Applying the natural capital approach – the case of the Cashel Forest Trust

1st March 2022

Cashel pic1 - November 2020

Natural capital and land use / management

Natural Capital is a concept that enables us to think of our natural environment as an asset that, alongside its intrinsic value, provides flows of benefits to society and economy. Framing the natural environment in this way can help us understand the need to invest in and manage this asset, within safe environmental limits, so that we can continue to enjoy these benefits. Taking a natural capital approach is intrinsically linked with the sound use and management of land. Good land management maintains and enhances stocks of natural capital (e.g. soils, water, biodiversity) while optimising the delivery of desired public (e.g. carbon storage, recreation) and private (e.g. timber, food production) benefits, within safe environmental limits.

That is all well and good, but how do land managers apply these concepts in practice? This is precisely the question that the Cashel Forest Trust board of Trustees asked themselves when they considered how natural capital “thinking” might help inform the management and use of Cashel and the benefits this provides. 

What is Cashel?

Cashel Native Forest Centre1 (“Cashel”) is located on the eastern shores of Loch Lomond. A former hill farm, the site was acquired by the Royal Scottish Forestry Society (RSFS) in 1996 with the long-term aim of “demonstrating the restoration and regeneration of Scotland’s native woods, through sound forestry practice, for the benefit of the public”.

Cashel extends to some 1,250 ha rising from close to sea level to 580 metres. Between 1997 and 2005, around 300 ha of native broadleaves and Scots pine were planted and a path network established for access and recreation. Other key ecosystems present include semi-natural grassland / grazing, heath and peatland. The Cashel Forest Trust has charitable status and is managed by a board of Trustees with management oversight of the woodlands provided by a professional forestry advisor.

In August 2020, the Cashel Trustees began to explore the possibility of applying a natural capital approach to aspects of the management of Cashel, including the development of a simple Natural Capital Account (NCA). The Trustees were fortunate to form a collaboration with the University of Edinburgh to develop this project, which was undertaken by French placement student Eponine Loridant (École Polytechnique, Paris) supervised by Prof. Marc Metzger (University of Edinburgh).

The original motivation for the project was to generate information on the benefits and value(s) of Cashel’s natural capital: (i) to support funding applications; (ii) for use in promotional material; and (iii) to help demonstrate adherence with the Land Rights and Responsibilities Statement (LRRS) Land Ownership by Charities Protocol2 (i.e. in terms of the benefits provided by Cashel). However, the wider relevance of the natural capital approach to Cashel soon became clear as the project developed.

How was a natural capital approach applied?

The Cashel project applied two internationally recognised methods: 

• The Capitals Coalition Natural Capital Protocol (NCP)1. This structured the whole project, including framing the planning / management questions for Cashel that adopting a natural capital approach might answer and defining the scope (e.g. in terms of which impacts and dependencies were considered); and 

• The United Nations (UN) System of Environmental Economic Accounting-Ecosystem Accounting (SEEA-EA)2 framework. This provided the framework for developing the Cashel NCA (i.e. ecosystem extent and condition accounts, ecosystem service physical flow and monetary accounts), as part of the application of the NCP.

Methods for modelling physical flows of ecosystem services (ES) and valuing their benefits were drawn from peer reviewed and grey literature sources, ideally taken from similar contexts to Cashel (e.g. the recent application of the NCP by Scottish Forestry to a new woodland planting scheme at Larriston in the Scottish Borders3).

Due to time constraints, it was agreed that there should be a focus on five priority ecosystems present at Cashel and five key ES. These priorities were tested via application of the NCP and through discussion with the Trustees.
 

What were the main findings?

The “why” stage of the NCP was fundamental for building capacity and understanding of natural capital amongst the Trustees – moving
it from being a broadly abstract concept to something with practical and operational relevance. For example: 

• Greater awareness of how recreational visits to Cashel have the potential to yield multiple physical and mental health benefits, and the range of different tools available for quantifying and valuing these benefits;

• Clearer understanding of risks and opportunities associated with
the management of Cashel’s natural capital – e.g. the pros and cons
of intervening in natural regeneration of treeline woodland onto
peat, given the potential risks to peatland ecosystem function and carbon storage; and

 Impact on decision-making – a clearer understanding of impacts and dependencies on natural capital of existing and planned management operations, as well as the potential values associated with this, helping to refine management decisions (e.g. prioritising parts of the holding for further woodland expansion to achieve the greatest net carbon storage benefit, understanding the relative value of different ES provided by Cashel and strategies for optimising this, opportunities for private investment in Cashel – via voluntary carbon markets etc).

The measurement and valuation (“how”) stage of the NCP produced ecosystem extent, physical flow and monetary accounts for Cashel. The extent account was calculated using the NatureScot SLAM-MAP1, a high resolution (20x20m) land cover map derived from earth observation (EO) data. The extent account analysis showed that heath is the most dominant ecosystem type found at Cashel (525 ha) followed by peatland (487 ha). Woodland ecosystems make up 152 ha. The woodland total is perhaps lower than anticipated as the EO method captures relatively fine scale habitat variation within the planted area – in reality, the wooded area at Cashel is a mosaic of woodland interspersed with grassland, woodland fringes and clearings, and some smaller patches of blanket bog at higher elevations. 

Table 1: Cashel NCA - Physical and monetary flow accounts
 
 

Ecosystem service

Physical flow (per year)

Monetary flow (per year)


Monetary flow (discounted over 100 years)
Forest products
Timber
50 tonnes
£250
£24,000
Venison
40 deer
£3,000
£291,000
Carbon storage
Carbon storage
4,133 tonnes CO2e
x
£92,573,000
Renewable energy
Renewable energy
1,377,556 kWh
£25,000
£2,438,000
Recreation
Note: the values here represent different methods for accounting for the benefits of recreation rather than different constituents of total value
Recreation (avoided healthcare costs)
10,000 active visitors
£6,000
£600,000
Recreation (welfare)
10,000 active visitors
£169,000
£16,388,000
Recreation (time-use)
15,000 visitors
£821,000
£79,597,000
Recreation (visited habitats)
15,000 visitors
£78,000
£7,596,000
Recreation (costs of production)
15,000 visitors
£14,000
£1,358,000
Recreation (willingness-to-pay)
15,000 visitors
£2,000
£194,000
Education
Educational values
3,750 educational visits from school children
£3,500
£339,000
Lifetime asset value of Cashel’s natural assets
Note: this is the monetary flow value of all five ecosystem services above summed and discounted into the future
Upper estimate (high recreation value)
£175,262,000
Lower estimate (low recreation value)
£95,859,000

Table 1 shows the findings from the physical flow and monetary accounts, both in terms of annual flows and the lifetime asset value for Cashel. The physical flow account quantifies the modelled “flow” of ES from Cashel’s natural assets using relevant metrics (e.g. tonnes of timber, tonnes of CO2e, number of visitors). The monetary accounts use various valuation techniques to monetise the benefits derived from the ES provided by Cashel’s natural assets. The lifetime asset value is the total lifetime value of Cashel’s natural assets summed and discounted into the future. The asset lifetime was set at 100 years with a diminishing discount rate across this period in line with the ONS Scottish Natural Capital Accounts1. Table 1 also assesses the uncertainties in the NCA modelling (e.g. on account of data quality, key assumptions etc) using a RAG (red-amber-green) score.
 

What next?

This project demonstrated how a simple NCA could be developed for a landowning charity using existing secondary data and published methodologies. The accounts will be useful for the Trustees, helping to communicate the multiple benefits provided by Cashel and informing a natural capital approach to the ongoing management of the holding. The lifetime asset value for Cashel, with estimated lower and upper values of around £96M and £175M respectively, is clearly significant and demonstrates the important societal benefits provided by the sustainable management and use of Cashel.

However, there are many limitations and uncertainties associated with the values calculated in the project. These are principally related to the rigour and accuracy of the input data used in the physical flow accounts (e.g. assumptions around soil condition and soil carbon, visitor numbers are based on estimates rather than robust visitor survey data, etc). The aspiration is to improve the accounts going forward, through the collection and application of better quality data for the models.

Applying a natural capital “lens” to Cashel, via the useful and structured stages of the NCP, has helped the Trustees to take a more holistic view of the holding, by understanding more fully the range of benefits it provides. In particular, natural capital “thinking” has helped to reframe the approach to the upland portion of Cashel, comprised of circa 1,000 Ha of heath and peatland. The project’s limited focus on carbon storage (as the key upland regulating ES) has illustrated the values of Cashel’s uplands, both in terms of current carbon but also restoration potential. Consideration of other ES (e.g. biodiversity, water quality) would likely elevate this further.

With kind support from the British Ecological Society (BES), the trust has now (February 2022) commissioned a comprehensive survey of peatland depth and condition at Cashel. This survey will inform the approach to upland management strategy, e.g. in terms of: (i) priority locations for peatland restoration; (ii) ongoing sustainable management of peatland in better condition; and (iii) crucially, target locations where soils will permit the further expansion of woodland, notably montane scrub. In due course, the trust will also consider the potential for attracting private finance, for example via sales of carbon credits under the Peatland Code, and the risks and opportunities associated with this. Ongoing revenues from carbon finance have the potential to support other important activities at Cashel, e.g. buying the nursery stock and fencing for future montane planting, funding a ranger post, providing resources for volunteer activities.
 

About the author

Dr Peter Phillips is a Cashel trustee and resident of nearby Drymen. He is the Head of Natural Capital Land Management Policy at the Scottish Government.

Disclaimer

All views expressed in this article are those of the author and do not reflect Scottish Government policy.