Binnies bridges the gap between green investment and nature recovery projects
Four steps for capitalising on the natural environment investment readiness fund
By Francesca Moore, Principal Environmental Economist, Binnies
Binnies (previously Black & Veatch), joined RSK in January 2021 and provides award winning functional infrastructure and lasting environmental and social legacies with a focus on low carbon, sustainable and resilient water solutions, flood alleviation and environment services.
Binnies welcomes the government’s natural environment investment readiness fund (NEIRF), which provides an opportunity to capitalise on green investment. The fund supports the UK government’s 25 year environment plan, its green finance strategy and its 10 point plan for a green industrial revolution.
We are witnessing unprecedented levels of investment in nature and a shift from public and charitable funding to private green investment. This has been driven by government and corporate commitments to biodiversity net gain and to net-zero carbon emissions, underlined by the Treasury’s recently published Dasgupta Review* and a growing awareness of corporate and economic dependency on nature and its health.
Nature recovery projects in England are now able to access between £10,000 and £100,000 from the fund if projects meet the following criteria:
→ they will achieve one or more of the natural environmental outcomes from the 25-year environment plan
→ they will generate revenue from ecosystem services to attract and repay investments
→ they offer an investment model that can be scaled up and reproduced
The demand for nature recovery projects is far outstripping supply. There are not enough investment-ready nature recovery opportunities out there, and whether they deliver benefits in addition to the potential to sequester carbon and to increase biodiversity is not known.
Binnies has already achieved notable success in bridging this gap, by providing the means to secure green investments and to facilitate nature recovery projects.
The River Thames Scheme is the largest inland flood alleviation project in the UK. The £500-million programme will protect communities and critical infrastructure in South-West London. Our natural-capital valuation identified and quantified an additional £48 million in hidden economic benefits that flow from the scheme’s inbuilt nature recovery measures. These benefits augment those that could be realised through conventional economic cost-benefit analysis of flood risks. This resulted in an additional £3 million in funding from water companies, the Local Enterprise Partnership and local authorities, to restore and create habitats at a landscape scale. The extra funding was made possible because our valuation made the broader benefits of the scheme clear to different investors, in terms of health, water quality and carbon, while aligning these same benefits to the nuances of different investment frameworks.
Similarly, for the Burton Washlands Landscape Vision, a 630-ha nature recovery and green infrastructure scheme, we unlocked an additional £2.7 million in hidden economic benefits, including air and water quality, amenity and health benefits, which attracted an extra £2.5 million in funding for nature recovery within three months of completing the valuation. Our roles included the valuation of natural-capital gains attributable to the masterplan proposals and setting this out in an attractive, easy to use, digital story map**.
Based upon these and other successful natural-capital projects, our environmental economic experts have identified four key steps to help bridge the gap between green investment and nature recovery projects.
1. Align opportunities with investors’ interests
In your area, it is important to understand what environmental outcomes are needed most and where these are, then align the opportunities to what interests green investors.
Digital mapping and the modelling of natural-capital flows produce “heat maps” around opportunities. The most “investable” opportunities are then grouped by the type of benefits to be gained, for example carbon, biodiversity, flood regulation or water quality benefits, while showing how investing in that outcome will also deliver multiple other advantages such as in air quality and health.
This helps to provide a tier system of nature recovery opportunities. Those with a greater overall combined impact, across a greater spread of services, are likely to secure investment first. However, our digital mapping technology enables individual outcomes such as opportunities for improvements in water quality or carbon sequestration to be highlighted, if this is preferred; or opportunities near ecological networks or in deprived communities, for example. Being able to identify and query nature recovery opportunities at a landscape scale is vital to securing funding: an investment “pick ’n mix”, if you will.
2. Understand the green investment market in your area
Aligning nature recovery opportunities with “investable” benefits does not necessarily mean investment is possible. Depending on the circumstances, such as landowner type, planning and boundaries, different investment opportunities may apply. It is important to be aware of the full extent of possible investment incentives in your area, such as grants, payments, finance, subsidies and tax breaks; investment mechanisms, such as inverse auctions, share capital, environmental bonds and brokers; investment expectations, such as risk levels, timescales, expected return and performance measures, along with their various nuances, for example, varying eligibility criteria, and what the investments can achieve. A review of the local investment market will ensure a complete understanding of the types of circumstance that will more readily facilitate investment.
3. Identify priority investment areas and measures
Identify the best opportunities to restore nature’s systems and services in your area: what is really going to make a difference on the ground? The mapping and modelling of natural-capital outcomes in “heat maps” is the best way to identify general priority areas of connected opportunities, at scale. Aligning the parameters to score and identify priority areas and opportunities early on, with relevant potential investors, (which comes back to understanding the green investment market in your local area), is essential to securing investment, as this will vary by sector, investor and mechanism. We have seen some projects lose out on investment simply because they selected the wrong scoring parameters early in the process.
Do not lose sight of the importance of locality. Home in on your priority areas and draw on local and specialist knowledge: where and how do natural cycles of carbon, water and nutrients need reconnecting? Why have they disconnected in your area, is it for ecological, biological or social reasons? Focus on reconnections. Address the root causes with the right measures for each particular context and full system regeneration will follow.
4. Share your maps and make them interactive
The creation of a natural-capital investment web page provides a dynamic, near-real-time, interactive digital representation of an area’s natural-capital stocks, flows and value. Landowners will be able to attract investors who will be able to clearly understand the nature of the opportunity, with both parties coming together to optimise the opportunity’s impacts.
Fully optimised investments require linking a grounded examination of natural-capital stocks and flows and where there is the potential to restore them, to a robust understanding of when and where we can more readily attach economic benefit to the restoration projects. The final step is to identify which restoration projects are best able to attract additional investment incentives.
These steps are captured and expanded on in Figure 1, which sets out our natural-capital approach to securing investments for nature recovery, and nature recovery opportunities for investors; bridging the gap between the supply of, and the demand for, nature recovery.
Figure 1: Binnies’ natural capital approach – bridging the gap between supply and demand for nature recovery
Conventional natural-capital valuation studies are provided in Microsoft Word documents supported by spreadsheets and are aimed towards a technical audience. Creating a web-based, natural-capital investment presence optimises and communicates the value of multiple nature recovery projects, with a range of benefits, at a landscape scale, for everyone. It also helps to attract investment, planning consent and landowner and stakeholder support. This is vital in bridging the gap between green investment and nature recovery projects, at the scale and speed required.
A web-based presence requires a partner who can provide visualisation expertise with geographic information systems and ideally, high quality, near-real-time and historic satellite land-use data to show landscape-scale change. As well as being able to gather, analyse and model data, your partner needs the ability to present the analysis and the results in a clear, easy-to-update and interactive format. This may at first seem costly, but the approach brings economies when applied at catchment or multi-catchment scale. The approach will be vital for future monitoring purposes, to demonstrate large-scale impacts.
Examples of our interactive natural-capital mapping
10m resolution land cover data, based on time series over a year (not snapshot), up to date (available every 7 days), readily up-date-able, interactive portal access. www.rezatec.com satellite image © Rezatec Ltd, 2021.
* Dasgupta, P. (2021), The Economics of Biodiversity: The Dasgupta Review (London: HM Treasury). “The risks associated with biodiversity loss – reductions in the productivity and resilience of ecosystems along supply chains – have significant macroeconomic and financial implications.”