For our economy to thrive, we need a thriving natural world 

The UK Government has set out an approach to economic policy that is an investment-led growth model with the objective of ensuring security and resilience. Yet it misses a fundamental fact: our economy is rooted in nature. And while we continue to use nature’s resources at an unsustainable pace, we won’t have the economic security we need to build a thriving economy.  

New research by economic consultancy eftec demonstrates the many benefits of investing in nature recovery. The report, commissioned by the RSPB, shows how addressing the nature finance gap will help meet the government’s economic objectives, including delivering economic growth, securing long-term jobs and supporting wellbeing improvements across wider society. 

Earlier this year, Chancellor of the Exchequer Rachel Reeves set out the government’s economic policy in what she described as the new age of insecurity. The conclusion was that ‘we must build growth that is both secure and resilient’ if we are to deliver rising incomes, revenues for public services and safeguard people. The approach is called securonomics. 

The Chancellor diagnosed the major cause of Britain’s economic problems as our ‘anaemic levels of investment’. Investment is seen as vital not only for giving people the best tools to do their jobs and generating innovation but also for ‘building the infrastructure on which our whole economy relies’. 

To lay solid foundations for future prosperity, it’s essential that we invest in nature. In his seminal review, The Economics of Biodiversity, commissioned by HM Treasury in 2021, Sir Partha Dasgupta showed that our economy is embedded in nature and that a key failure in our current economic approach is that we are using nature’s resources 1.6 times as fast as our ecosystems can replenish them. Put simply our economic model is unsustainable. 

The UK’s poor economic performance has gone hand in hand with nature degradation and we are one of the most nature depleted countries in the world. The Dasgupta Review showed that globally between 1992 and 2014 the stock of natural capital per person declined by nearly 40%.  

Natural capital is our stock of natural assets, which include soil, air, water, minerals and all living things. It provides us with a wide range of ecosystem services, which make human life possible and are essential to our prosperity and wellbeing. To return to the UK Government’s economic approach: securonomics needs to recognise that it is the natural infrastructure on which the whole economy depends.  

The decline in our natural infrastructure is reaching a critical point for the economy. The Green Finance Institute show that damage to the natural environment is already slowing the UK economy and could lead to an estimated 12% reduction in GDP in the years ahead – a larger impact than from the global financial crisis or Covid-19.  

Yet we know that nature represents good value as an investment. A report by the UNEP finds that the benefit-to-cost ratio of closing the natural capital gap to meet the nature-related Sustainable Development Goals in the UK is 34 – every £1 invested will bring £34 in benefits. Despite all this economic evidence, we have a nature finance of gap of £5-6bn per year in terms of what is required to meet our nature commitments.

The research from economic consultancy eftec estimates the multiple benefits of an approach to economic policy in the UK that puts nature recovery at its heart. It sets out that if we invest to address the nature finance gap over the next 10 years this will help meet the government’s economic objectives. 

This research estimates the impact of additional investment in activities such as restoration of habitats, species, woodland, peatland and the marine environment. The results show that this investment would support £80bn of new economic activity, helping to generate new economic growth. This would be growth that would be environmentally more sustainable and reduce the risks to our economic prosperity. 

It would also deliver 80,000 long term, skilled and productive jobs, many of which would be based in local rural communities with lower employment opportunities. The evidence suggests that nature recovery investment may generate stronger economic impacts than other forms of investment.  

As well as these significant contributions to growth and employment, there is a wider economic rationale for nature recovery investment as the ecosystem services it delivers will support wellbeing across society. New estimates show that these benefits amount to hundreds of billions if not trillions of pounds in value for society. 

Investing in nature recovery would also support the Chancellor’s objectives for economic and national security by contributing to climate mitigation, adaptation and food security. It would also mitigate financial risks from nature’s decline. The highest risks include those to crops, livestock and commercial trees from multiple climate hazards, including water scarcity. Nature-based solutions have significant potential to mitigate these risks, such as through natural flood management and regenerative agriculture.  

The report also highlights how nature recovery offers future opportunities to export knowledge-based services. The UK has world leading academic institutions, NGOs, and knowledge-based clusters and there are further potential economic benefits of developing a global leadership role in nature recovery.  

As a leader in nature recovery research and policy, the UK can position itself as a global centre for nature finance through its knowledge and skills base - London currently sits at the top of the Global Green Finance Index (GGFI). Developing the UK’s expertise in nature finance can enhance its position as a green finance centre.  

Nature recovery can help the UK break out of its doom loop of underinvestment, low productivity and unsustainable economics and put us on a new path to improved prosperity and wellbeing. So far it has been omitted from the Chancellor’s securonomics, but this could and should be rectified urgently by three clear actions: 

1. The Government sets out a new Green Finance Strategy for the UK which shows how public and private finance will combine to address the nature finance gap. 
2. The Office for Budget Responsibility is tasked with assessing nature-related financial risks as part of its reporting process at every fiscal event. 
3. The Chancellor’s fiscal rules put nature on an equal footing with other assets and allow borrowing to invest in natural capital. 

Only by recognising the vital role nature plays in our economic security and resilience, can the Chancellor’s securonomics be put on a sounder footing. There will be no economic security without nature recovery.