Adapting asset management systems for nature-first thinking to maximise the AMP8 investment opportunity
Published: 10 December 2024
By Craig Holliday, Associate Director – Asset Management
Adapting existing asset management systems to include environmentally focused objectives could evolve our expectation of infrastructure, encouraging us to target maximum value creation and embed ‘nature-first’ thinking. In this article, I look at how adapting mature asset management frameworks can assist in the scale-up of green solutions and enhance their performance.
The focus on building infrastructure in an environmentally sustainable way has shifted significantly in recent years. This change is driven by a combination of policy initiatives, industry standards, and public demand; all aimed at aligning infrastructure development with broader climate and sustainability goals.
A total of £88bn investment is a step change in the water industry over the next 5 years.
Addressing long term deterioration of assets and improving environmental standards presents an opportunity to embed ‘nature-first’ thinking. Among other things, OFWAT expects the industry to:
- Deliver 2,500 projects to reduce spills from storm overflows
- Invest £10 billion to reduce harm from storm overflows
- Deliver £2 billion of nature-based solutions and increase biodiversity on water company land
- Deliver £6 billion of upgrades to combat nutrient pollution
- Reduce operational greenhouse gas emissions by 11%
These are big numbers, and if we approach delivery in the same way as previous AMP cycles, it will prove a challenge. Pivoting to a nature-based approach brings uncertainty as we often think of them differently. Traditional asset management techniques are well established for ‘grey’ solutions that can be easily understood and applied.
The scale of change relating to green infrastructure ambition has been vast, and with that there are new challenges where traditional approaches are no longer appropriate, or gaps exist in our understanding. These challenges can all be faced and with the right mindset and flexibility in a framework of tools successful outcomes achieved. Challenges include:
- Integration with existing asset management systems: Traditional asset management systems often focus on physical assets with defined boundaries and depreciation rates. Nature-based solutions require adapting these systems to incorporate ecological factors, long-term benefits, and sustainability goals.
- Regulatory and policy frameworks: Regulations are often not designed to accommodate natural assets, creating a gap in governance and policy that needs to be addressed for effective implementation. Nature-based solutions typically cut across traditional ownership boundaries, necessitating increased collaboration.
- Valuation and accounting of natural assets: Valuing ecosystem services and incorporating them into asset registers can be complex and require new methodologies. We must adapt our thinking, use our asset management principles and draw on a wider range of subject matter experts.
- Performance metrics and monitoring: Unlike traditional assets, the performance of nature-based solutions can be influenced by external factors (e.g. biodiversity interactions), making it difficult to establish consistent performance metrics and monitoring systems. Performance may be measured over different timescales and not be linear, making reporting difficult. This complicates long-term planning, maintenance, and renewal strategies typically applied to conventional assets.
- Funding and resource allocation: Securing consistent funding for maintenance and management can be challenging. Justifying ongoing investment in living assets, especially when benefits are long-term and diffuse, requires a different approach.
Asset management systems are mature and widespread in their use across infrastructure sectors. The Institute of Asset Management conceptual model is a comprehensive way of approaching best practice in an organisation.
The question is, how do we adapt and apply that model to nature-based solutions to maximise the AMP8 investment opportunity? If we adapt this model to the environmental challenge, it provides the framework to operationalise nature-based solutions. Each building block becomes:
- Natural Asset Management Shared Capability: The skills required to ‘think green’ are different to traditional infrastructure, so the question of how best to educate and systemise the capabilities of our people will need considering. Gap analysis and capability assessments help identify where to focus efforts – right people, right skills, right support.
- Blue-Green Systems Alignment & Integration: integration of environmental objectives within existing frameworks (e.g. ISO 55001) creates a structure from which to build an environmental asset management system. Defining environmental objectives and goals within policy and strategy outcomes creates the context that nature-based solutions should be supported by the same rigour as traditional approaches.
- Sustainable Outcomes Quantification: Strategy approaches must be underpinned by effective decision-making. Strengthening appraisal of opportunities for environmental investment needs robust valuation frameworks (e.g. six capitals) that can be benchmarked against grey infrastructure within investment planning teams.
- Nature-Based Intelligence: Effective asset records, operational, and maintenance data is essential to support outcome quantification and strategy development. There are a wider range of variables to consider, some of which will have long-term implications on performance – understanding and catering for these differences are essential.
- Operationalisation of Natural Asset Management Solutions: A big issue is how to ‘operationalise’ nature-based solutions. Like any process, defining the standard operating procedures, performance metrics, and intervention modes is the starting point. This is underpinned by the links through the rest of the model.
- Natural Asset Continuous Improvement & Optimisation: Having the ability to plan, do, check, and act is the foundation of continuous improvement. Drawing intelligence from these assets and integrating into ‘business as usual’ allows performance to be understood, corrective action to be taken, and better decisions made in future.
A once-in-a-generation opportunity exists to harness environmental processes and move towards a ‘nature-first’ approach. But the increased adoption and normalisation of nature-based solutions is a big challenge. The answer lies in utilising best-practice asset management models, while respecting the unique differences of nature-based solutions. Adapting the Institute of Asset Management framework to environmental objectives gives us a structure from which to build solid outcomes from our green solutions.
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