Natural capital: regional economic reliance analysis

3. Ayrshire REP

Ayrshire Regional Economic Partnership's economy relies on nature from fishing and forestry to the way the environment regulates weather and climate and supports tourism and recreation. Understanding this helps us realise how important nature is to jobs and business today, and how investing in natural capital can bring about future economic benefits. £2bn of Ayrshire’s output is annually supported by natural capital alongside an estimated 14,000 full time equivalent (FTE) jobs.

Top 5 industries accounting for the largest share of natural capital reliant economic activity are:

• Agriculture: 23% reliant
• Electricity: 21% reliant
• Meat processing: 9% reliant
• Water and sewerage: 8% reliant
• Forestry harvesting: 4% reliant

Estimated employment supported by natural capital in these industries:

• Agriculture: 3,800 FTE
• Electricity: 1,100 FTE
• Meat processing: 1,090 FTE
• Water and sewerage: 640 FTE
• Forestry harvesting: 700 FTE

The percentage of economic activity and jobs supported by nature that cannot be replaced by engineering solutions are:

• Agriculture: 59%
• Electricity: 84%
• Meat processing: 89%
• Water and sewerage: 86%
• Forestry harvesting: 92%

Ayrshire has a rich natural environment, including productive agricultural landscape, coastline, and upland habitats. Ayrshire REP also includes the Isle of Arran, a UNESCO Global Geopark, which contributes ecological value through its diverse habitats. 35% of land use in Ayrshire is dedicated to farming, with most of it being improved grassland used for dairy cattle^[3], and the Ayrshire coast is a key place for breeding seabirds, with 21 of the 24 UK species having bred or currently breeding on the Ayrshire coast and its islands^[4]. Ayrshire's environment is not only key to the region's economy, but also wider ecosystems across the UK.

To better understand the Ayrshire REP’s natural capital reliant output and employment, we can compare the data to ‘traditional’ economic measures from the National Accounts, which this analysis is based on. Ayrshire’s ‘traditional’ output is £13bn and 136,000 FTE jobs, while this model measures nature reliant output at £2bn and 14,000 FTE jobs. Some of this value of nature will be already reflected within the economic data, but some of nature’s value might be partially or not reflected in market prices, therefore part of the £2bn is included in the £13bn, but not all.

Key considerations:

• The SIC industry classifications in the analysis shows Agriculture as a singular unit, however there is a wide range of agricultural output across Scotland. Ayrshire is the second most important dairy farming area in Scotland, with 77,000 cattle³, which makes up a significant portion of the region's agriculture.
• Ayrshire's economy generates significant renewable electricity as part of its reliance on natural capital, with the main source of renewable energy being solar power. The region has been increasing investment since 2019, the North Ayrshire Council has built facilities on former landfill sites at Nethermains and Shewalton near Irvine which will generate a combined 13,000 MWh of energy^[5].
• The Isle of Arran contributes to Ayrshire REP's economy significantly through the production of unique, local goods and through the tourism to enjoy the island's nature. However, it should be noted that tourism (even directly supported by natural capital) is not separated out as an individual industry in this analysis. The output and employment effect of tourism, such as in hotels and restaurants, is captured in the data used for this analysis. However, the impact of tourism is not isolated due to methodology.