Impact case study database

Working with both public and private sector organisations, Day and the LEEP team applied innovative NCA methods that have: (i) accelerated the application of natural capital values into decision-making through the creation of freely-available decision-support tools ( ORVal and NEVO) recommended and used by government, and directly benefiting business practices; (ii) helped to solve strategic, investment and operational challenges linked to natural capital issues; and (iii) designed and helped deliver pioneering ‘Payments for Ecosystem Services’ (PES) schemes, bringing about environmental change and millions of pounds of cost savings, to business and their customers. This work has been developed within the context of the UK Government’s ambition to improve the environment, and recognition of the investment potential of adopting a NCA [3.1], as set out by the Government's advisory Natural Capital Committee in its 2020 Progress Report on the implementation of the UK government’s ‘25 Year Environment Plan’ [5.1a].

Accelerating the adoption and application of the NCA in decision-making

Day and Binner’s development of two ground-breaking tools, ORVal [3.2] and NEVO **[**developed from 3.4], have benefitted business and accelerated both the adoption and application of the NCA. Both tools were powerfully endorsed by the UK Government’s Department for Environment and Rural Affairs (Defra), in its highly influential 2020 guidance ‘Enabling a Natural Capital Approach’ [5.1b, c]. The uptake of both tools has had a major impact on decision-making across national and local government, businesses and the third sector, generating significant benefits for society.

Built as a front-end interface to the Outdoor Recreation Valuation (ORVal) model [3.2], the ORVal website is a game-changing online and open-access valuation tool. The UK government’s landmark 25 Year Environment Plan described ORVal as “ ground-breaking” and “ world-leading” [5.2]. Other examples of government endorsement include: HM Treasury 2018 Green Book [5.2]; Department for Communities and Local Government’s 2017 Housing White Paper [5.2]; and Public Health England’s 2020 guidance to local authority public health and planning teams [5.3].

Through these endorsements and open-access, online accessibility, ORVal has been widely adopted in many contexts. Examples include: (i) calculating ‘public realm welfare values’ in a successful GBP250 million business case for Forward Funding made to the Housing Infrastructure Fund in 2018 for the ‘Old Oak’ regeneration development delivering 25,500 new homes; (ii) supporting Kent County Council’s business case to fund its Rights of Way Improvement Plan (2018-2028) and as evidence in a related Public Enquiry; and (iii) preparing the first set of Natural Capital Accounts for greenspace in London’s public parks in 2017; where ORVal-derived recreation value accounted for over GBP17 billion, some 19% of the total gross asset value ( GBP91 billion), supporting the case for continued or improved public funding of the parks [5.3].

Survey evidence demonstrates that use of ORVal has also delivered improvements to practitioner’s working practices in terms of improved quality, efficiency, flexibility and productivity and has led to better evidenced decision-making [5.4]. Additionally, ORVal has become the ‘go-to’ tool for a range of private sector businesses, including Mott MacDonald, AECOM, JBA Consulting and Eftec [5.4]. Director of environmental consultancy Eftec, said it had “ inspired” them and was “ a game-changer” [5.4].

In writing to personally thank Prof. Day and the LEEP team for their work developing ORVal, Defra’s Deputy Director of the Environment Analysis Unit wrote:

“*ORVal has, without precedent…. been uniquely empowering in the way it enables non-specialists rapidly to access and to understand the substantial public value provided by accessible natural environments, and how this varies spatially.*” [5.2]

Funded by Defra (2016-19), LEEP also developed NEVO, an open-access, online version of the Natural Environment Valuation (NEV) suite of models [3.4]. A unique application, NEVO is unprecedented in bringing the power of integrated modelling to the fingertips of practitioners needing to assess a diverse range of environmental costs and benefits arising from changes in land-use in the UK.

Launched in October 2019, NEVO was recommended by the Committee on Climate Change [5.3], an independent, statutory body advising government on building a low-carbon economy and preparing for climate change, and the National Infrastructure Commission for the natural capital analysis of the ‘Rail Needs Assessment’ [5.3]. NEVO is being used by the Environment Agency for a variety of different purposes, including a judicial review of Diffuse Water Pollution Plans [5.4]. A diverse range of local organisations, such as Shropshire Council, The Rivers Trust and a National Park, are using it to assess the effect of potential land-use change on, for example, carbon sequestration, river water quality and biodiversity [5.4].

Environmental consultancies also use NEVO in their commercial practices as a knowledge-gathering, high-level screening and analysis tool [5.4]. Mott MacDonald’s Environmental Scientists [5.4] found that NEVO’s accessible interface enabled them to upskill staff, routinely introduce welfare values into environmental assessments (which would previously have been impossible) and boost their commercial capability, stating that:

“being… an early adopter of these tools [NEVO & ORVal] provides a large reputational benefit… and with that a commercial advantage.” [5.4]

Furthermore, Eftec consultancy reported that 33% of their annual turnover related to work on projects which incorporate values derived from NEVO and ORVal [5.4].

Using the NCA to solve strategic, investment and operational challenges In partnership with numerous businesses, organisations and public bodies, LEEP has developed tailored evidence and advice through natural capital valuation and application of the NCA [3.1-3.4].

Day and team worked with South West Water (SWW) on the natural capital evidence that underpinned their Price Review 2019 (PR19) submission to the Water Services Regulation Authority (Ofwat). SWW's ‘Upstream Thinking’ Environmental Programme Manager credited this work with enabling SWW to adopt a ‘natural capital approach’ to their investments, which helped them convey their PR19 submission more effectively to Ofwat [5.5a]. Furthermore, he states that the success of adopting this approach “ was reflected” in their achieving ‘Fast Track Status’ (with a cost saving to SWW of GBP 200 million), in addition to securing funding of GBP 15 million for natural capital investments [5.5a, b]. LEEP’s partnership with SWW, in collaboration with others at University of Exeter, led SWW to commit £21M co-funding in their 2020-25 business plan to establish a dedicated research centre at the University of Exeter, the Centre for Resilience in the Environment, Water and Waste (CREWW).

[5.5a, b].

Advice and evidence provided by LEEP to consultants AECOM on the public benefits of river quality improvements, underpinned by LEEP methodological advances [3.2; 3.3; 3.4], also supported Yorkshire Water’s (YW) PR19 Business Case for investment in waste water treatment and 5 year Asset Management Plan. These contributions enabled YW to adopt a NCA and more effectively evaluate how the GBP772 million of customer money allocated by Ofwat for environmental improvements could be spent, for example, on improving sewage infrastructure or enhancing river water quality [5.6].

LEEP’s engagement with diverse non-academic partners has underpinned a number of other major investments. The Natural Environment Research Council funded GBP5 million South West Partnership for Environment and Economic Prosperity (SWEEP) programme (2017-2022), led by Bateman, with partners in the University of Plymouth and Plymouth Marine Laboratory, is delivering NCA solutions to over 200 businesses, public and third sector bodies in the South West, across a wide range of sectors. It has contributed to, or informed, 23 different private and public sector policies, strategies, business or management plans, including the Environment Agency’s GBP140 million ‘Coastal Modelling and Forecasting Strategy’ and Cornwall Council’s GBP30 million ‘Forest for Cornwall’. [5.7a]. Likewise LEEP’s new ‘Dragon Capital Chair in Biodiversity Economics’ (set up in May 2020) is a GBP1.6 million investment by the Dragon Capital Group focused on delivering natural capital solutions to problems of global biodiversity loss [5.7b].

‘Payments for Ecosystem Services’ schemes - incentivising environmental improvements

LEEP has also pioneered the application of ‘Payments for Ecosystem Services’ (PES) schemes [3.5; 3.6], in both public and private sector organisations, incentivising landowners to deliver environmental services through changes in land management.

Working with Anglian Water in 2016-17, LEEP designed the first PES scheme to eliminate pollution from the pesticide Metaldehyde in the catchments of strategic water supply reservoirs. The highly innovative scheme encouraged complete within-catchment participation and was described by Anglian’s Head of Environmental Quality as a “real game-changer”, explaining that it saved Anglian Water GBP 500 million in avoided costs; “a bill that customers would somehow have borne all or part of” [5.8].

From 2017 to present, LEEP has worked with EnTrade, a company implementing PES auctions for a variety of clients in the UK. Responding to various issues with EnTrade’s auction implementations, LEEP proposed a first-of-its-kind, uniform-price design. This was adopted by EnTrade and implemented on behalf of Wessex Water (WW) in a scheme seeking to reduce agricultural nitrate pollution in Poole Harbour. The new design delivered a 30% fall in the price the water company had to pay to land owners for each tonne of nitrate removal activity. As reported by Entrade’s Production Manager, this saving convinced WW to expand the size of the scheme doubling nitrate removals from Poole harbour and delivering a GBP 6 million saving to the water company and, as a consequence, the water company’s customers [5.9].

In 2020, the Forestry Commission (FC) launched its GBP50 million Woodland Carbon Guarantee (WCG) to support woodland planting over 5 years by offering guaranteed prices for carbon sequestered in growing trees through a series of auctions. LEEP worked with the FC to design an auction which encouraged competitive applications [5.10]. The Head of Economics at Scottish Forestry explained that it “would have been difficult … to design the auction effectively without [LEEP] input”, which was “instrumental” and allowed the FC to support woodland planting, which would not have otherwise happened, by incentivising future CO₂ removals at a carbon price of about one third of the government’s estimated values required to meet climate change targets. The FC considered this “a very successful outcome” that had “impressed” H.M. Treasury [5.10].