Clients: Defra and Cholderton Estate
Service area(s): Accounting for Natural Capital
Country/region: UK
eftec team: Ece Ozdemiroglu, Duncan Royle, Sophie Neupauer, and Natalya Kharadi
“Public money for public goods” is a phrase popularised by the Rt Hon Michael Gove MP, Secretary of State for Environment, Food and Rural Affairs. It has been influential in the development of the 25 Year Environment Plan and the consultation for the Environmental Land Management (ELM) update to deliver a green Brexit.
There is increasing understanding that public goods include soil health, water quality, greenhouse gas emissions reductions and enhancements to natural habitats and biodiversity. However, measurement of public goods and using this evidence in policy remains a challenge for the ongoing debate.
We applied natural capital accounting to identify the public goods farming can produce, using the 1,000-hectare Cholderton Estate as a test case. The Estate is a fully organic farming enterprise. It has eliminated the use of inorganic fertilisers and pesticides and is managed to maximise the diversity of plant, insect and bird species. The Estate also manages the Cholderton & District Water Company. Estimates for Cholderton are compared to ‘a typical (intensive) farm’ defined as one which also has 1,000 hectares for dairy, but which uses artificial fertilisers, has higher stocking densities and does not invest in soil quality and biodiversity.
Natural Capital Account Conclusions
We show that financial profits can be made at the expense of public goods. However, continued damage to public goods can reduce productivity and profitability in future. This is why it’s important to develop appropriate policies that can support both food production and the provision of public goods.
The bottom line for Cholderton is a benefit of £0.5 million in present value terms over 50 years.
The bottom line for a typical farm is a loss of £8.8 million in present value terms over 50 years.
While the typical farm makes more financial profit due to higher stocking rates (and associated subsidies), it also causes significantly more damage to public goods. The public good benefits provided by Cholderton arise from avoiding inorganic fertiliser, lower stocking rates, and better soil management practices that improve carbon sequestration in soil.
It is not possible to express all public goods in monetary terms. This case is not an exception: in particular, the benefits of the farming practice in Cholderton in terms of range of wild flowers, grasses, insects and birds, and rare breed are not captured in these monetary estimates but are shown in the full balance sheet.
Policy Implications
Accounting for the negative repercussions for society alongside the positive food production of a typical farm begins to build a clearer understanding of what sustainable food production might look like. The consequences of the farming approach at Cholderton has produced a rich countryside teaming with wildlife within a productive and viable food production system that secures clean air, clean water, healthy microbial content to naturally fertile soil and supporting healthy ecosystems.
Future public funds can be used to support good farming practices by being more directly targeted to combinations of food and public goods, not one at the expense of the other. Natural capital accounting can serve as a useful tool for measuring and monitoring the provision of both private and public goods.
Published output
The natural capital account is available here.