Methodology

Section 1The case for putting a price on nature

Britain is undergoing a nature crisis. Our species are declining and our habitats are degrading. A recent State of Nature report — compiled by the UK’s leading environmental charities — found that one in six species are now at risk of being lost from Great Britain, that only 14% of our most important wildlife habitats are in good ecological condition, and that the abundance of UK species has fallen by 19% on average since 1970.

We have set ourselves targets to reverse this trend: the 2021 Environment Act commits to halt the decline in species abundance by 2030, the UK has pledged to protect 30% of land for nature by 2030, and meeting Net Zero by 2050 will require — according to the Climate Change Committee — UK woodland cover to rise from 13% to around 18% by 2050 and the share of UK peatlands in natural or rewetted condition to rise from 26% to 55% over the same period. None of these targets will be met on current trajectories.

Achieving these goals will require sustained investment into nature over several decades, but the resources we have for nature recovery are finite. Funding from public, private and philanthropic sources combined falls well short of what the science indicates is needed. This leaves us with the basic problem of economics: how should we allocate scarce resources? To choose where best to spend our limited funding, we need to make well-informed decisions based on which actions will deliver the most impact for our money. We need to measure the cost-effectiveness of nature projects.

While putting a price on nature might seem crude, we already do something similar to help us decide how to fund other important foundations of our society. In health, the NHS uses Quality-Adjusted Life Years (QALYs) to decide which treatments to fund. In schooling, the Education Endowment Foundation’s Teaching and Learning Toolkit ranks classroom interventions by cost, evidence strength and months of additional learning delivered.

In academia, the case for measuring cost-effectiveness when funding nature conservation has been well studied. Key papers include Naidoo et al. (2006), Carwardine et al. (2008), Carwardine et al. (2012), Bateman et al. (2013) and Iacona et al. (2018).

“Decision making for conservation investments has so far escaped many of the requirements of standard investments, such as efficiency, goal setting and accountability. However, ignoring the cost of conservation actions is like shopping without price tags.”

— Carwardine et al., Avoiding Costly Conservation Mistakes: The Importance of Defining Actions and Costs in Spatial Priority Setting (2008)

In Britain, two issues make it difficult to easily understand the cost-effectiveness of our nature recovery efforts.

Nature funding is fragmented across many different delivery mechanisms. In England, DEFRA’s Sustainable Farming Incentive alone now offers more than one hundred different environmental funding packages to farmers, with parallel schemes in Scotland, Wales and Northern Ireland. Separately, the planning system protects species and habitats via the Habitats Regulations and offsets impacts via Biodiversity Net Gain. New woodlands and peatland restoration can be funded through voluntary carbon markets. Many charitable nature projects receive philanthropic and membership funding. Each of these delivery routes has its own administrative rules and budgeting approaches. The result is that it is difficult to compare the costs of delivering environmental outcomes, because the information is presented in different ways across different mechanisms.

We often price inputs, rather than outcomes. Most environmental spending in Britain is based on the direct cost of doing something. A landowner might be reimbursed by DEFRA for the cost of planting two thousand trees, regardless of how much wildlife the new trees ultimately support. But pricing inputs without measuring outcomes means that it’s difficult to know what we are getting for our money. Thanks to the UK’s emerging nature markets, some environmental outcomes – such as tonnes of CO₂ removed or kilograms of pollutants avoided – are now priced. But these market prices still don’t represent the full cost of delivering each outcome, because many projects also rely on substantial public subsidies.

Together, these two problems mean we often spend money on protecting nature without the information needed to allocate it sensibly. This has recently led to heated public arguments over some of the UK’s most headline-grabbing nature mitigation schemes – such as the £700 million Hinkley ‘fish disco’ in Somerset, the £300m ‘Kittiwake hotels’ in the North Sea and the infamous £100m HS2 bat tunnel in Buckinghamshire. Are these scandalous wastes of money or fair prices to pay, if we consider the valuable environmental outcomes that these projects will deliver? It’s hard to tell without data on cost-effectiveness.

We are already making important nature funding decisions every day. When planning rules impose mandatory environmental mitigation costs on housebuilders, or when the government pays farmers to set aside land for nature, we are implicitly deciding how much each outcome is worth. I’ve built the Nature Outcomes Catalogue to make these difficult trade-off decisions more transparent and better informed – so we can direct funding to the projects that will deliver the biggest impact for nature in the UK.

“There is no escape from putting a price on nature.”

— Dieter Helm, Natural Capital: Valuing the Planet (2015), p.122

Section 2What’s in the catalogue

A focus on outcomes

Dan Corry’s recent review of England’s environmental rules and funding recommended that we need to shift away from input-based, process-heavy approaches. Instead, we should focus on delivering outcomes — at the right scale and at the right level of proportionality. Accordingly, the government will soon require new infrastructure developments to produce Environmental Outcomes Reports. These reports will show how projects affect a comprehensive set of 66 environmental outcomes compiled by DEFRA in the Outcome Indicator Framework.

The Nature Outcomes Catalogue will support this new way of working, by tracking what it costs to deliver many of the outcomes in DEFRA’s framework.

The full mapping of outcome types to OIF indicators is shown in the interactive visualisation alongside this section.

Comparing within, not between, environmental outcomes

Environmental outcomes are not interchangeable. A tonne of CO₂e kept out of the atmosphere is not equivalent to a kilogramme of nitrogen held back from a river, nor is it the same as protecting a breeding pond for rare great crested newts. The catalogue is not intended as a tool to compare costs between different outcomes. It is useful however for comparing costs within each type of outcome, by enabling readers to understand how much it costs to deliver the same results through different projects and approaches.

How outcomes get delivered: the three main routes

The same environmental outcome can be delivered through three different delivery mechanisms, each with its own rules. These three mechanisms map roughly onto how Britain’s land is managed. According to the ONS Natural Capital Accounts, about 70% of the UK is farmland (including upland rough grazing), about 8% is built-up urban land, and the remaining ~22% is woodland, uplands, peatland and other semi-natural habitat. Government agri-environment schemes fund outcomes for nature across farmed land; planning rules mostly govern the delivery of outcomes where built-up areas are expanding; and voluntary schemes and bespoke government grants mainly support outcomes on the remaining land.

Funding environmental outcomes on the UK’s farmed land. The various devolved governments in the UK pay farmers and landowners to change how they manage their land to help nature. England’s Environmental Land Management schemes are the main tool used in this mechanism, alongside similar – but smaller – programmes in Scotland, Wales and Northern Ireland.

Mitigating negative environmental outcomes when we expand our built-up areas. Housing and infrastructure developers must avoid, mitigate or compensate for damage to habitats and protected species to gain planning approval. Key tools to deliver outcomes for nature through the planning system include Habitats Regulations Assessments, Biodiversity Net Gain, specialist ecological surveys, Environmental Impact Assessments and bespoke mitigation projects.

Delivering outcomes on our wilder lands. Conservation charities and private businesses often fund and deliver projects directly. Many of their projects focus on creating permanent habitats for nature that are taken out of farming in perpetuity, in order to create wildlife reserves, restored peatlands and new native woodlands. These projects can be funded by philanthropic donations and corporate payments, and are often combined with capital grants from government.

The Nature Outcomes Catalogue features outcomes delivered across all three of these funding mechanisms.

Section 3Three steps to calculate costs

“There are two broad approaches to this: to start on the demand side and try to work out what consumers would be willing to pay or their willingness to accept the damage; or to look at the supply side and ask what it would cost to maintain and enhance natural capital.”

— Dieter Helm, Natural Capital: Valuing the Planet (2015), p.124

Out of the two approaches Dieter Helm suggests to calculate the cost of an environmental outcome, this Catalogue takes the supply-side route. It simply adds up the costs of establishing, maintaining and financing each project.

The Excel model I used to build this website is available here. The python code is here. Link to source model: 202605_Nature_Economics_Database_v35.xlsx — both will be available for download once the site is hosted publicly.

My modelling approach is based on the guidance set out in the HM Treasury Green Book methodology. The three main cost components of every project are calculated separately:

• Direct project costs: development, capital and maintenance costs are added up to collectively represent the direct cost of each project.
• Opportunity costs: foregone existing income, such as farming revenue, is counted as an opportunity cost. Potential future revenue, such as speculative sales or rental revenue from a new development, is not counted.
• Financing costs: if projects are funded by public grants or donations, the financing cost will be zero. If projects are funded by private investment, then the Catalogue will calculate the return paid to the investor. Here I have deliberately diverged from the Green Book guidance, which excludes financing costs from public funding appraisals. This makes visible the cost premium that private capital adds to delivering nature outcomes.

The catalogue counts costs as they appear in cash terms to the parties actually delivering nature outcomes, in £2026 real terms. The fully loaded cost of each project is built up year by year, and then discounted at the Green Book’s 3.5% Social Time Preference Rate to produce a Net Present Value figure. All projects are normalised to the same 30-year timeframe to enable like-for-like comparison within each outcome type.

The catalogue’s primary metric is the Net Present Value of each environmental outcome unit delivered. This is the cost in today’s money needed to deliver each hectare of new habitat, or each tonne of CO₂e sequestered, or to protect each breeding pair of an endangered species.

Step 1: Direct costs

“Costs are the value of resources used up in producing the goods and services that flow from a project.”

— Green Book 2026, p.36

The direct costs calculator includes three components:

• Development costs: designing the project and getting it ready to deliver: feasibility studies, surveys, environmental impact assessments and planning applications.
• Capital costs: upfront spending when project delivery starts in earnest: groundworks, tree planting, fencing, new infrastructure and species translocations.
• Maintenance costs: the long-term management and operational costs needed to look after a project and ensure it delivers outcomes: repairs, weeding, ongoing ecological management and expert monitoring.

Step 2: Opportunity costs

Opportunity costs capture what is given up when somebody decides to make space for nature.

“Practitioners should consider the opportunity costs of continuing to use resources that have already been paid for. The next best alternative for these resources might be to sell them or use them for some other purpose.”

— Green Book 2026, p.37

These costs are often overlooked but need to be internalised into project budgets — otherwise many landowners will not be incentivised to deliver environmental outcomes.

Area-based habitat creation projects carry the largest opportunity costs. Schemes such as woodland and grassland habitat creation usually mean that landowners will forego some farming income when land use is changed away from agriculture. DEFRA’s ELMS payment rates are calibrated to compensate landowners for these opportunity costs. The catalogue uses Agricultural Land Classification grading and average farm income levels as a proxy to help calculate foregone income per hectare. Bespoke opportunity cost values can also be entered.

Hypothetical foregone incomes — for example, rental or sales revenue from a future development — are not calculated. This keeps figures grounded in actual, evidenced costs rather than speculative estimates.

Step 3: Financing costs

“There are costs associated with raising public funds: taxes create distortions in the economy, and the government typically pays interest on its borrowing. Practitioners should not generally include these costs in appraisal… The one exception to this standard guidance is when assessing private finance model options.”

— Green Book 2026, p.38

The financing cost of public grants or donations is set to zero. If projects are funded by private investment, then the financing element of the calculator is driven by the investor’s cost of capital – either the interest paid to a lender, or the return paid to an equity investor. In both cases, the cost of capital is calculated as the funder’s expected rate of return over the period for which capital is committed.

• Privately funded projects: the calculator proposes a private cost of capital of gilt yields plus a 4% premium. If these suggested rates don’t look right for a particular project, bespoke rates can be set in the calculator too. If future projects are funded via government borrowing, a suitable gilt rate can be entered here too.
• Commitment period: for privately funded projects, the financing cost is incurred over the period until the investor eventually exits.
• Repayment method: the Calculator can be set to use either an annuity repayment method, where money is gradually paid back over time, or a compounding repayment approach, where the full amount is repaid at a single point in time and the cost of capital accumulates in the meantime.

Section 4Comparing projects on equal terms

Projects in the catalogue have very different lifespans. A Sustainable Farming Incentive agreement between DEFRA and a farmer may only last 3 years. A BNG obligation has a statutory minimum lifespan of 30 years. Native woodland creation projects are intended to last indefinitely. To fairly compare outcomes, the Catalogue normalises every project to the same lifespan: 30 years. I chose this timeframe because it matches the minimum management period for habitat offset projects required under the Environment Act 2021, and the upper end of the HM Treasury Green Book’s standard 3.5% discount rate period before lower long-term rates apply.

Different environmental outcomes accrue at different rates over time. To normalise outcomes to a common 30-year timeframe, the Catalogue assigns each outcome a delivery curve that captures how outcomes build up over the project’s lifespan:

Step: the outcome is delivered in full at a single point in the project’s lifespan, typically at the start. For example — a new breeding pond created in year one of a project.

Front-loaded: most of the outcome is delivered in the first few years, with a long tail of smaller contributions. Invasive species control follows this pattern: the bulk of individuals are removed early, with diminishing returns over time.

Linear: the outcome accrues at the same rate every year. Avoided greenhouse gas emissions from a peatland rewetting project follow this pattern: once rewetted, the bog avoids the same amount of emissions year after year.

S-curve: slow accrual in early years, faster in the middle, then plateauing as the system matures. Carbon sequestration in a growing woodland follows this pattern: young trees sequester relatively little carbon, but the removal rate speeds up when trees are growing at their fastest between years 15 and 35, then the rate eventually plateaus as trees mature.

Each outcome type in the catalogue uses a suggested delivery curve, which users are free to override if a different pattern better reflects their project.

Section 5Feedback

“It is better to be vaguely right than precisely wrong.”

— Partha Dasgupta, The Economics of Biodiversity: The Dasgupta Review (2021), Chapter 12, p.302

This methodology has limitations. For example, the case could be made to use a higher cost of capital for public funding, or to include a wider set of opportunity costs, or to use a higher discount rate when calculating net present values. For now, this essay describes the approach I think makes the most sense.

If you have feedback or advice on how I could improve this methodology, please write to me at Tom@gegg.uk.

EndnoteA note on value vs. price

“What is a cynic?”
“A man who knows the price of everything and the value of nothing.”

— Cecil Graham and Lord Darlington, in Oscar Wilde, Lady Windermere’s Fan (1892), Act III

Knowing the price of nature is not the same as understanding its true value. The Nature Outcomes Catalogue only calculates the cost of delivering nature outcomes – it doesn’t help us to understand the deeper value of these outcomes for human society. Others, including the natural capital team at the Office for National Statistics, are working on this question.

To make better decisions, we ultimately need both of these numbers: a price signal to allocate our resources wisely, and a value-based reason to act now and restore nature in the UK.