12:30 Barry Gardiner (Labour)

Recognising that many of those services are predominantly public goods, however, presents a considerable problem for Government accounting and effective policy making. Classical economics treats such benefits and ecosystem services as externalities—free goods with no market price. Given that they have no market price, their destruction does not show up as a cost in the balance of costs and benefits. As a result, natural ecosystems become depleted and the services that they provide become degraded, and human society suffers the consequences of that loss of natural capital. We lose clean air and suffer asthma. The fish in our seas disappear and we lose a vital source of food. We destroy our forests and suffer climate change; we build a cement factory and lose a beautiful view.

Finally, on greenhouse gas emissions, it records:

“Current methodologies for assessment of the effects of policies and measures on greenhouse gas emissions are policy specific with no standard guidance available…In cases where quantification of the climate change effect is impractical, an assessment of whether the policy is likely to increase or decrease emissions, combined with a qualitative assessment of the significance of this change, should be included in the appraisal.”

Only last month, in Copenhagen, the world spectacularly failed to agree a pathway to reduce emission levels to 450 ppm by 2050. The current saturation level stands at 370 ppm. Coral is doubly vulnerable to climate change because it cannot survive where CO 2 concentrations make the pH balance of the sea water too acidic and it dies if the water becomes too warm.

I ask my hon. Friend specifically to task her officials to use tropical coral reefs as an appropriate study to refine their methods of ecosystem valuation. We have a superb opportunity to do that in relation to the current Foreign Office consultation on the future of the British Indian Ocean Territory. The Chagos archipelago in the Indian ocean comprises 55 tiny islands set in 250,000 square miles of what are some of the world’s cleanest seas. It is one of the largest and healthiest coral atolls on the planet. The Foreign Office is consulting on whether that pristine coral reef should be established as a full, no-take marine protection area for the whole of the territorial waters. It is officially an environmental preservation and protection zone, and a fisheries conservation and management zone, and evidence suggests that if that action were to be taken, the British Indian Ocean Territory might be one of the coral reefs to hold out the longest against climate change, and could act as a potential seed bank for the reintroduction of coral to areas where the indigenous tropical reefs had been degraded and bleached. That could enable coral reefs to be re-established, once anthropogenic greenhouse gas emissions were brought down to more manageable levels.

This year, 2010, is the international year of biodiversity. In Nagoya this year, the parties to the United Nations convention on biological diversity will meet. It is often seen as a poor relation to the United Nations framework convention on climate change, the parties to which have just met in Copenhagen. It is my belief that the CBD is every bit as important as its more glamorous sibling.

A change in climate on its own would not matter were it not for the fact that species and ecosystems will not be able to keep pace with the rate of climate change. It is the inability of species to adapt and maintain biodiversity that will cause the ecosystem services upon which human life depends to break down.

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12:50 The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry)

I congratulate my hon. Friend the Member for Brent, North (Barry Gardiner) on securing a debate on the important topic of Treasury accounting in relation to natural capital. When he applied for it, I doubt whether he envisaged us debating the subject on a day on which, if the forecasters are to be believed, Britain will probably be feeling the effects of extreme weather. Of course, the inconvenience of unaccustomed snow in this country is nothing compared to what may happen in developing and poor countries if we cannot stem the tide of climate change. Part of that process will involve a proper understanding of economics in relation to natural capital and an improvement in our evidence base in relation to policy making.

Much valuation research is ongoing, however, to improve how such environmental impacts are accounted for. For example, updated guidance on the value of greenhouse gas emissions will be published shortly, with the intention of reviewing those values every two years as our knowledge of their impact and cost develops. Guidance already exists on adapting long-term policies to the expected impacts of climate change, and on how to value changes in biodiversity and in air quality.

The Government are fostering further work to promote the understanding of natural capital issues and improve the evidence used in policy making. We are funding the work of the UK climate impacts programme, which helps organisations to assess the effects of climate change on construction, working practices, service delivery and health in their localities. It is funding a £1 million national ecosystem assessment, which will report in 2011 and be the first comprehensive analysis of the UK’s natural environment and the benefits that it provides to society and economic prosperity. It is also supporting the economics of ecosystems and biodiversity study—a major international initiative that aims to draw attention to the global economic benefits of biodiversity, that highlights the growing biodiversity loss and ecosystem degradation, and draws expertise together to enable practical action.

The Government are keen that the UK should remain at the forefront in developing best practice in relation to public accounting. We therefore propose the introduction of a system of regular sustainability reporting, including related expenditure, by all Departments in their annual reports and accounts. That will begin in 2011-12. As a minimum, Departments will be required to report annually their performance against their sustainability targets for greenhouse gas emissions, waste minimisation and management, and their use of finite resources.

A great deal of work has already been done and continues to be undertaken to improve the framework for policy making in relation to the natural environment, climate change and sustainability. Valuation research has already been published in relation to a large number of assets, and further research is ongoing.

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