Dependencies on ecosystem services
Using existing classifications of both ecosystem services and economic sectors, the current body of relevant information on ecosystem service dependencies for all economic sectors was reviewed and current gaps in knowledge were identified. Literature reviews were carried out for each ecosystem service class and production process combination using Web of Science, Google and key document searches, for example TEEB for Business, with standardised search terms, and targeted website searches, including leading companies in the sector and industry initiatives.
Expert interviews were conducted with sector specialists to validate information for some dependencies given the absence of information on ecosystem service dependencies identified through literature reviews. This resulted in a comprehensive assessment of which of the 21 ecosystem services each of the 167 economic sub-industries depend upon for their production processes.
Underpinning natural capital assets and potential drivers of environmental change
After linking economic sectors to the ecosystem services they depend on, it is important to understand how these services are provided by natural capital assets and how they might be influenced by drivers of environmental change such as pollution and climate change. Identifying the natural capital assets underpinning each ecosystem service and the potential drivers of environmental change that could impact them in a way that materially affects business performance enables financial institutions to understand what is important for service provision and what could lead to risk of disruption.
Factsheets were produced for each ecosystem service outlining the following information: a description of the ecosystem service-natural capital asset system, identification of the main drivers of environmental change influencing or impacting the system and the mechanism by which these impact ecosystem service provision. Web of Science, Google and key document searches, for example TEEB for Business, with standardised search terms were used to compile factsheets for all ecosystem services according to a pre-defined template.
Summary tables in each factsheet provide a quick overview of the natural capital assets most important to service provision and the drivers of environmental change that are likely to influence them. Importance here is defined as the sensitivity of the ecosystem service to a change in the state of the natural capital asset, and degree of dependence of the ecosystem service on the natural capital asset. Influence is defined as the degree to which the natural capital asset is susceptible to the driver of change, and the degree of variability and uncertainty in the response of the natural capital asset to the driver of change.
A framework was developed with Red-Amber-Green criteria to assess the importance of natural capital assets to ecosystem services, the influence of drivers of environmental change on natural capital assets and to provide contextual information on the drivers of environmental change. This framework was developed in collaboration with the Natural Capital Finance Alliance team, and reviewed internally and externally by key players in the natural capital and scientific community. Each assessment is accompanied by a justification for the Red-Amber-Green rating.
Criteria on the importance of natural capital assets to ecosystem service provision
| Criterion | Definition | RED | AMBER | GREEN |
|---|---|---|---|---|
| Nature | Nature of the relationship between the natural capital asset and service provision | Non-linear | Linear | |
| Sensitivity | Sensitivity of the ecosystem service to a change in the state of the natural capital asset | High sensitivity | Medium sensitivity | Low sensitivity |
| Reversibility | Possibility for the impact of a change in a natural capital asset on ecosystem service provision to be reversed (subject to feasibility) | Not reversible in a human lifetime | Reversible impact with long-term (>1 year), active restoration | Natural, short-term (<1 year), reversible impact |
| Substitutability | Degree of dependence of the ecosystem service on the natural capital asset | Only asset able to provide the service OR highly specific asset | One of only a small number of assets able to provide the service OR a supporting asset | One of a large number of assets able to provide the service |
| Uncertainty | Degree of uncertainty in the relationship between the natural capital asset and service provision | High uncertainty | Medium uncertainty | Low uncertainty |
Criteria on the influence of environmental drivers of change on natural capital assets
| Criterion | Definition | RED | AMBER | GREEN |
|---|---|---|---|---|
| Nature | Nature of the relationship between the natural capital asset and the driver of change | Non-linear | Linear | |
| Trend | Direction and timeframe of change in the asset alone | Situation expected to worsen in the short-term (<1 year) | Situation expected to worsen in the long-term (>1 year) | Situation expected to remain constant |
| Susceptibility | Degree to which the natural capital asset is susceptible to the driver of change | High susceptibility | Medium susceptibility | Low susceptibility |
| Variability | Degree of variability in the response of the natural capital asset to the driver of change | High variability | Low variability | Stable (no variability) |
| Uncertainty | Degree of uncertainty in the relationship between the natural capital asset and the driver of change | High uncertainty | Medium uncertainty | Low uncertainty |
Contextual criteria for the drivers of change in natural capital assets or ecosystem service provision
| Criterion | Definition | RED | AMBER | GREEN |
|---|---|---|---|---|
| Trend | Direction and timeframe of change in the driver | Situation expected to worsen in the short-term (<1 year) | Situation expected to worsen in the long-term (>1 year) | Situation expected to remain constant |
| Variability | Degree of variability in the driver of change over time | High variability | Low variability | Stable (no variability) |
| Extreme events | Likelihood of extreme variations in the driver of change | High probability of a dramatic change | Low, but non-zero, probability of a dramatic change | Very low, almost impossible, probability of a dramatic change |
| Predictability 1 | Existence of models/historical data to predict the future state of the driver of change | No | Yes | |
| Predictability 2 | Credibility of models/data to predict the future state of the driver of change | Models are not calibrated independently | Models are calibrated by comparison with modelled datasets | Models are calibrated with independent empirical/observed datasets |
| Uncertainty | Degree of uncertainty in the driver of change | High uncertainty | Medium uncertainty | Low uncertainty |
Impacts on ecosystems services and natural capital assets
Similar to the above approach for dependencies, literature reviews were carried out for each impact driver (see Impact Drivers page) and production process combination. This was conducted using Web of Science, Google and key document searches, for example TEEB for Business, with standardised search terms, and targeted website searches, including leading companies in the sector and industry initiatives.
Expert interviews were also conducted with sector specialists to validate information for some impacts, or fill gaps for some sectors or production processes that were lacking information in the reviewed literature.
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