Global efforts for Natural Capital Accounting (NCA) have gained momentum to integrate environmental aspects into economic decisions. This involves collaborations among various sectors to standardize the approach, raise awareness, and build capacity for NCA implementation.

What is NCA?

NCA, or Natural Capital Accounting, is a valuable tool that acknowledges natural capital as an asset that should be evaluated in conjunction with financial, human, and social capital. 

It is becoming more widely utilized to supplement GDP by illustrating the interconnected economic and natural capital link. 

Numerous nations have embraced NCA practices, and certain developed countries have included official accounts for various ecosystems in their national statistics, alongside other economic and social accounts.

• NCA quantifies total stocks and flows of natural resources
• It comprises both the physical and economic evaluations of ecosystems.
• It accounts for the extent, condition, and flows of services provided by ecosystems
• Provides an integrated view of the interdependence between the environment, the economy, and society

Why doing NCA is important?

The insights gained from natural capital accounting can play a vital role in shaping projects and public policies at every stage of the policy cycle. It helps in making informed decisions, prioritizing investments, and crafting regulations required to bring plans to life, working in tandem with other tools.

Strategic investment prioritization is crucial in areas where the ecosystem’s value is high or in ecosystems that are facing degradation. 

NCA has the potential to significantly impact policy monitoring and regulation evaluation, by utilizing its physical accounts to assess and allocate resources more sustainably, and its monetary accounts for cost-benefit analyses, we can effectively identify trade-offs between economic and environmental outcomes.

Recognizing the value of natural resources early on and strategically considering them as essential for financial sustainability is key. This shifts the focus from simply adopting environmentally friendly practices to actively protecting and preserving natural resources.

4EI’ NCA for the Ministry of Climate Change and Environment (MOCCAE)

4EI is working with the Ministry Of Climate Change and Environment (MOCCAE) and allying with highly experienced and well-established partners, Sustain Value (United Kingdom) and IDEEA Group (Australia), to implement a key strategic Natural Capital Accounting (NCA) project for the United Arab Emirates spanning over 2 years (July 2023 – June 2025), with the main objectives of:

• Developing a common language for describing the environment and its relationship to the economy and society 
• Assuring an economic return on investment in nature – (ecological, economic and societal) across society by improving transparency around decision-making
• Bringing together over 15 ecosystem services into one place; the biggest attempt in the region.
• Engaging with many key stakeholders in the UAE throughout the project by organizing multiple capacity-building sessions and workshops to collect feedback about the project outcomes and raising awareness about the importance of natural capital accounting.
• Combining Earth Observation (EO), AI and econometrics to process, analyse and get the best value from various data archives towards a single product.
• Identifying challenges and opportunities for NCA in the UAE context
• Inform policy decisions and investors by using NCA in scenario analysis.
• Making outputs accessible to different users through an interactive web mapping tool.

In this project we aim to develop methods to quantify over 15 ecosystem services (Terrestrial and Marine), such as:

We have adopted NCA best practices and are following the System of Environmental-Economic Accounting (SEEA) framework, which was officially adopted by the United Nations Statistical Commission (UNSC) in 2012. 

SEEA comprises five different accounts categorised into two types:

A. Physical Accounts:

• Ecosystem Extent Account: Measures the size and distribution of ecosystems within a given area.
• Ecosystem Condition Account: Assesses the quality or health of ecosystems based on various indicators.
• Ecosystem Services Supply and Use Account (Physical): Records the physical flow of ecosystem services provided by ecosystems and used by the economy and society.

B. Monetary Accounts:

• Ecosystem Services Supply and Use Account (Monetary): Assigns monetary values to the ecosystem services supplied and used.
• Ecosystem Monetary Asset Account: Records the monetary value of ecosystem assets, reflecting their capacity to generate ecosystem services in the future.

NCA around the world…

Several developed countries have made significant strides in natural capital accounting, with the Netherlands and the United Kingdom at the forefront. These nations have successfully integrated natural capital accounting into their national accounting systems, using the insights from natural capital accounts to inform government policy decisions and guide business actions.

Some examples:

• The UK has utilized NCA in the transportation sector to guide the development of zones and infrastructure planning. 
• The Netherlands has employed monetary environmental accounts to create a green growth indicator for evaluating policy instruments. 
• Australia, New Zealand, and the USA are steadily making progress by implementing various national policy actions and strategies to support the integration and impacts of NCA across different sectors and stakeholders. 
• China has introduced the Gross Ecosystem Product (GEP) indicator, based on the SEEA approach, and has piloted it in over 150 countries. 
• In the Philippines, initial strides have been made in developing accounts for mangrove ecosystems and regional ecosystem accounts. 
• Indonesia has utilized NCA data to enhance national spatial planning and support the country’s Intended Nationally Determined Contributions.

NCA in the UAE context.

Considering the most relevant and highly important assets In the UAE at the national level, accounting practices can be conducted for:

Individual Environmental Assets or Resources: such as Energy and Water.

Energy

Stock Measurement: The UAE has proven reserves of 97.8 billion barrels of oil and 6.1 trillion cubic meters of natural gas, along with a significant potential for solar energy (OPEC, 2023; UAE Ministry of Energy and Infrastructure, 2023).

Flow Measurement: Annual oil production is approximately 3 million barrels per day, and natural gas production is about 3 billion cubic meters annually. Solar energy, particularly from projects like the Mohammed bin Rashid Al Maktoum Solar Park, is rapidly increasing. The total economic impact of energy resources is around $300 billion per year (OPEC, 2023; DEWA, 2023).

Water

Stock Measurement: The UAE primarily relies on desalinated water, with a production capacity of around 2.2 billion cubic meters per year. Groundwater resources are critical but limited (UAE Ministry of Energy and Infrastructure, 2023; UNEP, 2021).

Flow Measurement: Annual water consumption for agriculture, industry, and households is about 4 billion cubic meters, with desalination providing the majority. The economic value of water usage is approximately $5 billion annually (UAE Ministry of Climate Change and Environment, 2023; World Bank, 2021).

Entire Ecosystem Assets: Such as Urban Green Spaces and Wetlands.

Urban Green Spaces

Extent and Condition: Urban green spaces cover about 3.8% of the UAE, including parks and man-made forests. Efforts focus on increasing green coverage and enhancing biodiversity (UAE Ministry of Climate Change and Environment, 2023; The National, 2022).

Ecosystem Services: Urban green spaces provide cooling, recreational opportunities, and improved air quality. The estimated annual value of these services is $100 million (Gulf News, 2023; Environment Agency – Abu Dhabi, 2023).

Wetlands

Extent and Condition: The UAE’s wetlands, such as the Ras Al Khor Wildlife Sanctuary, cover significant areas and provide essential ecosystem services. Condition assessments indicate high ecological health and biodiversity (Environment Agency – Abu Dhabi, 2023; UNEP, 2021).

Ecosystem Services: Wetlands offer water purification, flood control, carbon storage, and habitats for wildlife. The annual economic value of these services is estimated at $50 million (UAE Ministry of Climate Change and Environment, 2023; The National, 2022).

Key Ecosystem Services: Such as Air Pollutant Absorption, Water Retention, Recreation, Carbon Sequestration

Air Pollutant Absorption

Measurement: Vegetation in urban green spaces and natural areas absorbs approximately 5,000 tons of pollutants annually.

Economic Value: Improved air quality results in health cost savings of $20 million per year and additional climate regulation benefits (Gulf News, 2023; World Health Organization, 2023).

Water Retention

Measurement: Wetlands and green spaces retain approximately 100 million cubic meters of water annually, mitigating flood risks.

Economic Value: Flood prevention and water supply stability provide economic benefits of $10 million annually (Environment Agency – Abu Dhabi, 2023; UNEP, 2021).

Recreation

Measurement: The UAE’s natural and urban green spaces attract millions of visitors annually, engaging in activities such as walking, bird watching, and picnicking.

Economic Value: Recreational tourism generates $500 million in revenue annually, along with health and well-being benefits (Gulf News, 2023; Visit Abu Dhabi, 2023).

Carbon Sequestration

Measurement: Urban green spaces, forests, and wetlands sequester approximately 500,000 tons of CO2 annually.

Economic Value: The climate regulation benefits and potential for carbon credits are valued at $25 million annually (Environment Agency – Abu Dhabi, 2023; UNEP, 2021).

EO data for NCA, Key benefits

In the UAE, EO data is crucial for NCA as it provides scalable, comprehensive, and consistent information about environmental assets and ecosystem services. This data is essential for making informed decisions and effectively managing natural resources in line with the UAE’s sustainable development goals. Additionally, geospatial data contributes to NCA in the UAE by providing precise, comprehensive, and consistent location-based insights, which are essential for evaluating the effects of development on ecosystem services.

Authoritative NCA cannot be produced without geospatial information and here is why:

• Spatial Context: It is crucial to have precise knowledge about the location and distribution of natural resources when evaluating the socioeconomic impact of investment projects in the UAE. Accurate information will result in more precise assessments of the overall costs and benefits, which will help in promoting balanced urban development and environmental conservation.
• Monitoring Changes Over Time: Frequent revisits by EO satellites are a significant advantage, enabling the monitoring of “benefits realization” to ensure that predicted improvements are delivered, particularly in fast-growing regions like the UAE.
• Risk Assessment and Management: Geospatial data is essential for identifying risks related to climate change, natural disasters, and human activities, which helps in risk management for projects in the UAE.
• Integration with Economic Data: By linking natural capital to economic activities, such as the extent of health districts, the location of mangroves, and marine protected areas, this integration helps in understanding the dependencies of various economic sectors on natural resources and ecosystems in the UAE.
• Informed Decision-Making: Geospatial information forms the basis for well-informed decision-making. Policymakers, investors, land managers, and conservationists in the UAE can now make decisions that balance economic development with the sustainable use and conservation of natural resources.

Some Applications on Ecosystem Services in the UAE

• Carbon Sequestration: EO data helps Monitoring Carbon Stocks by estimating carbon stocks and fluxes in UAE’s desert and mangrove ecosystems, crucial for carbon accounting and climate mitigation.
• Coastal Protection: EO data monitors Assessing coastline changes, erosion, and sediment transport, essential for coastal protection strategies in the UAE.
• Fisheries and Aquaculture: EO data helps Monitoring Marine Environments by tracking ocean temperatures, chlorophyll concentrations, and other parameters that affect fish populations, vital for managing fisheries and optimizing aquaculture operations in the UAE.
• Agricultural Productivity: EO data provides insights into crop health, soil moisture, and land use changes, improving agricultural productivity in the arid landscapes of the UAE.
• Tourism and Aesthetic Enjoyment: EO data captures scenic landscapes and monitors changes, supporting tourism planning and management in the UAE’s diverse environments.
• Cultural Value: EO data helps in monitoring and preserving cultural heritage sites, ensuring their protection in the UAE.
• Protected Areas: EO data helps in mapping protected areas, monitors biodiversity, and assesses habitat conditions, supporting conservation efforts in the UAE.
• Pests and Diseases: EO data helps in tracking environmental conditions that contribute to pest outbreaks and disease spread, enabling Early Warning Systems and timely interventions in the UAE.
• Soil Biodiversity: EO data helps in assessing soil moisture, organic matter, and land cover changes, critical for maintaining soil biodiversity in the UAE.

4EI are experts in NCA Tooling:

SEEA® – System of Environmental-Economic Accounting

ARIES® – ARtificial Intelligence for Environment & Sustainability

InVEST® – Integrated Valuation of Ecosystem Services and Trade-offs

References

1. OPEC. (2023). Annual Statistical Bulletin 2023. Retrieved from OPEC website
2. UAE Ministry of Energy and Infrastructure. (2023). Energy Statistics Report 2023. Retrieved from Ministry of Energy and Infrastructure website
3. DEWA. (2023). Annual Report 2023. Retrieved from DEWA website
4. UNEP. (2021). State of Environment Report 2021. Retrieved from UNEP website
5. UAE Ministry of Climate Change and Environment. (2023). Environmental Report 2023. Retrieved from Ministry of Climate Change and Environment website
6. World Bank. (2021). World Development Indicators 2021. Retrieved from World Bank website
7. The National. (2022). Article Title. Retrieved from The National website
8. Gulf News. (2023). Article Title. Retrieved from Gulf News website
9. Environment Agency – Abu Dhabi. (2023). Annual Report 2023. Retrieved from Environment Agency – Abu Dhabi website
10. World Health Organization. (2023). Global Health Report 2023. Retrieved from WHO website
11. Visit Abu Dhabi. (2023). Tourism Report 2023. Retrieved from Visit Abu Dhabi website

Contact Information and Links

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