NCA is a way of measuring and reporting the stocks and flows of natural resources (water, soils, plants, animals). The rationale is that, since nature is important to society and the economy, we have to measure the stocks and flows of natural assets and make sure they are managed in a sustainable way.
In particular, the Farm Zero C project will follow the System of Economic and Environmental Accounting framework, which is the United Nations system of NCA which is the accepted international standard (Figure 1). This allows to highlight changes in the extent of stocks of natural capital year-by-year and the corresponding flows of ecosystem services (the contribution of nature to our welfare), as well as any improvement or deterioration in their condition.
Why is NCA important for the farmer?
As the management expert Peter Drucker said, “If you can’t measure it, you can’t manage it”. NCA is therefore important for the farmer because it allows to keep track of the stocks of natural capital and their condition, whether they are stable, improving or deteriorating, which could have an adverse impact on the farm ecosystems and its profitability.
It can also help to see how the farm is doing compared to others in the same area/sector and highlight opportunities for changes in management that can lead to ecological and economical improvements.
The following video adapted from the TCD website provides useful information on the benefits of NCA.
How is natural capital valued?
The NC stocks and the ecosystem services stemming from them are quantified and valued using different ecological or economic techniques, depending on the type of stock or service.
A healthy stock of natural capital will provide ecosystem services which will result in benefits to the farmer (crops, forage, sequestration of carbon in soil and plants, amenity value of the farm).
First of all, a quantification in biophysical terms is carried out (tonnes of carbon sequestered, tonnes of pollutants purified, etc.). A valuation in monetary terms can then be carried out.
In principle, the value can be for example the exchange market price, if a market for the service exists. Otherwise other techniques try to establish the willingness to pay for the service through stated preference (people are directly asked how much they would pay for the service) or a revealed preference (the willingness to pay is inferred based on consumer behaviour).
Research at Farm Zero C
At FZC stocks of natural capital are being accounted for and ecosystem services quantified(some also valued economically) first at Shinagh farm then at 10 replicator farms. The extent and condition habitats at Shinagh are being quantified using data from fieldwork already carried out at Shinagh (soil sampling, habitat assessment), from remotely sensed data and from literature.
In particular the following ecosystem services are being considered:
- Forage provision
- Carbon sequestration
- Water purification
- Habitat provision
- Amenity value
The assessment at Shinagh and the 10 replicators farms represent a first in applying NCA and the SEEA framework at farm level in Ireland. As such it has the advantage of using fine scaled data and local surveys, with the possibility of upscaling the quantification and valuation to the national scale. This could be very important, considering that there are approximately 18,000 dairy farms in Ireland, with 1.5 million cows.
At the moment there is no single repository for data on natural capital for Ireland. There are different governmental bodies, NGO’s and universities involved in the assessment and mapping of natural capital, like Natural Capital Ireland (NCI). NCI is a partner to the EPA sponsored program called INCASE which is mapping natural capital at catchment level for four Irish catchments. The NPWS carried out a project called “Mapping and Assessment of Ecosystem Services” which stems from the EU project with the same. Soil and vegetation carbon, habitats and food were mapped at a variety of scales. Further work has been done for peatlands, particularly in the EPA SCAMPI project and the project of Trinity College and UCD about the restoration of degraded peatlands. NCA are also being developed by Bord Na Mona and Coillte and further projects are studying the marine environment.
The following regulations are in support of the NCA.
The European Green Deal – This EU growth strategy aims to “protect, conserve and enhance the EU’s natural capital, and protect the health and well-being of citizens from environment-related risks and impacts.” The European Green Deal stresses that EU policies should contribute to preserving and restoring Europe’s natural capital by integrating ecosystems and their services into decision-making.
EU Biodiversity Strategy 2030– This long-term plan to protect nature and reverse the degradation of ecosystems is calling for the implementation of an NCA initiative. In 2021 the UN adopted the SEEA framework to better account for ecosystems in national economic planning and policy development. The EU supported the UN efforts with the Knowledge Innovation Project on Integrated Natural Capital Accounting (KIP-INCA) which produced statistics on the extent and condition of natural capital stocks, as well as flows of ecosystem services.
The Irish National Biodiversity Action Plan 2017-2021– The action plan demonstrates Ireland’s continuing commitment to meet its obligations to biodiversity. These efforts are reflected with the development of NCA registers and the integration of these registers into economic policy and decision making. It also aims to initiate NCA through sectoral and small-scale pilot studies using the SEEA framework.
The Farm Zero C project therefore aligns with European and Irish aims and objectives.
Economic and Environmental Benefits
NCA is a powerful tool for policy makers, the general public and farmers to realize the contribution of nature to our wellbeing, therefore allowing better management of natural resources and ensuring that their value is retained in time. Often, simple changes in management can improve the condition of habitats, therefore providing benefits for the planet, for the farm and also for the farmer, in the form of economic incentives.