A strategy for valuing resources: incorporating environmental, social and economic value

Joint policy event by All-Party Parliamentary Sustainable Resource Group and Resource Recovery from Waste programme, 28 November, Houses of Parliament, London.

As the release of Defra’s ‘Resources and Waste’ strategy draws ever closer, MPs, policy makers, academics and industry gathered in the House of Commons for a stimulating discussion around how the social and environmental values associated with such strategies can be incorporated into government decision-making.

Geraint Davies MP

Dr Alan Whitehead MP opened the session, providing a warm welcome to the group and reinforcing the importance of resource recovery and waste management in working towards the ambition of ‘net zero environmental impact’. Geraint Davies MP reiterated the importance of government intervention on issues where there are clear environmental and social benefits for doing so, in particular consumers need information to make choices, whether this is regarding health, social or environmental aspects.

Nick Molho (The Aldersgate Group) highlighted that business and industry are heavily reliant on the goods and services provided by the natural environment. Resource efficiency makes sense from an environmental perspective, but also for improving the long-term resilience of a business.  Resource efficiency is a key area of policy cutting across a number of government strategies, however action in this area has been slow in part due to its relevance to multiple government departments.

Professor Phil Purnell (University of Leeds and convenor of the Resource Recovery from Waste programme) provided a compelling case for a circular economy and resource recovery in terms of financial, environmental, resource security and societal values. However, whilst the business case is straightforward in general, multi-dimensional value can be difficult to articulate within the framework set out and implemented by government because governmental decision-making is still strongly biased towards financial costs and benefits.

Professor Andrew Brown (University of Leeds) discussed that recent updates to government assessment guidelines for infrastructure in HM Treasury’s Green Book begin to embed principles of whole systems thinking. These guidelines recognise the multiple dimensions of value and look to identify the interdependencies between infrastructure systems. Whilst short-term financial value is easier to measure, the principle of valuing long-term interdependencies demands that long-term social and environmental, as well as economic, impacts are fully accounted for.

Chair Alan Whitehead MP with panellists (left to right) Eleni Iacovidou, Ben Bowles, Tom Murray, Helen Dunn and Patrick Allcorn.

In the panel discussion which followed, the speakers were joined by panellists with experience of working in policy and decision making across Defra, BEIS and Treasury. Given that the eagerly awaited ‘Resources and Waste Strategy’ is due imminently, it was unsurprising the first question was around the strategy. Tom Murray (Defra) was unable to comment about the detail around the content for the strategy, however he felt that Defra has worked closely with stakeholders and academics over the past year and he was confident these views are reflected in the strategy, including those around metrics for valuing resources differently.

The conversation turned to approaches that were being used to incorporate environmental and social value into decision-making. Helen Dunn (Simetrica) discussed the natural capital approach which describes environmental value in terms of monetary equivalents. Whilst revised Treasury guidance (published this year) provides a consistent framework for this, the challenge is in the implementation and in ensuring the social and wellbeing aspects are also incorporated into business cases.

Eleni Iacovidou (Brunel University) highlighted that CVORR, developed as part of the RRfW programme, offers a transparent approach from describing the RRfW system to formulating circular economy scenarios, identifying and selecting metrics and carrying out multi-dimensional value assessments. This approach assesses economic, social, technical and environmental aspects by their inherent value rather than converting all into financial terms, instead using both quantitative and qualitative methods. There was agreement in the room that the way forward is likely to be a solution containing aspects from both the natural capital approach and a decision-making framework such as CVORR. This was re-iterated by Nick Molho who felt that both quantitative and qualitative approaches were needed, with monetisation being useful in terms of supporting decision making particularly around climate change and health where savings from interventions are clear.

Patrick Allcorn, BEIS, takes the mic for questions

Patrick Allcorn (BEIS) highlighted that there is challenge with values that are difficult to monetise. These are often not identified by individual government departments who tend to examine an issue from a narrow departmental viewpoint. For example, energy infrastructure does not always have a clear cost-benefit from investments, with complexity magnified by the fact that benefits from energy infrastructure radiate across a number of different aspects of governance including environment, health and society.

Ben Bowles (London School of Economics) emphasised that incorporating multi-dimensional value into decision-making is not purely about what metrics to use but also about how the assessment is embedded in government and the skills of government officers using it. “How much do we know about spending teams and the people using the Green Book to make decisions, and what about all the other nodes through which decisions around investments are made in governance?” Ben asked. There is a need to make these places more democratic so that the decision process can be better understood and evaluated.

To conclude Phil Purnell underlined the point that sometimes we are going to have to monetise but we need to open our minds to the idea that there is a world beyond cost-benefit. If we want to realise the multi-dimensional benefits of a circular economy, and a low carbon future, we are going to have to become comfortable with using qualitative methods in personal, commercial and policy decision making.

Please also see PolicyConnect’s review of the event at: A system of systems approach: a crucial factor in the shift towards a Circular Economy

We’d like to thank the Chair, speakers, panellists and all those attending for making this a informative and productive evening. Similarly, thanks to Rachel Marshall (RRfW policy impact fellow) all her work pulling the event together and the write up. Thanks also to PolicyConnect for their collaboration co-hosting.

Nick Molho, Aldersgate Group
Prof Phil Purnell, University of Leeds
Prof Andrew Brown, University of Leeds
Tom Murray, Defra, gets the first question
A conducive setting for an interesting debate
Taking questions from the floor