish? Have you checked what a population of pollinators is trading for, lately?
Since each of these assets are used by a bunch of firms as a commons, they aren’t given a price – and so, we don’t see them as revenue-generating capital.
A new wave of financial services firms have been trying to correct this short-sightedness, offering valuation services for what The Landbanking Group call ‘nature equity’: ‘an outcome-based asset class issued with measured nature as an underlying.’
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But whilst this approach can help individual firms to more accurately value whatever natural capital they’re dependent on, it is unlikely to properly protect all of those materials and their ecosystems upon which multiple disparate producers, consumers and nations are reliant.
That’s where institutions like the United Nations come in.
The United Nations Convention on Biological Diversity (CBD), adopted in 1992, establishes a global framework to conserve biodiversity, promote sustainable resource use, and share genetic benefits equitably.
Biodiversity underpins essential ecosystem services—pollination, water purification, and climate regulation—thereby highlighting nature’s role as invaluable natural capital that sustains human well-being and drives economic development.
Countries implement CBD objectives through National Biodiversity Strategies and Action Plans, supported by international cooperation at Conferences of the Parties and funding from mechanisms like the Global Environment Facility.
Despite challenges such as climate change, habitat fragmentation, and resource limitations, the CBD’s adaptive management and collaborative approach promise to safeguard Earth’s biological wealth for current and future generations.
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Why sequestered carbon will become our most valuable form of a natural capital
Sequestered carbon, stored in forests, soils, and oceans, represents a rapidly emerging form of natural capital that underpins climate stability, providing essential mitigation against global warming and extreme weather events.
Integrating carbon sequestration into economic planning transforms environmental stewardship into quantifiable wealth, incentivizing reforestation and regenerative agriculture while generating sustainable revenue streams that reinforce community resilience and national security.
Financial instruments and policy frameworks are evolving to recognize sequestered carbon’s market potential, linking ecosystem conservation with carbon credits and establishing robust incentives for long-term investments in natural capital.
By revaluing sequestered carbon, modern economies can drive innovation in sustainable finance, incentivize ecosystem restoration, and ensure that climate regulation becomes a cornerstone of resilient, inclusive economic development.
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1 Toward some operational principles of sustainable development. Herman Daly. Ecological Economics. 1990.
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AET 28.4 Oct/Nov 2024
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