Policy and Investment Design


‘Capturing’ the economic value means that economic values that we estimate are turned into actual money. This could be through policy instruments that make the polluters pay for the environmental damage they cause, such as full cost pricing, green taxes, tradeable permits and voluntary agreements. It could also be through the creation of new markets that capture the benefits (positive values) of the environment such as payments for ecosystem services, biodiversity offsets and habitat banking.

Our work for the European Commission and the Department for Environment, Food and Rural Affairs in the UK has led the way in contributing to the policy developments on:

  • Payments for ecosystem services – enables payments to those who manage the natural environment so that others benefit from its services. This increases the provision of sustainable management;
  • Biodiversity offsets – is a system in which residual biodiversity damage caused by development is compensated by new conservation actions that provide benefits equivalent to the damage, and
  • Habitat banking – a market in which biodiversity offsets are stored over time (‘banked’) and traded, allowing compensation to be delivered with greater ecological and economic efficiency.

Several stakeholders need to be involved in implementing habitat banking and offsets including regulators, ecological, economic and legal advisors, brokers and buyers and sellers from private, public and non-governmental sectors. Our work to date qualifies us as economic advisors and brokers who can assess environmental damage and equivalent offsets or credits.

We have also contributed to the design of policy instruments such as:

  • Vehicle excise duty in the UK;
  • Landfill tax in the UK;
  • Voluntary agreement with UK agrochemical industry for reducing pesticide use ;
  • Full cost pricing for water supply and wastewater managements;
  • Incentives for recycling;
  • Transferable development rights and transferable flood permits; and
  • A potential tradable permit system for nutrient use in agriculture.

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