This project involved the creation of a methodology to value the city of Cape Town’s natural environment and the development of a sound environmental business case for increased investment into the environment.

The economic value of the natural environment to Cape Town is poorly understood and largely ignored as part of decision making and management processes. Cape Town’s natural environment provides a range of direct and indirect economic services and value, which include:

• Direct use value (consumptive and non-consumptive)
• Indirect use value (ecological goods and services, social services, property services)
• Regulatory use value (climate)
• Option value
• Existence value

Currently these services are provided for in the absence of any commensurate investment in our environmental resources. Subsequently the real value of these services is not acknowledged in our accounting systems, and therefore not in our budgets for management and conservation.

Furthermore, as our population grows and our urban development expands, environmental concerns are often viewed as an obstacle to growth and development. In this context, very little recognition is given to the real cost of environmental degradation, including the direct costs, replacement costs as well as the opportunity costs.

Although there is a growing global awareness of the economic services that natural ecosystems provide, the value of these ecosystem services and the long term costs of their loss are rarely taken into account in decisions about how natural resources are used, or managed. Day-to-day management decisions often focus only on short-term financial returns at the cost of long term sustainability.

This project aims to develop a coherent natural resource economics model and methodology for the City of Cape Town through consultation with a wide range of city line functions, thereby providing a key methodology for building a sound environmental business case for the environment.

The environmental business case must, at a minimum, present a sound financial argument for environmental management in Cape Town taking into account and presenting:

• Estimated financial value (benefits) that the natural environment provides the City at the broadest level
• Current expenditure and investment by the City (across all line functions) in managing and enhancing the natural environment
• The comparative investment by the City in other asset management sectors
• A sound business case demonstrating the accrued benefit that would be realised by the City and its citizens if the existing investment were to be increased and conversely the financial cost (loss) if the investment were to remain static or decline.

Considerations in the business will include:

• Long term environmental risk factors (e.g. loss of water resources, air pollution etc)
• Impacts of climate change and its related cost implications
• Short term gain vs. long term sustainability.

The business case will be used as a mechanism to leverage increased funding for the environment, across the various City departments. The business will present a logical argument to the City’s Finance committees, and will clearly demonstrate the benefits and savings and economic and social return (in the long term) that will be derived from this increased investment into the environment. The business case will also aim to outline the consequences of a reduced investment into the environment.

Through developing an ecosystem goods and services (EGS) valuation methodology and building a business case for the environment, the City aims to ensure the continued delivery of ecosystem goods and services, thereby reducing the financial investment required by the City to implement these services (waste water treatment, air pollution, etc.).

This project was kindly funded by the Danida Urban Environmental Management Programme (UEMP).

The following documents are available for download:

Reports

 Summary Report: Why investing in natural assets makes financial sense for the municipality of Cape Town - A summary for decision makers, 18 Aug. 2009 [PDF 689 KB]
 Final Report: Investing in Natural Assets - A business case for the environment
in the City of Cape Town, 18 Aug. 2009 [PDF 11 MB]
 Methodology Final Report: Methodology to value the natural and environmental resources of the City of Cape Town, 29 May 2009 [PDF 772 KB]
 Stakeholder Interviews Report: Defining a Method to Value the City of Cape Town’s Natural Environment, 9 Dec. 2008 [PDF 448 KB]

Workshops

 Expert Workshop Report, 12 Mar. 2009 [PDF 84 KB]
 Expert Workshop Report, 18 Feb. 2009 [PDF 114 KB]

Presentations

 "Methodology to Value the Natural Assets of the City of Cape Town." Presentation at Environmental Resource Economic Conference, 21 May 2009 [PDF 1.2 MB]
 "Developing a methodology for the valuation of the City of Cape Town's natural resource base: Illustrating the methodology using case studies", 25 Mar. 2009 [PDF 2.8 MB]
 "Testing a Methodology to Value the City of Cape Town’s Natural Environment." Presentation at workshop with City of Cape Town managers, officials and external stakeholders, 12 Mar. 2009 [PDF 271 KB]

A2 Poster

 Valuing the City of Cape Town's Natural Environment - Developing a Methodology [PDF 2.1 MB]

For further information, please contact:

Mr Arne Purves
Tel: +27 (0)21 487 2136
Fax: +27 (0)21 487 2255
E-mail: arne.purves@capetown.gov.za

Please consider the environment before printing this web page.

Skip to top