Natural Capital Accounting (NCA) is a critical tool that Ministries of Finance can use to better understand and manage their natural assets. Natural capital accounts, once in place, can help governments make more informed decisions about development as well as investment in conservation, restoration, and sustainable use of nature.
In 2019, the Finance Ministry of Finland convened the first technical meeting to gathering representatives of 19 country in Helsinki. The meeting built consensus on key documents that would guide the goals and actions of the Coalition of Finance Ministers for Climate Action, inlcuding a set of common principles, so-called, the 6 Helsinkin Principles – designed to support the Finance Ministers to share best practices and experiences:
- Align our policies and practices with the Paris Agreement commitments;
- Share our experience and expertise with each other in order to provide mutual encouragement and promote
collective understanding of policies and practices for climate action;
- Work towards measures that result in effective carbon pricing;
- Take climate change into account in macroeconomic policy, fiscal planning, budgeting, public investment
management, and procurement practices;
- Mobilize private sources of climate finance by facilitating investments and the development of a financial
sector which supports climate mitigation and adaptation;
- Engage actively in the domestic preparation and implementation of Nationally Determined Contributions
(NDCs) submitted under the Paris Agreement
Last week, the Helsinki Principle 4 and 5 workstreams hosted a joint workshop on Natural Capital Accounting (NCA). Serina Ng (Lead for HP5, Her Majesty’s Treasury, UK) opened the event, followed by a presentation from Alessandra Alfieri (Chief, Environmental Economic Accounts Section Economic Statistics Branch, Statistics Division, UN Department of Economic and Social Affairs) on NCA and the UN SEEA Central Framework and SEEA Ecosystem Accounting.
Raffaello Cervigni (Lead Environmental Economist, Lead of the Global Program on Sustainability Trust Fund, World Bank) then presented on the World Bank’s assistance to countries in implementing NCA and provided an overview of the findings from the World Bank report, The Economic Case for Nature, and relevant policy implications.
Alastair Johnson (Senior Economic Adviser, Environment Analysis Unit, Department for Environment, Food & Rural Affairs, UK) and Adam Johnson (Economic Adviser in the Green Book and Major Projects Unit, Her Majesty’s Treasury, UK) presented on the UK’s experience with NCA and how the information from these accounts are being used.
Sam Mugume (Ag, Assistant Commissioner, Macro Economic Policy Department, Ministry of Finance, Planning and Economic Development, Uganda) shared Uganda’s experience setting up NCA, how implementing NCA has facilitated cooperation between various parts of government, and challenges that remain in most effectively utilizing NCA data.
Finally, Irene Alvarado Quesada (Director of Environmental Statistics Unit at the Central Bank of Costa Rica) provided the central bank perspective on how and why the Costa Rican Central Bank is engaged in implementing and managing the country’s Natural Capital Accounting. The presentations were followed by a discussion on how the private sector is using or can use national NCA information and progress of corporations in applying corporate NCA approaches.
Coalition members have recognized that in their efforts to align their economies with the goals in the Paris Agreement, it is important that Ministries of Finance pursue actions at the climate-nature nexus – addressing the climate and biodiversity crises simultaneously. Climate change and biodiversity loss are closely interlinked, as is clearly illustrated in the recently published joint report of the Intergovernmental Panel on Climate Change (IPCC) and the Intergovernmental Platform on Biodiversity and Ecological Services (IPBES). The Intergovernmental platform was awarded last month by the Fondation Prince Albert II of Monaco, for its valuable work and expertise on global biodiversity scale, ecosystems and its contributions to populations, as well as the tools and methodologies applied to protect and sustainably use these vital natural assets).
Earlier this year, the Economics of Biodiversity: the Dasgupta Review, published by the UK, called for governments to account for and more effectively manage their natural assets. Such accounting and management could contribute meaningfully to the achievement of government climate change mitigation and adaptation targets and 30×30 conservation and restoration targets (to protect 30% of the world’s land and ocean by 2030).
In many countries, natural assets are being depleted, leading to an overall decrease in wealth that jeopardizes future growth. In addition to leading to more effective governance of natural assets, providing data on natural assets to the private sector can better inform private investment decision making about how to manage the natural assets that companies depend on or impact through their operations. There is potential for improved data provision on natural assets to mobilize private investment for nature.
Source: Coalition of Finance Ministers for Climate Action – Natural Capital Accounting