The Environment Strategy for Scotland: Driving the Transition to a Nature Positive Economy - A Synthesis of Policy Levers for Governments

This report supports the research project ‘Delivering the Environment Strategy Outcome on Scotland’s Economy: Evidence base and Policy levers’. It focuses on the transition to a nature positive economy, summarises key evidence, and presents a synthesis of potential actions.

7. The importance of nature to society and the economy

The section above on ‘Nature positive economies’ presented an emerging concept of embedding the idea of societal transformations beyond the goal of restoring biodiversity. In this section the need for such a transformation is reviewed in light of the importance that nature has on societies and economies.

An effect of the COVID-19 pandemic was to slow down all of the world’s economies (IPBES, 2020). Initially, this had some positive effects on the level of consumption of resources and a reduction in levels of pollution. The Scottish Government notes the desirability and opportunity to plan for a green recovery from COVID-19, such as locking in reductions in GHG emissions (Scottish Government, 2020). However, recovery policies may create a disproportionately high impact if they are not coordinated with the aim of transitioning towards nature positive economies, with a risk of exacerbating impacts on social and natural boundaries (IPBES, 2019; Pascual et al., 2022).

Approximately three billion people live in circumstances that are highly vulnerable to climate change (Pörtner et al., 2022). Current unsustainable development is increasing the exposure of ecosystems and people to climate hazards. Since 1970, trends in agricultural production, fishing, bioenergy production and the harvesting of materials have all increased, but contributions of nature to wellbeing, mostly regulating and non-material services, have declined (IPBES, 2019).

The use of natural resources has more than tripled since 1970. However, benefits accrued and environmental impacts created have been uneven across countries and regions (UN, 2019). If benefits are mainly accrued to final consumers in rich economies, environmental damages are suffered by those who supply goods and environmental services, and depend more on nature. In many circumstances it is the poorest and most vulnerable communities to suffer the highest death tolls caused by climate-related disasters, air pollution and stresses on natural resources (e.g. soil and water quality). Estimates show that more than one billion jobs in sectors such as farming, fisheries, forestry and tourism depend on healthy ecosystems (SEI, 2022). Thus impacts on nature can contribute to unemployment and exacerbate inequalities between and within countries, with the share of global wealth mainly in private hands and governments becoming poorer (Chancel et al., 2022).

The 2021 drought in California, USA, led to restrictions in the use of water which caused reductions in cultivation, a shortage of crops, and increases in retail prices, in turn creating inflationary pressures in the US economy (Power et al., 2022). The scarcity of stocks of natural resources such as water and the loss of regulating ecosystem services can have an adverse impact on businesses. For example, pollination supports 75% of global food crop types, including fruits and vegetables, and some of the most important cash crops such as coffee, cocoa, and almonds with estimates of market values ranging between US$ 235 billion and US$ 577 billion (FAO, 2022). Negative impacts on natural capital can create indirect effects on markets with consequences for prices of commodities, reductions of revenues for businesses, and a loss of purchasing power of household income. Multiple challenges to supply chains and increasing costs for business are expected (e.g. Foot, 2022).

Economic impacts can translate into risks for the public and financial sectors, potentially compromising financial stability. Adverse impacts on nature may lead to direct and indirect fiscal implications for government finances through lower tax revenue, damage to infrastructure, additional expenditure on welfare, increased costs of ecosystem restoration, slower economic growth, and increased sovereign credit risk (Power et al., 2022).

Progress has been made in valuing and measuring stocks and flows of natural capital using physical and monetary metrics to thinking about their roles and uses (Alpizar et al., 2020; Costanza et al., 2014a; Dasgupta, Partha, 2021; Turner et al., 2010). Evidence shows the implications of the degradation of nature on the loss of income for economic sectors such as forestry, agriculture and tourism, and benefits to communities (e.g. Nature4Climate, 2020).

Researchers have included natural capital into integrated assessment models to account for the benefits nature provides and explore macroeconomic implications on losses to GDP, and how this is shared amongst countries under scenarios of business as usual compared to those of nature positivity (WWF, 2020). Businesses have developed quantitative metrics to assess biodiversity impacts at site, project, product, supply chain and corporate levels, by means such as targeting the analysis of dependencies and impacts on the environment (Capitals Coalition, 2021a; Joseph, 2018). There is also increasing recognition that the knowledge and economic models of indigenous peoples and local communities can offer holistic understanding that connects the wellbeing of people and nature (Carr, 2020; Pio and Waddock, 2021; Maseyk et al. 2019).

Political and institutional actions that direct transformative change (Nature4Climate, 2020; Power et al., 2022; World Economic Forum, 2020; WWF, 2020) can set the conditions in which nature positive economies can emerge in the following ways:

  • building a clear political vision that incorporates diverse voices and perspectives, including those of Indigenous Peoples (Carr, 2020; Pio and Waddock, 2021; Maseyk et al. 2019; Ruth, 2020);
  • making nature more visible in decision making by mainstreaming full-cost accounting of natural capital into economic decision-making (Barbier et al., 2020; Bateman and Mace, 2020; Costanza et al., 2014a, 2021; Turner et al., 2019, 2010);
  • integrating nature into business decisions by measuring and valuing their dependencies on natural capital (Capitals Coalition, 2021b, 2021a; Freeman, 2017; Waddock, 2020b);
  • financing nature protection by developing and incorporating biodiversity metrics into public and private finance (Cooper and Trémolet, 2019; Loorbach et al., n.d.; OECD, 2019);
  • working with nature by investing in restoring ecological infrastructures and nature-based solutions;
  • co-creating a shared vision for a nature positive future through inclusive, participatory processes and multi-stakeholder dialogue (Green Economy Coalition, 2022.; Waddell and al, 2021; Waddock, 2021, 2020c).



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