fungus and fungibility

disasters waiting to happen

I joked in the past that I made my career as an expert on banking failure, and realised far too late in life that it would have been much more profitable and pleasant to have been an expert in banking success. Now it seems I’m repeating the mistakes of the past and inadvertently developing a research interest in governance failures. It’s not nice to see a political and environmental disaster waiting to happen…

My concern is with what the UK planning system calls “nutrient neutrality areas”. This is a deceptively benign sounding name – it’s got nutrients in it, which sound good, and neutrality, which sounds like a sort of easy going state which will probably be easy to maintain.

A more accurate name for these places might be “catastrophically overloaded ecosystems existing on a hair-trigger edge of catastrophe”.

Basically, a nutrient neutrality area is a watershed into which enough farm run-off and waste water is being pushed to raise the levels of nitrogen and other plant nutrients to levels where it’s not obvious why there hasn’t been a massively toxic algae bloom already. “Neutrality”, in context, means that Natural England has put a massive “BEWARE” sign on the map, indicating that you really can’t do anything there which raises the nutrient run-off levels at all, because of the very material risk of a great big die-off which fills a river or estuary with stinking dead fish and poisonous vegetable matter. (yes yes, not strictly speaking fungus, my title is misleading, sorry).

Of course, having a big area in which you can’t build any new housing is also a significant problem. So the name of the game in nutrient neutrality areas is to find solutions to “mitigate” the flows, either by improving water treatment, removing other sources of run-off, managing the watercourses better and so on. It seems to me that this is absolutely obviously a job for the “Solution Factory” – what you need, having identified a horrible ecological Sword of Damocles like this, is for an area-wide planner to come in with the capacity to identify what sites can be developed, what mitigation measures need to be carried out and, generally, how to unpick the cumulative effects of bad past decisions.

And here we are; the government has considered doing this, and decided that it would involve spending money, so we shouldn’t do it:

yeesh.

Instead, the idea is to set up a general pot of money – the “Nature Restoration Fund” – so that developers can have a guess at the cost of doing a survey and getting mitigation, Natural England can have a guess at the amount of biodiversity and nature that might be lost, and if it’s cheaper to create nature benefits elsewhere, then the developers just put the money into the pot.

In principle, this isn’t necessarily a bad idea. For some kinds of habitat protection, it could work, and it’s a good idea, in my view, to reduce the number of things which are uncompensatable, showstopping objections, compared to those where the costs can be weighted against the benefits. But policies like these, they’re tricky.

Firstly, it’s clearly a species of offset scheme, and offset schemes have a deservedly bad reputation. You need the estimates to be absolutely on point, and you need to be very careful about conflicts of interest. (Natural England, in the new legislation, will be both making the estimates and managing the Nature Restoration Fund; my guess would be that in short time, the NRF will be the biggest part of its budget).

And that’s been the experience with carbon offsetting, where CO2 emissions really are the same no matter where or how they’re created. If you’re trying to do offsets with “nature”, then the question of how to estimate and price the value and cost of the offsets is intrinsically much more difficult. (The Chartered Institute of Environmental Management are already, understandably, up in arms about the way in which the new legislation appears to want to trade off ancient forest with new planting on an “a tree is a tree” basis). In fact, it might not be possible at all; the world is not obliged to provide a commensurable scale for everything we might want to optimise.

Saying “tradeoffs always exist” is a quite statement to make. In its defensible sense, it just means that we can’t have everything and need to make choices. But it’s easy to slip from there into an assertion about smooth functions and substitution curves which is much less defensible.

And I suspect that the way in which this lesson will be very rapidly learned is with respect to “nutrient neutrality”, which again really means “significant and unpredictable risk of creating an aquatic death zone”. A mass die-off in a river or estuary is a very big, very telegenic disaster, which people will notice. And when they do, I would not like to be the person responsible for explaining to residents that the Nature Restoration Fund is doing some great work rewilding a really big meadow hundreds of miles away. Or answering questions about whether the original contribution had been calculated on the basis of an expected value rather than the actual outturn, or over what period of time we would hope things to average out.

Basically, if this policy is applied to nutrient neutrality, it is going to end up discrediting the concept of fungibility in the most drastic and public way possible. And I strongly suspect that all the people who have advised the government that nutrient neutrality was just a piece of EU red tape and nimbyism will long since have moved on to other issues.

The bottom line here is that you have to respect the problem. Complicated risk management problems require significant input of state capacity. There’s no silver bullet solution to just linearise them and wish them away.