Tarmac Explore the Concept of Corporate Natural Capital Accounting

01 April, 2016

First published in the March 2016 issue of Quarry Management as Taking Nature into Account

Tarmac’s Mancetter Quarry takes part in trial project to explore the concept of Corporate Natural Capital Accounting

The next phase of restoration is about to begin at a Warwickshire quarry – but this time with a difference. The site owners, Tarmac, know from a pilot study that the restored quarry will create value for the local community and the national economy. The findings have the potential to positively impact future quarry management not just for Tarmac, but across the country.

Mancetter Quarry is one of four trial projects to explore the concept of Corporate Natural Capital Accounting (CNCA). It is an idea which is gaining traction at the highest levels. Central to a 25-year plan to deliver a healthy natural environment, unveiled in autumn 2015 by the Department for the Environment, Food and Rural Affairs (Defra), natural capital is also set to be incorporated into the Treasury’s national accounts by 2020.

Natural capital is, essentially, the elements of nature which provide value or benefit to people. Air, land, soil, biodiversity and geological resources are all assets just as much as, for example, buildings or bridges. Assets have a financial value, and the Government estimates that Britain’s natural capital is worth some £1.6 trillion.

CNCA assesses the value of natural capital in the form of a ‘balance sheet’ for an organization or for society. In doing so, a picture is drawn of the benefit natural capital brings, and so the rationale for investing in projects which enhance the value of natural capital at a given location. The Mancetter pilot has shown how this can work in practice.

Testing the theory

Tarmac were the only quarry operators to take part in the CNCA pilot. Mancetter was an ideal location, with the potential to have a further 2 million tonnes of minerals extracted up to the end of its operational life in 2024 and aftercare work then taking place to create a natural habitat.

For Dr Martyn Kenny, sustainability director at Tarmac, there was a strong rationale for the trial. ‘Tarmac are committed to making a ‘net positive’ contribution to biodiversity – ensuring that at the end of a quarry’s operational life the local ecology is richer and more varied and sustainable than before. Through the pilot, we wanted to test whether we could track our progress against this commitment using hard evidence and financial metrics.

‘Additionally, we wanted to see how CNCA could support asset and resource management, and boost our community engagement programmes by showing the contribution our restoration schemes can deliver to the local environment.

‘Lastly, we wanted to learn how the approach could improve the resilience and sustainability of our long-term operations.’

The pilot takes off

Tarmac worked within a framework developed by the UK Government’s Natural Capital Committee, designed to ascertain the current worth of the site’s natural capital and then attribute a future value to it post restoration.

The CNCA process starts with a register of the natural capital assets which an organization either controls or benefits from.

Mike Gale is the Tarmac production manager who heads operations at Mancetter. ‘We evaluated a wide range of areas,’ he said. ‘One was carbon sequestration and storage from soils and vegetation. Another was habitat and biodiversity; ecological restoration and habitat management has been taking place at the quarry since 1999. Also important were the minerals yet to be quarried, which have a natural capital value.

‘Natural water resources were a key part of the assessment, and recreation and amenity were a central consideration.’

The approach to data gathering was twofold. It started by looking in detail at day-to-day site operations, taking data from Cranfield University, which had previously been commissioned to quantify the site’s ecosystems. This was supplemented with analysis from consultants who developed modelling techniques to provide final data sets.

Proven to add value

Compared with its condition at the time of the pilot, the CNCA process found that the fully restored site, after its quarrying life, will deliver significantly improved wildlife conservation, carbon sequestration and recreation benefits. The financial value of these will exceed the costs of restoration and Tarmac’s net positive ambitions for the site will be delivered.

Mancetter Quarry had a total net natural capital, excluding mineral reserves, of
£0.11 million at the time of the pilot. For the year 2032, following Tarmac’s after-care period, this was forecast to be £3.56 million. The worth derived from carbon sequestration and biodiversity was higher and, for the first time, a value could be placed on the amenity the restored site will offer.

‘This shows that a restored quarry carries significant value,’ said Dr Kenny, ‘and highlights the benefits of the CNCA process.

‘This was encouraging but the analysis does not give a whole picture, as the framework has no scope to consider the worth of natural capital once put to economic use.

‘For our pilot we accounted for the value for mineral reserves at the time of the study, but the methodology required a zero value for the extracted mineral in 2032. We believe, though, that the working of mineral reserves delivers significant societal, environmental and economic benefit, as aggregate products are used in the construction of assets such as housing, schools and transport infrastructure.

‘These are accounted for in different commercial and economic ways but we believe that when assessing the benefits accruing from a mineral site, the wider benefits arising from the use of the aggregates should be recognized in some way as it is for other forms of natural capital asset.’

Mancetter and more

What are the next steps for Tarmac? At Mancetter, the latest phase of restoration works is under way. It includes the installation of raised earthworks to screen local views of the quarry, with more fundamental restoration taking place by 2025.

For CNCA, Dr Kenny confirms that Tarmac will continue to work with Defra on its programme. ‘We’re starting to put theory into practice but there’s a lot more development to come. The pilot has helped refine the thinking and the concept of treating nature as an asset that delivers quantifiable services.

‘The benefits of the process are clear and we’re proud to have been the first construction materials provider and quarry operator to have embraced Corporate Natural Capital Accounting.’

With Defra’s 25-year plan for the environment now announced, and completed CNCA pilots under its belt, it seems to be a methodology which will find more widespread application over the coming years.