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Investing in the environment
will promote economic prosperity

There are many things the Chancellor of the Exchequer could do to promote environmental sustainability that would be really good for the economy, and could even save the Treasury money! Environmentally sound economics makes simple common sense – now we just need the Chancellor to realise that.

March 2016

There is a long overdue but fast-growing realisation that looking after the environment is crucial for our economic prosperity. This is certainly true in the long term where to remain competitive we will need to develop more resource-efficient, low carbon patterns of production. But it’s also true in the short term, as the costs of neglecting our natural assets can no longer be ignored:

  • Mismanagement of rivers and surrounding land is a major contributing factor to flooding, which is estimated to have cost the UK at least £5 billion this winter alone.
  • The economic value of the effect of small particulate (PM2.5) pollution on health in the UK was around £16 billion in 2008 alone, and responsible for 29,000 premature deaths.
  • £1.4billion additional annual UK revenues could be expected if UK fish stocks recovered to the average levels seen before the 1970s. In fact we know thatinvestments in natural capital – including adaptation of England’s farmland to provide a range of benefits from peatlands, forests, grasslands, as well as restoring fish stocks – would generate economic benefits worth over £9bn over 50 years – two to three times larger than the investment costs involved. That’s why WWF-UK published its second ‘Greener Budget Report ‘ recently, which sets out a series of policy recommendations that could be introduced in the annual Budget that Treasury will be publishing on 16th March, and that would help to move the UK economy onto a more sustainable, low carbon growth path, and to better manage its natural assets.
For example, it asks the Treasury to develop a new ‘stress test’ to assess the consequences of environmental degradation for economic outcomes. This could look at the impact on business productivity if water stress worsens in drier areas of the UK such as the south east for example. It could also look at the impact – or requirements - of new government policies, (such as the 25 year plan for food and farming which is due to be published soon), on the UK’s natural assets such as its soil and water resources. And we’ve proposed that the Treasury develops an investment strategy for natural capital, as part of the new 25 year plan for nature being developed at the moment, and works with businesses through a new taskforce to identify policies that would incentivise business investment and sustainable management of natural resources. The report also recommends that the Treasury demonstrates support for a long-term policy package that will give industry the confidence to invest in renewables and energy efficiency, develops a Bioeconomy Strategy - to look at the economic opportunities relating to the invention, development, production and use of biological products and processes - and starts requiring financial institutions to report on the climate and natural capital-related financial risks they face.

For more detail please read the report.To follow the story on Twitter, see #GreenerBudget2016.

Karen Ellis

Chief Advisor, Economics & Development

WWF-UK

The opinions expressed in this blog are the author’s and not necessarily those of the wider Link membership