Making the Case for Nature: insights from Scotland's Natural Capital analyses

Conclusions: Key insights from Scotland’s Natural Capital Analysis

There has been a growing body of evidence on natural capital and its application to policy in Scotland. Since 2022, a number of key research reports and analysis on natural capital have been published by the Scottish Government making it an opportune time to take stock of this evidence and draw out key insights from Scotland’s natural capital analysis.

The purpose of this work is not to develop new analyses but instead to set out and clearly communicate the key messages and implications of the existing natural capital evidence to a wide range of stakeholders.

The report sets out key messages by five themes. In this concluding section, the key facts and messages most relevant for different audiences are highlighted.

Key messages for the public

The State of Nature report highlights that Scotland is a nature depleted country. Much of this depletion occurred over the last century with data for recent years indicating stabilisation for both terrestrial and marine ecosystems.

• Scotland’s natural environment is central to our identity as a nation. It is fundamental to our health, our quality of life, and our economy.
• Scotland’s natural capital provides services that benefit people and the economy. These include the provision of natural resources from forests, agriculture and the sea; the provision of clean water, pollination, recreational activities, and tourism; and spaces for outdoor recreation and nature appreciation.
• Scotland’s natural capital has been in long term decline, and this poses a risk to our wellbeing and our economy.
• The Scottish Government has committed to rebuilding natural capital, which aims to support more sustainable policy choices, meaning that current and future generations can enjoy and benefit from our natural environment.

Key messages for economic policy

It is estimated that, at a minimum, around 14% of Scotland’s total economic output and 260,000 jobs are supported by natural capital.

• Scotland’s economy is highly reliant on natural capital. Moreover, this cannot all be substituted by man-made interventions, so if natural capital is damaged this value will be lost. Therefore, action to recognise these dependencies and maintain natural capital in good condition is essential to ensure sustainable economic growth.
• Scottish sectors such as tourism, agriculture and food & drinks are all highly dependent on natural capital; climate change poses a risk to their contribution to the Scottish economy. For example, drought poses risks to the production of whisky in Scotland.
• Key research has highlighted the importance of acting early to stem the decline in biodiversity and natural capital, demonstrating that the benefits of early action far outweigh the costs.
• Integrating natural capital into appraisals and business cases in all areas of Government should be the ‘norm’ as set out by HM Treasury Green Book and this approach can support the growing case for investment in nature-based solutions. Natural capital can be viewed as a form of infrastructure – natural infrastructure – similar to engineered solutions for climate change or flood risk.

Key messages for businesses and investment in nature

Recent analysis highlights that nature degradation could lead to a significant reduction in GDP in the UK.

• Degraded habitats can lead to risks to the economy including higher insurance costs and declines in productivity such as through supply chain interruptions. Identifying opportunities to invest in nature can address key nature risks which affect Scottish businesses.
• The industries most dependent on natural capital are among the most important sectors for the Scottish economy such as whisky and renewable energy. This means that risks to natural capital can translate into risks to these industries and the country’s economic performance.
• Both public funding and private finance will be essential to ensure sufficient investment to meet nature restoration goals. Scotland is playing a leading role in the development of high-integrity natural capital markets as set out in the 2024 Natural Capital Market Framework.
• The ‘Facility for Investment Ready Nature in Scotland’ (FIRNS) provides funding to grow the use of private investment and market-based mechanisms for the restoration of Scotland’s nature. The Scottish Government is investing in the restoration of natural capital through programmes such as the Scottish Forestry Grant Scheme (woodland creation) and Peatland Action (peatland restoration). Other opportunities are in development, including an Ecosystem Restoration Code to act as a new high-integrity market mechanism.
• Investment in carbon credits generated by woodland creation and peatland restoration has been significantly focused in Scotland, accounting for 81% of UK Woodland Carbon Code projects and 87% of Peatland Code projects.

Key messages for local and regional policy

The Highlands and Islands, the Tay Cities, and the South of Scotland have the highest share of habitats providing key ecosystem services to the rest of Scotland. These areas provide services that support our environment, economy and wellbeing.

• The value of some ecosystem services, such as air pollution removal, recreation, and flood regulation can be relatively higher in areas where there is a larger number of people who can benefit. For policy, this has the important implication to consider location to population (among other factors) in the development of natural capital investments.
• The Scottish Government’s designation of the first Natural Capital Investment Zone (NCIZ) for the South of Scotland, providing a means for strategic targeting of natural capital investments.
• Identifying opportunities spatially enables a wide range of public and prvate organisations to decide where they can support projects which can optimise benefits and enable higher returns.
• NatureScot is leading on the development of an innovative new tool, the Natural Capital Tool, that will facilitate decision makers to take a natural capital approach for managing land at the landscape scale in Scotland.

Key messages for the health and wellbeing sector

Nature provides significant health and wellbeing benefits. Annual cost savings to the NHS in Scotland due to nature-related recreation activities is estimated at £870 million.

• Tourism contributes more than £4 billion to the Scottish economy each year, with 40% of tourism spend a result of nature- based tourism.
• The direct annual health benefits from time spent in NHS Scotland’s open spaces was estimated at just under £82 million.
• A recent study highlighted the current and potential social and economic value generated by investments in NHS Scotland open spaces, both at the health board and national levels.
• Recent evidence in Scotland and the UK is showing encouraging results for Green Social Prescribing. Nature-based activities are a relatively cost-efficient way to support people across a wide spectrum of mental health needs and offer value for money.