Scottish biodiversity strategy: report to Parliament 2020 to 2024

2. Outcome 2: Natural Capital

Natural resources contribute to stronger sustainable economic growth in Scotland, and we increase our natural capital to pass on to the next generation.

2.1 Encourage wider acceptance and use of the Natural Capital Asset Index (2012) including comparable measures for the marine environment.

There is a clear recognition in Scotland that natural capital is one of the four capitals underpinning our economy and that the natural environment is one of Scotland's greatest assets.

Scotland’s Natural Capital Asset Index (NCAI) provides a robust and consistent framework for monitoring changes in Scotland’s natural capital, helping us to make better-informed decisions, based on an awareness of the relationship between nature, human well-being and economic activity.

The NCAI is a National Indicator in the National Performance Framework acting as an indicator of sustainable development that takes better account of the multiple benefits of nature. The NCAI continues to be updated to further refine its methodology and improve the data on which it is based. A Feasibility study for a Marine Natural Capital Asset Index for Scotland showed that this would require improved data and indicators.

2.2 Use this index to influence decision-making and market-based approaches, so that wider monetary and non-monetary values for ecosystem services are recognised and accounted for.

An open access, GIS-based Landscape Scale Natural Capital Tool is under development by NatureScot, and funded by the Scottish Government, to help make better informed and standardised decisions on land management by taking a natural capital approach at the landscape-scale in Scotland. The tool helps to capture and visualise the unseen multiple benefits of nature (ecosystem services) with the aim of helping to prioritise interventions and attract public, private and social enterprise financing for nature protection and restoration.

This prototype natural capital tool is being piloted by the South of Scotland Regional Land Use Pilot (RLUP) and NW2045 sub-RLUP pilot area with further collaboration planned as the tool develops further into a Minimum Viable Product in 2024 and 2025. See also s1.1 for discussion of RLUPs.

The Woodland Carbon Code (WCC) is a UK government scheme administered by Scottish Forestry allowing the owners of new woodland planting schemes to calculate the total carbon sequestration their woodland will achieve over the lifetime of the trees. In March 2023 there were over 57,000 ha of woodland projects registered under the WCC in Scotland, projected to sequester nearly 18 million tonnes CO2e.

The Peatland Code allows the reduction in carbon emissions through peatland restoration to be quantified, validated, and verified in a similar way to the Woodland Carbon Code. In July 2024 there were just over 200 projects registered in Scotland under the Peatland Code covering nearly 28,000 ha of peatland restoration and projected to avoid the emission of almost 6.5 million tonnes CO2e.

The Facility for Investment Ready Nature in Scotland (FIRNS) is a joint initiative between Scottish Government, NatureScot, and the National Lottery Heritage Fund that offers grants to organisations and partnerships to help develop a viable business case and financial model to attract investment in natural capital restoration projects.

The Landscape Enterprise Networks model is a system to attract new forms of investment into biodiversity and nature restoration through the buying and selling of Nature-based Solutions that deliver ecosystem services, such as water quality management, flood risk management, resilient supply of crops, carbon sequestration, or biodiversity outcomes. It is being trialled in three catchments in Scotland.

The Scottish Marine Environmental Enhancement Fund (SMEEF) is hosted by NatureScot with support from Scottish Government and Crown Estate Scotland to leverage private investment towards projects that recover, restore or enhance the health of marine and coastal habitats and species across Scotland. Since 2021, SMEEF has distributed £3.3 million to 50 projects around our coasts and seas.

Scottish Government published its Blue Economy Vision in March 2022, and published a subsequent document on Delivering Scotland's Blue Economy approach in November 2022. The Vision represents a noteworthy shift that aims to place nature and climate at the heart of decisions regarding the development and use of Scotland's seas, their protection, enhancement, and the diverse benefits our seas provide. It knits together many existing strands of work, while also integrating some newer ambitions - including the adoption of marine natural capital approaches and improving the ‘ocean literacy’ of Scotland's people.

Innovation in responsible investment in natural capital

Achieving the outcomes in the Scottish Biodiversity Strategy is a public and private responsibility. Scottish Government is currently working to refine its understanding of the role private finance can play alongside existing public investment in nature, such as the £65M Nature Restoration Fund (NRF).

Collectively Scottish Government, NatureScot and SEPA are working closely with CreditNature under CivTech Challenge 8.6 to develop a new voluntary biodiversity market in Scotland that aligns with the Scottish vision of a ‘values-led, high-integrity market for responsible investment in natural capital’. We will be working together to develop an option for a new voluntary biodiversity market in Scotland that we believe has strong potential to help scale responsible private investment into nature restoration in Scotland.

2.3 Undertake a major new programme of conservation, management and restoration.

Restoration programmes are discussed above at ‘s1.1 Encourage and support ecosystem restoration and management’.

2.4 Monitoring this Outcome