The Budget must work harder to tackle the growing risks from environmental degradation, natural resource scarcity and climate change if the UK is to enjoy resilient economic growth in the future, states WWF-UK in its recent report. Unless the Government act soon, the consequences for Britain’s prosperity are likely to be costly in the long-term.
In its new 2016 report ‘A Greener Budget: choices for a prosperous future’, WWF-UK sets out a suite of practical policy recommendations that the Treasury could implement through the 2016 Budget to help tackle these risks and put the UK on a more sustainable and resilient economic footing.
WWF-UK is calling on the Chancellor to put a ‘natural capital stress test’, which highlights the potential risks that the economy faces from environmental damage, at the heart of the Budget.
The report outlines how the Treasury could use such a stress test to assess, for example, the potential future consequences for business productivity if soil erosion is allowed to continue at current rates or if water stress were to worsen - and to help identify the most appropriate course of action.
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) air pollution on mortality in the UK was around £16 billion in 2008 alone, equivalent to 29,000 premature deaths
- £1.4 billion in additional annual UK revenues could be expected if UK ﬁsh stocks recovered to the average levels seen before the 1970s.
Drawing on the latest evidence, the report shows how tackling these issues through decisive policy action would be a win-win for the environment and the economy - insulating the economy and businesses from growing risks, cutting public sector costs, generating hundreds of thousands of new jobs, creating new market opportunities and improving UK competitiveness.
WWF also proposes that a business-focused 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 also calls on the Treasury to make disclosure of environmental risks a legal requirement for financial institutions, enabling investors to better understand their risk exposure and to evaluate which investment options deliver the most sustainable returns.
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. “
Τhe 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 (senior fellow at the Institute for New Economic Thinking and former chairman of the UK Financial Services Authority), 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.”
Read more: Report by WWF-UK