With COP26 just days away, we’re seeing an increased focus on Scotland’s environment and, more specifically, its natural capital and what we’re doing to protect it.

In simple terms, natural capital refers to everything which nature or the environment provides – both the individual constituent elements and also the consequences of those elements interacting under the direction of humans or nature.

Natural capital is made up of three categories: natural capital stock, which includes plants, animals and minerals as well as heat and light provided by the sun; natural capital services, the goods and services derived from natural capital stock, such as using lochs for fishing and canoeing or using stone to build houses; and ecosystem services, the services yielded by natural capital stock including pollination of plants and carbon storage provided by peatlands and forests.

The economic benefits of natural capital are not always fully apparent to all partly because of the lack of wider understanding that these elements impact on each other directly. For example, the creation of the steam train in the 18th century brought several public benefits, but also brought dis-benefits caused by the mining of natural capital stock (coal) and the associated air pollution.

This finely balanced relationship is now beginning to gain prominence with growing understanding of the role natural capital assets can play in tackling climate change. Here in Scotland, protecting these assets is also economically crucial for key sectors including a major employer like the tourism industry. Meanwhile Scotland’s food and drink sector, which is largely dependent on the raw ingredients provided by nature, is worth more than £14 billion annually to the economy.

Placing value on natural capital, treating it as an asset of the economy, and factoring in the cost of non-beneficial activities, such as burning coal and polluting watercourses, could better enable us to protect the environment.

This approach could also create economic opportunities by opening business diversification channels and new revenue streams. This includes opportunities for innovators to support companies in finding ways to mitigate against the effect their activities are having on the natural world.

We must encourage a wider debate on the crucial but complex factors around ownership of natural capital resources such as clean air, clean water and pollination.

While there is momentum behind this approach, it will likely remain difficult for many landowners or farmers to identify their natural capital assets and assess their value in the immediate future. This situation is, however, likely to evolve as new markets develop, new funding is made available, and there is increased awareness of the value of natural capital including additional income streams that can be derived through the safeguarding and efficient stewardship of these natural assets.

With the eyes of the world about to focus on Scotland at COP26, we must focus internally on this challenge and ensure this platform helps create a positive legacy in how we maximise the full economic potential of the nation’s natural capital going forward.

Alex Irwin, Senior Solicitor at Davidson Chalmers Stewart