Catalogue Methodology

Section 1Funding nature recovery

Britain is undergoing a nature crisis. 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.

The UK Government has set ambitious targets to reverse this trend. In the 2021 Environment Act, it committed to halting the decline in species abundance by 2030, and in 2022 it pledged to protect 30% of land for nature by 2030. According to the Climate Change Committee, to meet Net Zero by 2050 the UK will need to expand its woodlands to cover nearly a fifth of the country, and over half of Britain’s peatlands must be returned to their natural condition. None of these targets will be met on current trajectories.

Achieving these goals will require sustained investment into nature recovery over several decades, but funding from public, private and philanthropic sources falls well short of what is needed. This leaves us with the basic problem of economics: how should we allocate scarce resources? To use funding wisely, we need to understand which actions will deliver the best outcomes for nature for every pound we spend.

Section 2Why measure the cost of outcomes for nature?

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

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

While it might seem crude to put a price on a breeding pair of newts or tonne of carbon stored in an oak woodland, we already do something similar to 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 and months of additional learning delivered. This type of analysis has become a valuable way to help people in government make difficult trade-off decisions.

The starting point begins with understanding how much it costs to deliver a particular outcome. This can be done simply by adding up the total cost of a given project or policy, and then dividing it by the quantity of outcomes that will be delivered. This gives a straightforward measure of cost-effectiveness. For example, the NHS’s QALY metric allows decision-makers to understand how many years of additional healthy life will be bought for its patients, in exchange for the cost of a new drug.

Many approaches have taken this analysis one step further, as part of a “Cost-Benefit Revolution”. In order to understand whether the cost of delivering a particular outcome is worthwhile or not, some analysts have attempted to represent the true worth of outcomes by assigning them a financial value. For example, TfL once priced the ‘Value of a Statistical Life’ for the average Londoner at an oddly specific £1,638,390. Having done this, the supposed financial value of a particular outcome can then be compared to the cost of delivering it. If the balance is positive, then the cost-benefit test is passed and the project or policy should go ahead. Therefore, if TfL is considering whether to upgrade safety infrastructure in London tube stations, then it only needs to calculate the cost per human life saved. If the cost is less than £1,638,390, then TfL should invest in the upgrades. If it costs more, well then it’s not worth it. (See diagram for an illustration of the difference between Cost-Effectiveness and Cost-Benefit analysis).

However, putting the right monetary value on these outcomes can be a highly subjective and often contested exercise. Is the life of everyone travelling on the tube worth £1.6 million, or are children perhaps worth a bit more (they have longer to live), or a bit less (as they aren’t yet contributing to the workforce)? For nature – how much is a breeding pair of lapwings truly worth, in Great British Pounds? Financially valuing these outcomes involves a great degree of personal judgement.

In the Nature Outcomes Catalogue, I have not attempted to put a financial value on the true worth of these outcomes for society. Instead, I have simply focussed on the first step in this process: measuring the cost of delivering each outcome. This helps us to answer a basic but very useful question – which projects can deliver a given outcome for nature, at the lowest cost? This is cost-effectiveness analysis.

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 however, two issues make it difficult to understand the cost-effectiveness of delivering outcomes for nature.

Nature funding is fragmented across many different delivery mechanisms. In England, DEFRA’s Sustainable Farming Incentive alone has offered more than one hundred different environmental funding packages to landowners. Separately, the planning system protects species and habitats via the Habitats Regulations and offsets impacts via Biodiversity Net Gain. Many charitable nature projects are funded by philanthropists and members. Each of these delivery routes has its own administrative rules and approaches to budgeting. This makes it difficult to compare the costs of delivering environmental outcomes, because the information is presented in very different ways across different mechanisms.

We often pay for inputs, rather than outcomes. Most environmental spending in Britain is based on the direct cost of doing something. Landowners are reimbursed by the Scottish Government for the cost of putting several thousand saplings in the ground – this is more straightforward for a civil servant to administer than paying someone for successfully creating a mature woodland habitat, or sequestering carbon in the trees. But paying for inputs without measuring outcomes means that it’s difficult to know exactly 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 more clearly. But the prices paid by market buyers often do not represent the full cost of delivering each outcome, because many projects also rely on substantial public subsidies.

Together, these two problems mean we can spend money protecting nature without the information on cost-effectiveness that we need to allocate funds sensibly. These challenges have recently led to heated public arguments over the cost of the UK’s more headline-grabbing nature mitigation schemes – such as the £700 million Hinkley ‘fish disco’ in Somerset, £300m ‘Kittiwake hotels’ in the North Sea and the infamous £100m HS2 bat tunnel in Buckinghamshire. Are these scandalous wastes of money? Or are they fair prices to pay, if we consider the outcomes that these projects might deliver for nature? It’s hard to tell without any data on cost-effectiveness.

We are already making important nature funding decisions every day. When planning rules require housebuilders to deliver environmental mitigation measures, or when the government pays farmers to set aside land for wildlife, we are implicitly deciding how much should be spent on delivering outcomes for nature. I’ve built the Nature Outcomes Catalogue to make these complex decisions more transparent and better informed, thanks to cost-effectiveness analysis. This could help to direct funding to the projects that will deliver the biggest impact for nature in the UK.

Section 3What’s in the catalogue

A focus on outcomes

Dan Corry’s recent review of England’s environmental rules recommended a new focus on delivering outcomes for nature, rather than relying on complex procedures and input-based funding. Accordingly, the government will soon require new infrastructure projects to produce Environmental Outcomes Reports. These reports will show how projects affect a comprehensive set of 66 environmental outcomes compiled by DEFRA in the Environmental 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 EIF 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 sequestered from the atmosphere is not equivalent to a kilogramme of nitrogen held back from a river, or the protection of a breeding pond for rare great crested newts. The catalogue is not intended as a tool to prioritise one particular type of environmental outcome over another, just because it may be cheaper to deliver. It is useful however for comparing costs within each type of outcome, by showing readers how much it costs to deliver the same results through different projects and approaches.

Tracking how outcomes get delivered across different routes

The same environmental outcome can be delivered through many different delivery mechanisms, depending on which government agency is overseeing it — each comes with its own set of rules and processes. There are three broad categories of mechanism, which map roughly onto how land is managed in Britain. According to the ONS, 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 largely fund nature-friendly farming approaches on agricultural land; planning rules mostly govern nature protection where built-up areas are expanding; and voluntary schemes and bespoke government grants support bespoke projects on our semi-natural land.

Funding environmental outcomes on the UK’s agricultural land. Devolved governments in the UK pay farmers to change how they manage their land to help nature. England’s Environmental Land Management scheme is the main mechanism used, and there are similar – but smaller – programmes in Scotland, Wales and Northern Ireland.

Mitigating negative outcomes for nature when we expand our built-up areas. Housing and infrastructure developers must lay out how they will avoid, mitigate or compensate for damage to habitats and protected species in order to get approval to build. 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 for nature on Britain’s semi-natural land. Conservation charities and philanthropists have funded and delivered many projects in the UK’s uplands, wetlands and forests. These projects tend to focus on creating new wildlife reserves, restored peatlands and native woodlands. These projects can be funded by donations and carbon market revenue, often combined with capital grants from government.

The Nature Outcomes Catalogue can document the results delivered by projects from all of these different funding mechanisms.

Section 4Calculating outcomes delivered for nature

The catalogue first calculates the quantity of outcomes that a project will deliver for nature. How many kilogrammes of nitrogen will be stopped from entering a stream by a new buffer strip along the edge of a farm field? How many invasive mink will be removed by an eradication project over its lifetime? What area of peat bog habitat will be successfully restored by a rewetting project?

Different environmental outcomes will build up at different rates over time. Newly planted trees will sequester carbon very slowly to begin with, then this rate accelerates as trees reach their maximum growth rate, then finally it plateaus when the woodland matures. To represent the different rates at which environmental outcomes accrue over a project’s lifespan, the Catalogue assigns each outcome a delivery curve:

Step: the outcome is delivered in full at a single point in the project’s lifespan. 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 of the project and then plateaus thereafter. Effective invasive species control projects follow this pattern: the bulk of individuals are removed early on, 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 a consistent quantity of CO₂e leaking into the atmosphere year after year.

S-curve: the outcomes accrue very slowly in early years, then the rate speeds up to reach a maximum growth rate before finally plateauing as the project matures.

The Catalogue suggests a suitable delivery curve for each type of outcome, but users are free to override this if a different pattern better reflects their project.

Comparing projects on equal terms

To compare projects fairly, they all need to be presented in the same way. The catalogue adjusts each project in three ways to enable cross-comparison.

Firstly, it puts all projects on a common timeframe. 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.

Secondly, the catalogue applies discounting – using the Green Book’s 3.5% rate – so that every outcome quantity is expressed in present value terms. If a woodland carbon project will deliver 100 tonnes of CO₂ removal in year 26, that quantity is discounted back to 41 tCO₂ in present value terms. This represents the fact that outcomes delivered many years in the future are worth less to us than those that can be delivered much more quickly.

Thirdly, the catalogue applies an uncertainty haircut of 10% to all estimates of outcome quantities. This is something that many carbon codes and other ecosystem service methodologies already do, as it helps to guard against optimism bias.

Section 5Three 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 used to perform these calculations is available here.

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

• Direct project costs: development, capital, maintenance and administration costs are added up to collectively represent direct project costs.
• 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 an investor, then the return sought by the investor will add an additional cost to the project. If projects are funded by public grants or donations, the financing cost will be zero. Here I have deliberately diverged from the Green Book guidance, which does not account for financing costs because government projects are normally funded with taxpayer money. Accounting for financing costs allows readers to understand the cost premium that private capital adds to the cost of a project.

These three cost categories are built up year by year. The total is then discounted at the Green Book’s 3.5% Social Time Preference Rate to produce the Net Present Value of the project cost. All projects are normalised to the same 30-year timeframe to enable like-for-like comparison.

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 to sequester each tonne of CO₂e, 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 four components:

• Development costs: designing the project and getting it ready to be delivered: 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 for nature: repairs, weeding, ongoing management and expert monitoring.
• Administration costs: the cost of managing the project and its associated funding. For example, it could cover Natural England’s staffing overheads when managing an Environmental Delivery Plan, or the labour costs of a private project developer.

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 harder to calculate, but must be accounted for in project budgets.

Area-based habitat creation projects carry the largest opportunity costs. Schemes such as woodland and grassland habitat creation mean that landowners will forego 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 grades and average farm income levels 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

“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 dividends and asset value 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.

• Cost of capital: the calculator proposes a standard cost of capital equal to UK 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.
• Commitment period: the financing cost is incurred over the period from when the capital is deployed until the investor eventually exits.
• Repayment method: the Calculator can be set to one of two repayment approaches. An amortising repayment method represents an investment that is gradually paid back in equal annual instalments over the commitment period, where ongoing costs like maintenance and opportunity are treated as a fresh financing layer in each year they arise. A compounding repayment approach represents an investment where the full return is paid out as a single lump sum at the end of the commitment period, with the cost of capital accumulating in the meantime.

Section 6Feedback

“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. I have described 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 and compares the cost of delivering outcomes for the environment. It doesn’t help us to understand the deeper value of these outcomes, whether expressed in financial or more intrinsic terms 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 things: a price signal to allocate our resources wisely, and a value-based reason to act now and help nature to recover in the UK.