The UK is heading towards an eye-watering fiscal debt of £1.95 trillion. This is rightly exercising conservative politicians and the millennials who will bear the brunt of it. It is well understood, reasonably well quantified, and has a firm position in public policy discussions. 

But there is another debt being racked up. This debt we have only just begun to count. In the UK, it is debt which conservatives have committed to calculating and reducing. It is the debt we owe to our natural environment. 

This debt was well understood by Edmund Burke. We are “temporary possessors and life-renters” of the earth who must not “leave to those who come after... a ruin instead of a habitation”. Lady Thatcher picked this up in her superlative environmental speech to the UN: “The last thing we want is to leave environmental debts for our children to clear up… No generation has a freehold on this earth. All we have is a life tenancy, with a full repairing lease.”

Where environmental benefits are not traded in markets, it is hard to value them. However, as with fiscal accounting, consistent measurement over time and cautious, multilateral consolidation can bring increasingly sound data.

In the contemporary world, we often forget our dependence on this natural environment. Many of us are divorced from the soil and water that provides our food, the pollinators, pests and predators that feed and fertilise. We breathe (reasonably) clean air without much thought to the plants which oxygenate it, and the parks which filter it. We pay scant attention to the less tangible benefits of the natural environment: buoying our spirits, boosting our physical health, bringing us into contact with others.

Yet at the moment, we are spending down this natural environment. For example, the UK’s Priority Species Indicator (covering 213 species) has declined 64 per cent since 1970, a decline in biodiversity matched around the world.

We should not pretend this debt is uncomplicated. Where environmental benefits are not traded in markets, it is hard to value them. However, as with fiscal accounting, consistent measurement over time and cautious, multilateral consolidation can bring increasingly sound data.

Therefore the UK has pursued Natural Capital Accounting. Progress has been steady. Work began after conservatives entered government in 2010. A Natural Capital Committee that reports to the Treasury was set up in 2012. The goal is to incorporate UK Natural Capital into the UK Environmental Accounts by 2020. 

The accounts will be a mix of financial and non-financial reckonings. The committee has said: “In principle, we would like to measure natural capital stocks and link them to current and future values, as well as features that indicate their own sustainability [but] there are several practical difficulties.”

To overcome these difficulties, the committee will measure across three groups, namely: “natural capital stocks” (such as species, soils, minerals); “major land-use categories” (such as woodlands, or enclosed farmland) and “goods/benefits” (such as food, clean air, amenity). The first two will likely be reckoned metrically. The committee notes that “changes in [the latter] yield changes in human well-being that, in turn, can be valued in monetary terms in most cases”.

The idea moves the debate on from broad sustainability in three important ways. First, it brings more precise quantification of and value to the factors of production (Dieter Helm would go so far as to say “it forces us to see the environment as a (or indeed the) key input into the economy”). Secondly, it drives a clear distinction between renewable and non-renewable assets. Thirdly, it allows trade-offs of those assets across landscapes, countries, and even the globe.

The UK government is funding the development of Natural Capital Accounting in Botswana, Colombia, Costa Rica, Guatemala, Indonesia, Madagascar, Rwanda and the Philippines. This will likely create investment opportunities for environmental philanthropists and for businesses seeking to secure supply chains. The Netherlands has also experimented with some natural capital approaches. It is also being tested by businesses such as the Coca-Cola Company, the Dow Chemical Company, Nestlé and Shell.

Already the thinking has prompted the creation of new markets in the UK, for example allowing the water utilities to purchase better quality intake water – a trend that will continue as we take control of agricultural policy.

As things stand, we are leaving environmental debts to our children. We should be as hawkish about these as we are on fiscal debt. 

Some conservatives will take issue with natural capital. There will be those who feel its pricing is not robust enough. There will be those who find the utilitarianism, or privileging of humanity, hard to stomach: for example, it may value nature and wildlife accessible to humans (within reach of a city) more highly than less accessible nature. Still others might feel that pricing (for example, the beauty of a landscape) can never capture the full value, and will lead to distorted decisions. It is true that there are other solutions, such as better forms of private ownership and intergenerational moral responsibility.  However, in the context of the contemporary polity, Natural Capital carries that high conservative value: pragmatism.

As things stand, we are leaving environmental debts to our children. We should be as hawkish about these as we are on fiscal debt. Our wildlife is under enormous pressure (in the UK, driven by crass CAP regulation). In places our soil is degrading, we are overusing aquifers, and we are pushing carbon into the atmosphere. On the other hand, we have seen how quickly natural resources, like fish, can spring back under the right circumstances, or how problems can be solved by technical innovation. Natural capital is a tool which will accelerate replenishment and innovation, and create new markets. We will choose whether it will condemn us for our debts, or praise us for our responsibility.