Distributional issues in natural capital accounting: An application to land ownership and ecosystem services in Scotland

Accounting for ecosystems is increasingly central to natural capital accounting. What is missing from this is an answer to questions about how natural capital is distributed: that is, who consumes ecosystem services and who owns the underlying assets.

In this paper, the authors examine the significance of the ownership of natural capital – specifically, land which provides ecosystem services – in the context of natural capital accounting. They illustrate this with regard to two ecosystem services – carbon sequestration and air pollution removal, and a range of ecosystem types and land ownership in Scotland, a context in which land reform debates are longstanding.

The findings indicate the relative importance of private land in ecosystem service supply, rather than publically-held land. The authors find relative concentration of ownership for land providing comparatively high amounts of carbon sequestration. For air pollution removal, however, the role of smaller to medium sized land holdings closer to urban settlements becomes more prominent.

The findings have implications for evolving debates about agricultural and environmental policy in the UK. More generally, the authors argue that the paper’s contributions represent important first steps in connecting natural capital accounting to broader concerns about disparities of income and wealth across and within countries.

Key points for decision-makers

• Natural capital accounting (NCA) describes a body of statistical work that seeks to construct better metrics of nature for policy and land-use management decisions. At its core is an emphasis on measuring flows – typically called ‘ecosystem services’ – as well as the underlying ‘natural capital’ stocks giving rise to these outputs.
• A growing number of countries have set statistical processes for ecosystem accounting in motion and it is such efforts that the authors describe as NCA in this paper.
• The paper focuses on a spatial dimension that has so far been neglected in NCA: how natural capital wealth is distributed among institutional actors – i.e. people and organisations.
• It considers a local ecosystem service – air pollution removal, and a global service – carbon sequestration, which are benefits consumed by individuals that are not obviously the outcome of an economic production process.
• In the case of carbon sequestration in Scotland, most of the value associated with this ecosystem service flow was mainly provided by woodland, more than half of which is privately owned. A large portion of this carbon sequestration (56%) apparently occurs in medium to very large properties.
• In the case of air pollution removal, it is ownership of land that it is in relative proximity to urban population centres that is important. Woodland and farmland contribute most to air pollution removal services in Scotland. Compared with carbon sequestration, there is a greater tendency for smaller and medium sized holdings to be significant for this ecosystem service.
• These findings permit reflections on the concentration of land ownership in the context of the supply of ecosystem service flows and indicate strongly that private institutional actors are central to shaping natural capital policy, and distributional issues that could arise from payments to landowners for providing natural capital services.