How Natural Capital Plan works

Advanced concepts

Natural Capital Plan has several novel features that can be combined to explored and compare different natural resource management investment scenarios.

Multiple Indicators

Typically Natural Resource Management investment programs focus on one or two target indicators (water quality, farm resilience, biodiversity). However, it is well established that Natural Resource Management activities usually have beneficial impacts well beyond the target indicators. Natural Capital Plan has 17 indicators, which can be considered individually or in any combination in order to prioritise an investment strategy.

Temporal Response

It is difficult to directly compare hard engineering and softer Natural Resource Management investment Activities. Typically hard engineering (e.g. stream and gully engineering work) is much more expensive than softer engineering approaches (stock exclusion, revegetation). Hard engineering solutions typically provide a much faster response time (and high level of confidence in the predicted benefit). Natural Capital Plan includes a temporal response for each indicator for each Action. This allows the short and medium term benefits to be considered as well as the long term benefits.

Confidence in predicted response

Some Natural Resource Management Actions have a long history and their impact is well demonstrated by supporting research. Newer Actions do not have the same level of confidence with the predicted impact. Natural Capital Plan includes a confidence in predicted outcome for every indicator for every Action to allow Actions of varying levels of maturity to be compared.

Confidence in cost

A key parameter in determine cost effectiveness of investment programs is the budgeted cost of performing on-ground Actions. Natural Capital Plan includes a confidence score for the cost estimate of each Action.

Adoption likelihood

Most Natural Resource Management Actions occur on private land. This requires landholders to ‘adopt’ the Action. Natural Capital Plan includes the CSIRO ‘ADOPT’ method to predict the likely level of adoption of an Action. Where an Action is the combination of some on-ground activity plus the supporting framework (grant, extension, regulation).

Negative Actions – the baseline is not static

When modelling the benefit of Natural Resource Management, it is almost always assumed that the current condition is static, and improvement from that static baseline is reported. Woody vegetation clearing in Queensland in 2017-18 was 392,000ha. Natural Capital Plan includes libraries of ‘Negative Actions’ in order to include the consideration of a ‘business as usual’ impact on the continued decline of indicator condition.

Avoided harm – the value of preservation

Natural Resource Management investment programs typically focus on the repair of degraded systems. However, it is much more cost effective to prevent degradation by protecting high quality systems than it is to repair degraded systems. Natural Capital Plan can be used to provide a value of preservation of high quality assets such as creating covenants for high quality forests on private lands.

Prioritisation approach

The basic investment prioritisation approach of Natural Capital Plan is the ‘Marginal Cost Abatement Curve’ approach, whereby those Actions which provide the greatest benefit per $ represent the best value for investment. The difficulty with multi-criteria such as Natural Capital Plans 17 indicators is how to combine these indicators into a single value representing the overall benefit of and Action. Natural Capital Plan takes this further, to not simply consider which or the 17 indicators are important, but how important each one is, as well as how important the temporal response of the indicator is. The Prioritisation approach also includes some general pragmatic considerations that are often encountered in investment planning such as economies of scale (how big is the industry that the action addresses) and likelihood of adoption.