Cost to UK of Neglecting the Environment

25 February 2016 | World Wide Fund – UK News Release

WWF-UK is calling on the Chancellor to put a natural capital ‘stress test’, which highlights the potential risks the economy faces from environmental damage, at the heart of the Budget.

Evidence shows that economic costs of neglecting our natural assets can no longer be ignored:

  • Mismanagement of river catchments is a major contributing factor to flooding, which is estimated to have cost the UK at least £5 billion this winter alone.
  • The economic value of the effect of small particulate (PM2.5) pollution on mortality in the UK was around £16 billion in 2008 alone, equivalent to 29,000 premature deaths.
  • £1.4 billion additional annual UK revenues could be expected if UK fish stocks recovered to the average levels seen before the 1970s.

WWF UK’s Greener Budget, published today, outlines how the Treasury could use the new ‘stress test’ to assess, for example, the consequences for business productivity should water stress worsen in drier areas of the UK such as the south east – and propose remedial action to be undertaken by government departments.

WWF also proposes that a business-focussed Natural Capital Task Force is needed to identify how the private sector can lead better management of natural resources, incentivising innovation and investment in a business-friendly way.  It is calling on the Chancellor to legislate for climate and natural capital-related financial risk disclosures by financial companies, on a mandatory comply or explain basis.

Trevor Hutchings, Director of Advocacy at WWF-UK, said:

“George Osborne recently spoke of an economic ‘cocktail of threats’ related to short-term falls in commodity prices and stock markets – and yet he’s said little of the trinity of longer-term risks posed by environmental degradation, resource scarcity and climate change.

“The Chancellor should use the Budget to report on the contribution that the natural environment makes to the UK economy, the risks to businesses and individuals associated with environmental damage, and the measures needed to maintain the healthy natural environment upon which our prosperity depends.”

WWF Ambassador Lord Adair Turner said:

“In the wake of the Paris agreement, and with the impact of climate change on homes and businesses becoming impossible to ignore, creating a green economy through smarter use of taxes and targeted public spending should be a far higher priority for government. Free markets won’t deliver this on their own. The Treasury needs to take a hard look at how we can use all available policy levers to drive this change, starting with this year’s budget.”

Research conducted for the government’s Natural Capital Committee suggests that investments in natural capital – including the adaptation of England’s farmland to provide a range of benefits from peatlands, forests, grasslands, as well as restoring fish stocks – would generate economic benefits worth over £9bn over 50 years – two to three times larger than the investment costs involved.


Notes to Editors

  1. Download the main report and summary report, and see business leaders including Zoe Knight (managing director, Climate Change Centre of Excellence, HSBC) and Dax Lovegrove (director of sustainability & innovation, Kingfisher Plc) discussing the importance of natural capital at
  2. WWF’s recommendations to HM Treasury for the annual Budget are as follows:

Promoting the protection and improvement of natural capital

Introduce a natural capital stress test to evaluate risks to the UK economy from natural capital degradation and depletion. This would identify the exposure of UK Plc and individual economic sectors to potential changes in stocks of natural capital and associated service/benefit provision, and inform decisions about what level of assets should be maintained to mitigate risk (and associated policy/investment requirements).

Incorporate a new section on natural capital in the annual Budget report. This should include information on stocks, service/benefit provision, risks, liabilities and future outlook. The 2016 report should draw on existing evidence (e.g. from the Natural Capital Committee (NCC) and UK National Ecosystem Assessment (UKNEA), with subsequent reports building a more complete picture as evidence gaps are filled and analytical capability improves.

Initiate a natural capital investment strategy, within the context of the government’s proposed 25 year plan for nature. Building on the work of the NCC, the Treasury should drive a cross-government work to identify priority natural capital investments, and to incentivise and secure funding.

Establish a UK business-focussed Natural Capital Task Force (NCTF), to identify how the private sector can best contribute towards natural capital goals, and to identify how public policy intervention can best incentivise action, innovation and investment in a business-friendly way. An NCTF could be jointly sponsored and coordinated by Defra and HM Treasury, to ensure cross-fertilisation of ideas and knowledge.

Decarbonising the UK economy and driving investment in low-carbon industries

Give industry the confidence to invest in renewables and energy efficiency, and clarify what financial support is available to the UK’s renewable energy industry beyond 2020.  This should support an ambitious 5th Carbon Budget (which should be passed by July 2016) and a new Carbon Plan explaining how Government intends to deliver against its climate commitments.

Fund a major programme of investment in domestic energy efficiency including the retrofit of UK building stock.  They should consider Introducing a regulatory approach, to ensure that deployment of energy efficiency measures is sufficient to enable us to achieve the 4th carbon budget.

Research and Development funding should be channelled to crucial technologies which are needed for the security of the future energy system. In particular batteries, smart technologies, and CCS require investment.

Developing a sustainable, thriving UK bio-economy

Develop a UK Bioeconomy Strategy building on previous work by BIS. This should consider how to promote new industries and jobs while creating a more sustainable, resource-efficient, low carbon economy, and which takes account of the interlinkages between the different aspects of the bio-economy to deliver optimal climate change mitigation.                                                                                         

Promoting a more resilient and sustainable financial system

Commit to adopt of a legislative framework for climate and natural capital-related financial risk disclosures by financial companies, on a mandatory comply or explain basis.  Providing a clear timeframe will help to speed up and mainstream action by the financial sector to develop methodologies for assessing these risks, and promote greater awareness of the need to manage these risks by financial companies and investors alike.

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