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It’s been more than 50 years since the German-born British economist Ernst Schumacher first coined the phrase ‘natural capital’ to highlight the value of nature, with assets including our forests, fisheries, rivers, peatlands and farmlands, as well as biodiversity, microorganisms, soils and minerals.
Since then, numerous reports and studies have highlighted the critical ecosystem services provided by natural capital, showing how it underpins economic prosperity and human wellbeing. In 2021, the Dasgupta Review called on governments to measure “inclusive wealth” – produced, human and natural capital – when determining economic success, describing nature as “our most precious asset”.
Indeed, the Office for National Statistics values UK ecosystem services at £1.8trn, equivalent to 72% of GDP, while the Green Finance Institute estimates that environmental deterioration could cut economic growth by 6%-12% by the 2030s.
However, despite evidence for the value of natural capital, MPs, environmental groups and industry membership bodies have accused ministers of adopting a “lazy narrative” in recent years that portrays nature as a “blocker” or “inconvenience” to economic growth.
“It seems like the conversation has taken a bit of a backward step, with some politicians characterising environmental protections as a blocker to development or a hindrance to economic growth, and that really flies in the face of the evidence that’s been produced over the past 10 years,” explains Jonathan Nichols, senior associate director of natural capital at consultancy firm Jacobs.
“The government’s own evidence, which has been developed using taxpayer money, has clearly demonstrated that nature is absolutely crucial to economic prosperity and resilience.”
Around 18 months ago, ISEP’s Biodiversity and Natural Capital Steering Group, of which Nichols is a member, began working on new policy guidance for the government to better incorporate the value of nature into decision-making.
This year, after consulting with a range of infrastructure organisations – including Network Rail, SSEN Distribution and National Highways – the group produced a report with six key recommendations, chief of which is for the government to “formally recognise natural capital as critical national infrastructure (CNI)”.
“The recent UK national security assessment on global biodiversity loss concludes that global and ecosystem degradation and collapse threaten security and prosperity, with every critical ecosystem on a pathway to collapse,” says ISEP policy and engagement lead and paper co-author Lesley Wilson. “We must take nature, biodiversity and natural capital much more seriously.”
There are 13 CNI sectors currently recognised in the UK, including energy, water and health. These are defined as the “critical elements of infrastructure”, where loss or compromise could result in a “major detrimental impact” on the delivery of essential services and have a “significant impact on national security, national defence, or the functioning of the state”. These sectors benefit from heightened regulatory scrutiny, mandated security standards, specialised government support and proactive protection strategies.
“If we consider natural capital as critical infrastructure, then it becomes part of government decision-making, budgeting and spending, as well as risk and economic strategies,” Nichols says. “It is not a silver bullet that will solve everything, but it will put nature on par with the other sectors for investment and development so it is taken as seriously as energy security, pipelines and undersea cables, for example – because it’s just as important.
“We’re not going to have a thriving economy if we don’t have a healthy network of natural assets that are functioning and providing key ecosystem services that protect our businesses and health.”
The National Infrastructure and Service Transformation Authority (NISTA), launched in April last year, is responsible for overseeing the strategic planning, delivery and improvement of CNI to drive economic growth. Formally recognising an additional sector does not require new legislation, but a NISTA spokesperson tells me that “such designations do not happen often”, adding: “the most recent was government designating data centres and cloud infrastructure in 2024; before that, space and defence in 2015.”
Crucially, ISEP’s paper does not recommend that natural capital be designated as a separate CNI sector in its own right – rather that it be recognised as underpinning and complementary to all existing CNI sectors by their responsible bodies.
“If we were planning to build a data centre in an area that might impact a highway or overload the grid, we probably wouldn’t do that, whereas with nature, the conversation is often framed around bats or newts getting in the way,” Wilson explains. “Nature is sometimes seen as expendable when, actually, it is intrinsically linked to economic growth. The conversation should be around how we can both deliver new developments and enhance nature without making unwise sacrifices that undermine the resilience benefits functioning ecosystems provide.”
The UK government’s 10-Year Infrastructure Strategy, published last year, includes principles for the design of new developments, such as the incorporation of nature-based solutions, with ‘grey’ solutions only deployed when greener options are not viable. Meanwhile, Defra is undertaking work to quantify the economic value of natural capital and incorporate this into government policy. However, CNI recognition could take this to the next level and mainstream natural capital so it is embedded into decision-making.
“There are certain sectors that have adopted a natural capital approach, such as the water sector, but there isn’t a consistent approach across sectors, and there is no evidence that it is informing the government’s own spending priorities,” Nichols says.
“The Environmental Audit Committee last year recommended that a natural capital approach to decision-making should be adopted more broadly but, unfortunately, most of the government’s response was about nature markets, outsourcing it as a private-sector issue. Yes, we need to develop nature markets – they are very important – but we also need to embed natural capital into government decision-making, which is what we are trying to address through our policy recommendations.”
Another recommendation in ISEP’s paper is for the formation of a Strategic Nature Network (SNN), and for it to be designated as a nationally significant infrastructure project (NSIP). This would involve creating a kind of ‘National Grid for nature’, with high-value, joined-up nature hotspots and bottlenecks prioritised for investment.
“A good parallel that’s often used is the National Cycle Network for cycling routes, and this would be the same thing for nature, providing the ecological connectivity that we need,” Nichols says. “After classifying natural capital as CNI, the SNN gives us the tangible, on-the-ground product to build and invest in.
“Just like a big new road or railway line, it will need not only technical, environmental expertise but also communications expertise, programme management, asset management – all of the different capabilities and resources that are needed for any other NSIP.”
Local nature recovery strategies are already being created across different regions of England, “but they are too granular to represent strategic priorities at the top-down national level,” Wilson says, adding that “an SNN would allow for the mapping and connection of strategically important areas of nature across the UK”.
An SNN is already being mapped out, led by the Rebuilding Nature Alliance. This is a body made up of private sector and regulated businesses, including major infrastructure organisations across many CNI sectors, some of which contributed to ISEP’s paper and developed the recommendations.
The ISEP report suggests that a dedicated Natural Infrastructure Investment Fund for nature restoration projects to connect the SNN should also be established. This would create early-stage investment and provide private-sector confidence and targets for critical locations, with the SNN being recognised in national policy statements and spatial development strategies, it said.
“People have spoken about an SNN and classifying natural capital as critical infrastructure before, but until our paper, no one had done the work to review the definitions, collate the evidence and set out the logic,” says Nichols. “Our recommendations also contribute to the discourse by posing the ‘what next?’. If we recognise that natural capital is critical infrastructure, what should we do about it?”
He says it’s “surprising” that some policymakers still fail to recognise the inextricable link between economic growth and nature protection and enhancement, given the government’s own evidence.
When we think of critical infrastructure, we tend to imagine the digital and communication networks or healthcare systems that keep the economy and society running – but we often forget that natural assets underpin every one of them.
Wilson says: “We enjoy the shade that nature provides on a sunny day, or the protection against floods during heavy rainfall, but it’s only when that disappears and rain runs straight down our hills and flood our homes because the trees have gone, for example, that we notice how valuable our natural assets are – we take it for granted.”
And it’s not only about the negative effects of what we might lose. Studies indicate that nature restoration projects return around £3 of value for every £1 invested, with benefits stemming from job creation, health improvements, carbon storage and numerous other ecosystem services. There are huge economic and social gains to be had from investing in nature.
“If we’re chasing economic growth by investing in things that erode our natural ecosystems and planetary support system, that’s going to lead to economic losses far in excess of that growth,” Nichols says. “Our paper is focused on supporting the government’s economic agenda, not hindering it. The paper reminds policymakers that simply removing environmental protections is not going to deliver growth but will undermine it instead. Recognising natural capital as CNI, embedding natural capital in decision-making, and investing in our natural infrastructure will build a more resilient economy and society.”
ISEP’s paper Natural Capital is Critical Infrastructure, by Jonathan Nichols MISEP CEnv, Lesley Wilson and Oliver Seville, can be downloaded at bit.ly/NatCapInfra
Chris Seekings is the Deputy Editor of ISEP’s Transform magazine, which is published biomonthly for ISEP members. Chris’s role involves writing sustainability-related news, features and interviews, as well as helping to plan and manage the magazine’s other day-to-day activities.
