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Economic Aggregates

As the rise in the aggregates levy takes effect and the new Nature After Minerals (NAM) partnership between the RSPB and Natural England is launched, Quarry Products Association (QPA) economics director Jerry McLaughlin wonders why government hasn’t factored restoration into levy calculations.

In a previous column I highlighted concerns about the environmental credentials of the aggregates levy.  It is a topical point given the Budget decision to follow up this April’s 22% levy increase to £1.95 per tonne with a further index linked increase to £2.00 per tonne in April 2009. 

The decision was justified on the basis that the levy needed to rise to maintain its environmental impact.  Given that government has yet to produce any empirical evidence that the levy has reduced adverse environmental impacts, this statement makes the emperor’s new clothes even more difficult to spot.

There is one school of thought among economists and policy makers that if you put a price on environmental impacts – such as aggregates supply – then the market sorts out the problems.
If you add the apparent environmental cost to the market price the polluter is paying for his actions and the environmental cost/benefit equation is balanced and everything in the economic garden is rosy.

In theory maybe! In practice, a reliance on sometimes highly dubious monetary valuations of environmental impacts is a sign of people who know the price of everything but the value of nothing. In reality the aggregates levy does not discriminate between good and bad environmental performance, so the gold star operator is charged the same as someone who spends his time ducking and diving from his responsibilities.

One of these days government might notice this. Interestingly, other people who know about environmental impacts can tell the difference.

Last year the Royal Society for the Protection of Birds (RSPB) and Natural England published their Nature After Minerals (NAM) report and website.

This has been followed up by a three year NAM initiative, which had a parliamentary launch on 19 March this year.

The aim is to build on the industry’s performance in restoring sites for the benefit of nature and to ensure that the industry and regulators take advantage of opportunities to link restoration with biodiversity priorities – the QPA supports the initiative because we want to maximise the benefits of restoration.

Going back to the monetary cost benefits discussed earlier used to justify the levy, we know that extraction causes impacts, but we also know that good restoration generates long term benefits.  So is there a net environmental cost or benefit for the life cycle of aggregates operations? 

It is difficult to make a general call on this – but on a site-by-site basis positive outcomes will already be common.  NAM is one way we can look for more positives.

As observed before, the Treasury calculations that costed the environmental impact of aggregates supply and directly led to the original £1.60 levy rate assumed that site restoration produced no environmental benefits.  That’s right – a big fat zero!

This view suits the Treasury as it makes the justification for levy increases less complicated. As far as levy decisions are concerned, the huge reedbed and bittern habitat being delivered by Hanson and the RSPB at Needingworth in Cambridgeshire – to name just one example – isn’t a part of the sums.
As NAM helps industry to deliver more priority habitats, they probably won’t be part of the sums either.

As the extra levy revenue rolls in over the next two years, will anyone at the Treasury worry about the missing valuation of environmental benefits? I think we all know the answer is no!
Jerry: 0207 963 8000

Nature After Minerals

The Nature After Minerals (NAM) partnership between the RSPB and Natural England is an aggregates levy sustainability fund (ALSF) supported three-year project that seeks to deliver more appropriate, high-quality and sustainable priority biodiversity habitat on mineral sites and to raise awareness of the conservation potential of minerals sites.

A recent round of workshops across the UK organised by the NAM programme asked authorities and operators how best to influence and use the new Mineral Development Frameworks –   the strategic planning documents dictating how and where mineral extraction will take place within a local authority’s area over a 10-15year period – to create more spaces designed to protect wildlife.
Jonathan Clarke of Natural England, said: “Strategic mineral planning is key to identifying the opportunities for creating high quality wildlife habitats in the right locations.

The ALSF is designed to support projects that put money back into the natural environment and this project is the ideal recipient.

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