Birmingham i-Tree Report

Natural capital accounting enables the calculation of the monetary value of services provided by assets, such as trees, and monitoring of changes in the stocks of those assets and the services they provide. Using Government guidelines for natural capital accounting, the present values of three ecosystem services have been calculated: carbon sequestration, air pollution removal, and avoided runoff. Natural capital accounting helps provide an understanding of the long-term value of the current urban forest in Birmingham, and a baseline for monitoring.

Figure 14 shows the process of applying natural capital accounting principles to a natural asset, to generate annual physical and monetary flows, and a present value. First, the natural assets are identified, in this case woods and trees in the Birmingham City Council metropolitan district have been surveyed. Their extent (area in hectares and number of trees) is calculated by i-Tree Eco by extrapolating from survey data. i-Tree Eco uses models of biological function to calculate the delivery of ecosystem services from surveyed trees and extrapolates to give an estimate for the whole urban forest in Birmingham. The per annum value of the benefits provided by these services is calculated by multiplying by unit values. Finally, the present value is calculated by estimating the future flows of value over 100 years, to reflect the longevity of renewable natural assets such as trees.

Key Definitions:

• Carbon dioxide equivalent (CO2e): The number of tonnes of a greenhouse gas with the same global warming potential as one tonne of CO2.
• Discount rate: The rate of decline in the value or price of a service from one year to the next, representing people’s preference to receive and pay for a service now rather than in the future.
• Monetary flow: The flow of value from services provided by a natural asset, typically presented in £ per year.
• Natural capital: Environmental assets that may provide benefits to humanity.
• Natural capital accounting: A formal, structured process for classifying, measuring, and recording the condition of environmental assets, and assigning monetary values to the benefits those assets provide.
• Physical flow: The magnitude of a service provided by a natural asset, such as tonnes of NO2 removed per year.
• Present value: The current value of future flows or future stock of monetary value, here summed over 100 years.

Delivery of ecosystem services

In natural capital accounting, the value of assets is influenced by their ability to deliver ecosystem services. The ability of any natural capital asset to deliver ecosystem services depends on its three factors:

• Quantity
• Quality
• Spatial configuration

Quantity refers to extent, often given as the amount of land the asset covers in hectares or the number of items in the asset. The quantity of urban trees is calculated by i-Tree Eco from survey data. We calculate the natural capital accounts using ecosystem service provision data for the whole urban forest. We also present indicative per-hectare 100-year present values.

Quality refers to health, biological performance, and ecological condition. For example, a degraded peat habitat emits rather than sequesters carbon. Trees with large leaf area and high leaf density are better at retaining particulate matter, so trees with reduced leaf area and density owing to disease or poor condition are less able to remove particulate matter and likely other air pollutants from the atmosphere. Interception of rainfall is strongly dependent on leaf area and gaps between leaves, so avoided runoff will also be reduced in trees with poor quality or reduced canopies. i-Tree Eco estimates the impact of crown health (dieback) on carbon sequestration; but to date, there has been no applicable assessment of how the condition of urban trees impacts their ability to deliver other ecosystem services. Therefore, we do not perform additional calculations to represent these reductions. We do, however, present overall information about the condition of urban trees. More detailed tree condition information is given on page 43.

Spatial configuration relates the location of an asset to the services it can provide. For example, trees on floodplains help to reduce downstream flooding by increasing surface roughness, but trees outside the floodplain do not contribute via this mechanism. Spatial configuration also refers to the location of the provision of a service in relation to the beneficiaries. In both cases, the services provided by urban trees are all relevant to the immediate surroundings, and the people benefiting from those services live in close proximity to the trees.

Table 8 summarizes the quantity, quality, and spatial configuration of trees in the urban forest of Birmingham.

Change in services and value over time

People have a preference to receive (and pay for) a service now, rather than in the future. This is known as the social time preference, and it means that the value (or price) of a service declines from the present day into the future. The rate of decline is called the social discount rate and is given in HM Treasury Green Book guidance. For most services, the discount rate is 3.5% for the first 30 years, declining thereafter; for health-related impacts, the discount rate is 1.5% for the first 30 years, declining thereafter.

As a population becomes more wealthy, they may value environmental services more highly. This is reflected in the calculations for air pollution removal and avoided runoff by adjusting the unit values to account for projected income uplift. As a population grows, the number of people receiving a benefit from natural assets increases, and so the value of the asset is said to increase. We reflect this by adjusting the unit values for air pollution removal and avoided runoff to account for projected population changes.

It is reasonable to assume that the unit factor (that is, the provision of an ecosystem service per unit of asset) will change over time. Carbon sequestration will change as the age, size, species composition, and condition of the urban forest changes. In our future climate, there are projected to be more frequent and more extreme heavy precipitation events. Rainfall interception is dependent on meteorological conditions as well as leaf area, so changes to weather and to the tree population will impact avoided runoff. Air pollution is likely to decline in the UK with the adoption of clean energy and clean transport technologies; absorption of air pollutants by trees depends on atmospheric concentrations, and along with structural and composition changes to the urban forest, so the unit factors for air pollution removal will change. We cannot currently predict these changes so we hold the unit factors constant for the 100 years.

Finally, the value of benefits flowing from each ecosystem service is likely to change. Reduction in air pollution concentrations means that the value of air pollution removal will decline, while predicted increasing frequency and intensity of precipitation events indicate that avoided runoff will become more valuable. We do not have projections for these changes, so we hold the unit values for air pollution removal and avoided runoff constant and adjust them using population and income projections. For carbon sequestration, however, we use projected values to 2122 following Green Book guidance.

Table 9 summarises the details of calculations for each ecosystem service.