An appetite for greening the recovery with natural capital accounting - Fifth Policy Forum on NCA for better decision making
The Fifth Policy Forum on Natural Capital Accounting for Better Decision Making was co-organized by the World Bank’s Global Program on Sustainability (GPS), the United Nations Statistics Division (UNSD), and the Government of the Netherlands. It took place online on 15 and 16 September 2021 and focused on green recovery and practical ways in which Natural Capital Accounting (NCA) can make green recovery initiatives more effective and sustainable. The Policy Forum brought the NCA and the green economy communities to discuss how NCA can provide the necessary data to monitor and to guide green recovery efforts and institutional reforms.
The Forum was opened by Karin Kemper, Global Director, Environment, Natural Resources and Blue Economy Global Practice of the World Bank, Stefan Schweinfest, Director United Nations Statistics Division and Carmen Hagenaars, Deputy Director, Inclusive Green Growth Department, Ministry of Foreign Affairs, the Netherlands.
“The world is screaming for data, NCA data to support a number of policies, sustainable development, climate change, biodiversity, ocean, etc. and the good news is that we are starting to produce these data”, said Stefan Schweinfest.
The key word of NCA is integration, integration between economic, environment and society and of different data sources, traditional and big data, statistics and geospatial. Karin Kemper remarked NCA can support economic analyses that are needed to compare investment options and to make decision about conservation.. The COVID 19 pandemic presents an opportunity to create economies that are more resilient and advance decarbonization while at the same time increase economic performance.
Post-COVID19 recovery must count on nature
The Forum, attended online by more than 330 participants, recognized that the pandemic has underscored the need to take an integrated approach to designing policies which takes into account the interdependencies and spill over effects. The Forum asserted that government spending, policies and management of the economy must now tackle a breadth of pressing challenges alongside the post-COVID recovery, such as climate change, biodiversity conservation and attainment of the Sustainable Development Goals – and that NCA can help.
Professor Diane Coyle’s keynote highlighted the importance of official statistics in influencing government and business decisions. On the adoption of the SEEA Ecosystem Accounting (SEEA EA) at the historic session of the UN Statistical Commission in March 2021, Professor Coyle said “We now have an important platform to bring these important statistics into policy and decision making around the world” that provides an important tool to integrate natural capital into the fiscal lenses. The COVID pandemic has generated an appetite for resolving the climate change and biodiversity loss crises alongside with the economic crisis. Governments are beginning to seek more holistic recovery responses that take into account the natural capital together with the physical capital and other forms of capital (e.g. human and social capital)..
Progress in NCA around the world holds promise for greener recovery
The high level panel included a video presentation from Egypt’s Minister of Environment, Ms. Yasmine Fouad, and a moderated discussion with Mr. Juergen Voegele, Vice President for Sustainable Development of the World Bank, and Mr Elliott Harris, Chief Economists and Assistant Secretary General for Economic and Social Affairs of the United Nations. Ms. Fouad noted that in the aftermath of the COVID pandemic, NCA is particularly important in supporting Egypt’s government policies which aim to put in place rigid environmental policies integrated within the national systems, that is the public sector, the private sector, the banking sector and civil society. Mr. Voegele stated that “nature-positive policies, which are good for nature and deliver economic growth at the same time, can support a green recovery”. Mr. Harris added that “Natural Capital Accounting allows us to translate the concepts from different dimensions into a language that people in the economic and the financial space can understand.” This is particularly important to understand the interlinkages and spill over effects that have been overlooked in the past with policies being developed in silos. In the discussion, both Mr. Voegele and Mr. Harris emphasized that we now have a common language and approach in NCA for integrating environmental issues in economic decisions, but we still need to build understanding and trust in the accounts so that their full potential is realized. Mr. Harris further emphasized the importance of National Statistical Offices (NSO) which provide a national function. He stressed the urgency to enable NSOs to produce SEEA accounts and for adequate resources to be allocated to the strengthening of national statistical offices. Only countries that have compiled the accounts can appreciate the relevance of such data to support on-going discussions on climate and biodiversity. At the same time we need businesses to request natural capital data in order to give a push for the NSOs to elevate this data to the same level as economic statistics. Mr. Harris said,
"We can no longer afford the luxury to take decisions based on hunches or what we think the reality should be. We need to base decisions on what we know reality to be, and it is statistical information and other sources of data that give us the understanding of what reality is. We need to invest in statistics if we want better policy making”.
The case for linking NCA and green recovery was made in the background paper that was prepared and presented by the Netherlands Environment Assessment Agency, which showed how the SEEA can address all stages of green recovery decision-making. Evidence of progress was provided in 18 examples presented by a number of countries, including Australia, Brazil, Colombia, Costa Rica, France, India, Ireland, Liberia, Mexico, Mozambique, Nigeria, Peru, Rwanda, South Africa and Uganda (all presentations available on the Policy Forum website). Sharing experience was considered a useful way to encourage cross fertilization between the environmental accounting and green economy communities. Tools that have been tracking the recovery across many countries were showcased by the OECD (revealing promising signs that some recovery spending is shifting from “grey” to “green”) and the Green Economy Coalition (which tracks countries’ use of NCA and formation of natural capital committees as two of the 21 core green recovery policies).
With the adoption of the SEEA EA, the NCA programme of work is shifting towards implementation. The United Nations Statistics Division provided details of the SEEA implementation strategy, which will be submitted to the next UN Statistical Commission. In support of the implementation of the accounts, a tool “ARIES for SEEA” was developed. It harnesses existing data sources and models to accelerate land cover and ecosystem accounts production even in countries with scarce data. On using the accounts, the World Bank exhibited modelling using NCA data that supports public policy and investment decisions by business and donors. Further, theUNSD and UNEP launched a technical report Policy Scenario Analysis using the SEEA Ecosystem Accounting.
Looking forward – NCA ensuring people and nature thrive together
Such a wealth of material inspired rich discussions in several breakout sessions. These generated many ideas for advancing NCA for green recovery, as well as advancing NCA for the forthcoming Conferences of the Parties of the UN Framework Convention on Climate Change and the Convention on Biological Diversity. Common threads during the discussions included the need to increase funding and capacity for both producing and using NCA; to link accounts more with the analyses and modelling being used to make green recovery decisions; to build understanding and trust in the accounts; and to embed NCA in the machinery of government. To institutionalise NCA, involvement of ministries of finance and central banks will be critical, as NCA can help in tough recovery decisions on taxing, borrowing and spending – thereby integrating NCA across the ‘fiscal triangle’.
The Forum concluded for the NCA and green recovery communities to continue to work together. Integration, coordination and shared understanding are essential, and the SEEA gives us a common language for better, more coherent management of the economy and nature. As devastating as the COVID-19 pandemic has been, the recovery provides an opportunity to resolve long-standing social, economic and environment problems. As the Forum’s keynote and high-level panelists asserted, the consequences of maintaining the status quo are dire, but NCA can guide our decisions for a better, greener future, so that nature and people can thrive together.
Photo by David Zawila on Unsplashed
Photo by Dawid Zawila on Unsplash