Natural capital assessment of demonstrated solutions

D6.6 – Natural capital assessment of demonstrated solutions July 2025 Authors: Edoardo Croci, Alessandra La Notte, Benedetta Lucchitta, Tania Molteni (UB) Ref. Ares(2025)6282215 - 01/08/2025 A2C – Deliverable D6.6v.2.0 Page 2 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. Technical references Project Acronym Agro2Circular Project Title TERRITORIAL CIRCULAR SYSTEMIC SOLUTION FOR THE UPCYCLING OF RESIDUES FROM THE AGRIFOOD SECTOR Project Coordinator Fuensanta Monzó CETEC [email protected] Project Duration October 2021 – March 2025 (42 months) Deliverable No. D6.6 Dissemination level* PU Work Package WP 6 - Demonstration of the A2C technological solution Task T6.4 - A2C business cases and financing Lead beneficiary 28 - UB Contributing beneficiary/ies 28 – UB, 21 – KVC Due date of deliverable 31 March 2025 Actual submission date 31 March 2025 * PU = Public PP = Restricted to other programme participants (including the Commission Services) RE = Restricted to a group specified by the consortium (including the Commission Services) CO = Confidential, only for members of the consortium (including the Commission Services) A2C – Deliverable D6.6v.2.0 Page 3 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. Document history V Date Comments v0.1 02/02/2025 First draft of document v0.x 31/03/2025 Revised version based on the comments of Aran Blanco - KVC v1.0 31/03/2025 First final version, approved by the WP leader and the project coordinator, (will be) submitted to EC. v2.0 31/07/2025 Second final version, approved by the WP leader and the project coordinator, (will be) submitted to EC. Verification and approval Name Date Verification Final Draft by WP leader Maricarmen Cánovas 31/07/2025 Approval Final Deliverable by coordinator Fuensanta Monzó 31/07/2025 Disclaimer and acknowledgement A2C – Deliverable D6.6v.2.0 Page 4 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 101036838 Disclaimer This document reflects only the views of the author(s) the European Research Executive Agency (REA) is not responsible for any use that may be made of the information it contains. Whilst efforts have been made to ensure the accuracy and completeness of this document, the A2C consortium shall not be liable for any errors or omissions, however caused. A2C – Deliverable D6.6v.2.0 Page 5 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. Table of contents List of abbreviations 8 Glossary .................................................................................... 9 1. Executive summary ............................................................ 10 2. Introduction......................................................................... 11 3. Methodological framework ................................................. 13 3.1 The Circular Economy Conceptual Framework .................................... 13 3.2 The System of integrated Environmental and Economic Accounting ..... 15 3.3 Identification, assessment and accounting of Ecosystem Services ........ 18 3.4 Natural Capital Accounting and ecosystem services in the circular economy framework ........................................................................................... 20 3.5 Possible procedures to embed ecosystem services accounts in Agro2Circular scenarios .................................................................................... 23 4. Application of the NCA methodological framework in the Murcia region .......................................................................... 25 4.1 Ecosystem services identification in the Murcia region....................... 25 4.2 Data collection process ............................................................................... 30 4.2.1 Data on Ecosystem Services .............................................................. 30 4.2.2 Data on agricultural statistics .............................................................. 38 4.2.3 Data on agri-food waste in the Murcia Region .................................... 39 4.2.4 Data on Agro2Circular Demonstrators ................................................ 41 4.3 Ecosystem services assessment and valuation in the Murcia region ..... 45 4.4 Application of the procedure to Demo 3, 4 and 5 ...................................... 47 4.5 Sensitivity analysis and refinement ............................................................ 50 A2C – Deliverable D6.6v.2.0 Page 6 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. 4.5.1 Sensitivity analysis .............................................................................. 50 4.5.2 Refinement ......................................................................................... 52 4.6 Discussion..................................................................................................... 52 5. Conclusions ........................................................................ 54 6. Bibliography........................................................................ 57 List of Tables Table 1: List of ecosystem services identified as relevant for the region of Murcia, Source: extracted and adapted from https://cices.eu/resources/....................... 29 Table 2: Evolution of the surface area of cultivated land according to type of crop (km2) (source: extraction from CARM https://econet.carm.es/web/crem/inicio/- /crem/sicrem/PU590/sec21.html) ...................................................................... 39 Table 3: Evolution of agricultural production by type of crop (kg) (source: extraction from CARM https://econet.carm.es/web/crem/inicio/- /crem/sicrem/PU590/sec21.html) ...................................................................... 39 Table 4: Volume of waste generated per year in the region of Murcia (source: Deliverable 1.4 "Residues management plan") ................................................. 40 Table 5: Amount of waste supplied by companies (source: Deliverable 1.4 "Residues management plan") ........................................................................................... 40 Table 6: Quantity of biomass processed in Demo 3 – different scenarios ................ 42 Table 7: Quantity of biomass processed in Demo 4 – different scenarios ................ 43 Table 8: Quantity of biomass processed in Demo 5 – different scenarios ................ 44 Table 9: Crop yield in Murcia (year 2021) (Source: extracted and adapted from https://data.jrc.ec.europa.eu/dataset/d810c03e-535f-4f48-879e-ef26c7c61e24) .......................................................................................................................... 45 Table 10: Ecosystem services in Murcia (year 2021) (Source: extracted and adapted from https://data.jrc.ec.europa.eu/dataset/d810c03e-535f-4f48-879eef26c7c61e24 ) ................................................................................................. 46 Table 11: ES calculation considering all agri-waste produced by A2C partners ....... 51 A2C – Deliverable D6.6v.2.0 Page 7 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. Table 12: Summary table of ES valuation from selected A2C Demos...................... 52 List of Figures Figure 1: Elements from the Circular Economy conceptual framework to focus on (own elaboration based on UNECE-OECD [3]) ......................................................... 14 Figure 2: Supply and Use tables from SEEA CF (circled in green) to SNA (own elaboration) ....................................................................................................... 16 Figure 3: Supply and Use table of SEEA EA (own elaboration) ............................... 17 Figure 4: Ecosystem services features and the interaction of the material life cycle with ecosystems (own elaboration)........................................................................... 20 Figure 5: How to account for the benefits of recycled biomass using the ecosystem services SUT (own elaboration) ........................................................................ 21 Figure 6: The “material life cycle” box (own elaboration) .......................................... 21 Figure 7: The “interaction with the ecosystem” box (own elaboration) ..................... 22 Figure 8: The ideal procedure to compute the avoided land transformation (own elaboration) ....................................................................................................... 23 Figure 9: Agro-biomass provision service, used as reference layer ......................... 31 Figure 10: Pollination service in the Murcia region ................................................... 32 Figure 11: Soil retention service in the Murcia region............................................... 33 Figure 12: Carbon sequestration service in the Murcia region ................................. 34 Figure 13: Woody biomass provision in the Murcia region ....................................... 35 Figure 14: Flood protection service in the Murcia region .......................................... 36 Figure 15: Recreation potential in the Murcia region ................................................ 38 Figure 16: Demo 3 flowchart (Source: A2C project, Deliverable 1.9) ....................... 41 Figure 17: Demo 4 flowchart (Source: A2C project, Deliverable 1.9) ....................... 42 Figure 18: Demo 5 flowchart (Source: A2C project, Deliverable 1.9) ....................... 43 Figure 19: – Biomass balance PHBV production (Source: CETECBIO)................... 44 A2C – Deliverable D6.6v.2.0 Page 8 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. List of abbreviations CE Circular Economy CF SEEA Central Framework CICES Common International Classification of Ecosystem Services EA SEEA Ecosystem Accounting E-LCA Environmental Life-Cycle Assessment ESVD Ecosystem Services Valuation Database ES Ecosystem Services F&V Fruit and Vegetables LCC Life-Cycle Costing LULUCF Land use, Land Use Change, and Forestry NCA Natural Capital Accounting NPV Net Present Value PHBV Polyhydroxyalkanoate-type polymer SEEA System of Integrated Environmental and Economic Accounting SUT Supply and Use tables TEEB The Economics of Ecosystems and Biodiversity UNSD United Nations Statistics Division A2C – Deliverable D6.6v.2.0 Page 9 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. Glossary Ecosystem services: benefits supplied by the functions of ecosystems and received by humanity [4]. Life Cycle Assessment: LCA is defined by the ISO 14040 as the compilation and evaluation of the inputs, outputs and the potential environmental impacts of a product system throughout its life cycle. Life Cycle Costing Assessment (LCC): assessment of all costs related to a product or service within its life cycle, from raw material extraction over production and use until disposal. Net present value: value of an asset determined by estimating the stream of income expected to be earned in the future and then discounting the future income back to the present accounting period [4]. A2C – Deliverable D6.6v.2.0 Page 16 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. The SEEA CF accounts are based on environmental data that can be collected from a variety of sources, such as emission inventories and water and energy statistics. The systematic collection of environmental data makes it possible to monitor trends over time. When focusing on flow accounts related to the material life cycle, it is important to consider the natural resources flowing from ecosystems to the primary sector, and then the products generated by the primary sector, together with the wastes associated with the production activities (Figure 2). Figure 2: Supply and Use tables from SEEA CF (circled in green) to SNA (own elaboration) The second SEEA standard is Ecosystem Accounting (SEEA EA) [5] which includes: • the ecosystem extent accounts report in physical terms the total area of each ecosystem, classified by type, within a specified area. They are structured as asset accounts and their measurement over time shows the changes in extent from one ecosystem type to another over the accounting period; A2C – Deliverable D6.6v.2.0 Page 17 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. • the ecosystem condition accounts report in physical terms the ecosystem status, based on selected characteristics at specific points in time. They are structured as asset accounts and their measurement over time shows the changes to their condition and therefore the health status of ecosystems; • the ecosystem services accounts report in both physical and monetary terms the ecosystem contribution generated by the ecosystems and allocated to economic units (economic sectors, government and households). They are flow accounts structured as Supply and Use tables; • the ecosystem asset accounts in monetary terms aggregate ecosystem services by ecosystem types to report changes over time of ecosystem assets. Such changes may be negative (ecosystem degradation) or positive (ecosystem enhancement). All accounts are spatially explicit (i.e. based on geo-referenced data). When focusing on ecosystem services that support socio-economic activities, SUT records the flows that ecosystems provide to the socio-economic system; such flows are eventually transformed by the socio-economic system into goods and services provided as intermediate consumption to economic sectors or as final consumption to government and households (Figure 3). Figure 3: Supply and Use table of SEEA EA (own elaboration) Supply Use Biomass growth Pollination Carbon sequestration Pest control Water purification Flood control Soil retention … Househods Global society Rivers and lakes Coastal Primary sector Secondary sector Tertiary sector Ecosystem Types Economic Units Ecosystem Services Cropland Grassland Woodland and forest Wetlands Heathland and shrub Sparsely vegetated land A2C – Deliverable D6.6v.2.0 Page 18 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. When ecosystems are altered, their ability to provide services changes. For example, woodlands and forests transformed into intensive monocultures will no longer be able to provide services such as flood control, carbon sequestration, soil retention, water purification and nature-based recreation. The annual provision of these services will be lost forever. Therefore, the impact on land cover and land use in terms of ecosystem transformation can be measured in terms of the services that ecosystems provide. 3.3 Identification, assessment and accounting of Ecosystem Services Ecosystem services can be defined as the ecological contribution to human activities [6], [7], [8]. In the Common International Classification of Ecosystem Services (CICES), they are grouped into three broad categories: • Provisioning services - ecosystem contribution to any type of benefit to humans that can be extracted from nature, such as fisheries, timber, plants and medicinal benefits. • Regulating and maintenance services - ecosystem contribution to everything that makes life possible for people, such as clean air and water, bacterial decomposition of waste, wild pollination, and mitigation of floods and erosion. • Cultural services - ecosystem contribution to spiritual enrichment, cognitive development, reflection, recreation and aesthetic experiences. The assessment of ecosystem services for accounting purposes is strongly linked to the way in which ecosystems provide services. Indeed, ecosystems may act as sources, sinks, buffers or means of transmitting information [9]. Furthermore, when acting as a source or sink, they may be subject to sustainability thresholds. Here are some examples: • Source: ecosystems act as sources of matter and energy. When it is about “sourceprovision”, ecosystem generates mass and biomass that are eventually extracted. In case the extraction is above the regeneration rate of the natural resource, there will a sustainability issue in terms of depletion. Examples are wood and fish provisions. When it is about “source-suitability”, ecosystem act as sources of matter and energy by providing suitable habitats and condition within the ecosystem to generate eventually matter and energy. In this case, there is no sustainability thresholds, but rather presence or absence of ecosystems able to provide services such as pollination, soil fertility, pest control. A2C – Deliverable D6.6v.2.0 Page 19 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. • Sink: ecosystems act as sinks to store, immobilize or absorb matter. This type of ecosystem services applies to role of ecosystems in cleaning the negative externalities generated by human activities, such as pollution and wastes. When it is about “sinkabsorption”, the emission of pollutants can be beyond the absorption rate and the overuse of these services may lead to ecosystem degradation. Examples are air filtration, water purification and soil decontamination. When it is about “sink-storage”, there is no sustainability threshold, but it is rather a matter of ecosystem presence of absence, like the case, for example, of forests to store carbon. • Buffer: ecosystems act as transformers, changing the magnitude of flows of matter or energy. This is the case of services such as flood control, coastal protection, off-site soil retention. What matters is the presence or absence of ecosystems able to provide these services. • Information: ecosystems deliver information, which does not modify their original state. This type refers to cultural services such as nature-based recreation and tourism, naturebased education, aesthetic and spiritual services. What matters is the presence or absence of ecosystems able to provide these services. The role of ecosystem services in supporting socio-economic activities can be multifaceted [10]: • they provide ecological inputs that affect directly the production process, like in the case of biomass provision and pollination; • they remove negative externalities that are directly generated by the production process, like in the case of air filtration that cleans air emissions and water purification that cleans wastewater; • they protect against a series of threats that indirectly affect production given the geographical location of relevant economic assets, like in the case of flood control (i.e. physical threats), pest control (i.e. biological threats), nature-based tourism (other threats); • they guarantee compliance to overarching environmental targets, like in the case of climate change mitigation (e.g. carbon storage and sequestration services) and halting biodiversity loss (e.g. habitat and species maintenance) Based on the way ecosystem services are provided and the role they play in supporting socio-economic activities, Figure 4 summarizes how they match with the life cycle material and the interaction with ecosystems. A2C – Deliverable D6.6v.2.0 Page 20 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. Figure 4: Ecosystem services features and the interaction of the material life cycle with ecosystems (own elaboration) 3.4 Natural Capital Accounting and ecosystem services in the circular economy framework From the previous subsections, it can be concluded that: (i) the advantages and disadvantages of alternative circular economy scenarios can be measured in terms of the material life cycle component and its interaction with the ecosystem; (ii) there is a coherent system to account for the interaction between ecosystems and socioeconomic systems, which pass through ecosystem services; (iii) the impact on land cover and land use can be measured through the annual flow of the services provided by ecosystems. The rationale behind the proposed methodology is based on the principle that in order to generate additional biomass to be supplied to the socio-economic system, we would need to transform land and thus alter ecosystems. However, if the additional biomass is generated through recycling activities, ecosystems are not altered and there is still an additional flow of biomass to be provided to the socio-economic system (Figure 5). A2C – Deliverable D6.6v.2.0 Page 21 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. Figure 5: How to account for the benefits of recycled biomass using the ecosystem services SUT (own elaboration) The biophysical assessment and monetary valuation of the ecosystem services provided by the land that is not converted to generate the additional biomass flow (generated instead by recycling activities) can be used as a proxy for the avoided negative interaction of production processes with ecosystems. Based on the flow-chart example of one A2C Demonstrator, Figure 6 provides a visual summary of how sustainability in the agri-food industry can be quantified in terms of reduced pressure on waste generation (less waste to landfill) and increased amount of biomass to be used in manufacturing (more raw material in production). Figure 6: The “material life cycle” box (own elaboration) A2C – Deliverable D6.6v.2.0 Page 22 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. The natural resources involved in this process are water and energy. An increase or decrease in the amount of water or energy depends on how efficient the transformation process can be. The demand for these resources can, together with waste generation, have an impact on the environment. However, this is not the ecological interaction that will be studied and assessed. The impact on the environment is accounted by considering the opportunity to offer additional biomass for manufacturing transformation without converting the current land uses. Economic processes need organic raw materials, which are not obtained by additional cultivated land, but rather from agri-wastes from current cultivated land. Ecosystems will not be modified and will be able to keep on generating the current flows of services that are assessed in physical and monetary terms (Figure 7). Figure 7: The “interaction with the ecosystem” box (own elaboration) There is an avoided negative impact on the land, which can be quantified together with the benefits of reducing the amount of waste sent to landfill. The accounting of ecosystem services will focus on monetary estimates of the flows that 'unchanged' ecosystems in Murcia will be able to provide to economic sectors and households. A2C – Deliverable D6.6v.2.0 Page 23 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. 3.5 Possible procedures to embed ecosystem services accounts in Agro2Circular scenarios The ideal procedure to calculate the avoided land use transformation required to produce the additional tons of organic raw materials obtained through the recycling process would be to convert the LCA scenarios into corresponding hectares of land. Finally, the annual flow of ecosystem services per hectare is related to these equivalent hectares ( Figure 8). Figure 8: The ideal procedure to compute the avoided land transformation (own elaboration) On the other hand, there could be an alternative approach to estimate the number of hectares the project avoids being converted. This approach requires the application of the following formula (Equation 1): Land Area (km²) = Total Biomass Needed (t) / Yield (t/km²) Equation 1 A2C – Deliverable D6.6v.2.0 Page 24 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. The variable "Total Biomass Needed" is provided by the Agro2Circular Demos and represents the total organic raw biomass provided by the agricultural waste for the transformation process. The organic agri-food waste selected in the Agro2Circular project were citrus, artichoke, broccoli, cauliflower, grape and apple residues. These residues were selected on the basis of their composition (for having a high concentration of phenolic compounds of interest or fibre content) and for being predominant crops in the region of Murcia and other regions of Europe, which guarantees an adequate supply and a correct replication of the results to other regions [11]. In the NCA, the following agri-food waste are considered: lemon, artichokes, broccoli, apples, according to data availability and the Demos included in the assessment. In the case of artichokes, the raw organic biomass is provided by both the primary sector (production, collection and distribution) and the transformation sector (peels and waste). In the case of lemons and apples, the raw organic biomass is only provided by the transformation sector; in the case of broccoli, from the primary sector only. The biomass not provided by these F&V is not included in the estimate of equivalent km2. The variable “Yield” is expressed in tons per km2 and represents the average agricultural yield of selected crops in the region per year. Once the Land Area is computed, it is multiplied by the €/km2/year estimated for the selected ecosystem services in the region, after subtracting the value of the crop yield (Equation 2): Avoided land transformation (€) = Land Area (km²) * [(€/km2 ES) – (€/km2 of crop yield)] Equation 2 This procedure can be used to provide an initial estimate of the value of the avoided land transformation per year and eventually remain as a reference for validation in case the LCA conversion per hectare (or km2) is undertaken. A2C – Deliverable D6.6v.2.0 Page 25 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. 4. Application of the NCA methodological framework in the Murcia region Different ecosystem services characterize different biogeographical regions due to differences in climate (temperature, precipitation and seasonality), soil and geology (nutrient availability, water retention and drainage), topography (elevation and slope), latitude (sunlight and daylight hours) and, of course, human activities that alter the natural composition. Based on the characteristics of the Region of Murcia, ecosystem services are identified, assessed and valued for accounting purposes, so that they can be used as a proxy for the impact on the land in terms of transformation practices (as explained in the previous section). 4.1 Ecosystem services identification in the Murcia region The Region of Murcia has a Mediterranean climate, with hot, dry summers and mild, wet winters. The main natural features of the Region of Murcia include several mountain ranges (including Sierra Espuña, Sierra de Ricote and Sierra de Carrascoy), a long coastline along the Mediterranean Sea (with sandy beaches, rocky coves and cliffs), the Segura River and its tributaries, which support riparian ecosystems and provide water for agriculture and human settlements; semi-arid ecosystems such as grasslands, scrubland and salt marshes; and several protected areas, such as the Sierra Espuña Nature Reserve, El Valle Regional Park and the Salinas y Arenales de San Pedro del Pinatar Nature Reserve. Based on the region's ecosystems and habitats, it is possible to identify a number of relevant ecosystem services, as listed in Table 1. The table lists together with ecosystem services, their priority for the study we need to undertake and the availability of datasets that it is possible to use. For example, although fire control is a critically important ecosystem service, there is no assessment and valuation available for the region of Murcia that we can use. Page 32 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. Figure 10: Pollination service in the Murcia region Changing land use will affect the availability of habitat suitable for hosting wild pollinators and thus the provision of pollinating services. It should be noted that the assessment of crop provision, which is used as a benchmark, already includes crop pollination as an ecological input. Consequently, these two services can be compared, but they cannot be aggregated in order to avoid double counting. Third, there is no data set that can be used for the assessment of soil retention, nor is there any data set available for adaptation. This service concerns the process of holding or keeping soil in place to maintain soil quality, prevent erosion, and protect natural habitats. Page 33 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. The estimation (Figure 11) is based on a biophysical model that employs the RUSLE equation [14], which serves as the foundation for a counterfactual model 2 . Figure 11: Soil retention service in the Murcia region Should the land be converted to an alternative use, the current soil retention setting would inevitably undergo a significant change. It should be noted that the assessment of crop provision, which is used as a benchmark, already includes soil retention as an ecological input. Consequently, these two services can be compared, but they cannot be aggregated in order to avoid double counting. 2 Ref. section 4.1 in Page 34 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. Fourth, the proxy used to assess carbon sequestration is the net carbon removals (Figure 12), which are based on LULUCF datasets 3 . The reference year is 2021. Figure 12: Carbon sequestration service in the Murcia region This assessment is closely linked to the woody biomass provision. In fact, this service flow would be lost if woodland and forest were converted into cropland. 3 https://ec.europa.eu/eurostat/databrowser/view/env_air_gge/default/table?lang=en&category=env.env_air.e nv_air_ai Page 35 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. Fifth, the assessment of woody biomass provision (Figure 13) considers the yearly flow of timber extraction from woodland and forests and is based on the forest resource accounts compiled by ESTAT 4 . The reference year is 2021. Figure 13: Woody biomass provision in the Murcia region If woodland and forest were converted into cropland, the service flow would be lost. Sixth, there is no data set that can be used for the assessment of flood protection, nor is there any data set available for adaptation. The role of ecosystems to mitigate the risk of 4 https://ec.europa.eu/eurostat/databrowser/view/for_vol_efa/default/table?lang=en&category=for.for_sfm Page 36 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. flooding is estimated through a biophysical model 5 based on the curve number [15]. The reference year for the estimates used here is 2021. Figure 14: Flood protection service in the Murcia region The assessed level of protection depends mainly on the current presence of vegetation. The transformation of natural and semi-natural ecosystems into farmland would reduce the service flow. The result in Figure 14 is influenced by the fact that estimates used in the assessment are extracted from the model run on a European scale and refer to 2021. Furthermore, it is 5 Ref. section 6.1 in https://publications.jrc.ec.europa.eu/repository/handle/JRC116334 Page 37 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. possible that - following the floods of previous years (e.g. in 2016, 2019) - there have been improvements that have led to an increase in flood risk mitigation. Finally, there is no data set that can be used, nor is there any data set available for adaptation for the assessment of nature-based recreation services that include both daily recreation and tourism. In terms of daily recreation, it is likely that users will be residents of the surrounding area. As a result, the number of residents can be used as a reference data source to estimate this component of the service. In the case of tourism, however, users are likely to come from a distance, making the number of nights spent in accommodation establishments a more appropriate reference data source to estimate this service. Naturebased recreation is estimated (Figure 15) using a biophysical model based on the Recreation Opportunity Spectrum [16] that maps not only the presence of natural features but also the human accessibility. Page 38 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. Figure 15: Recreation potential in the Murcia region Land use is one of the key drivers in modelling the Recreation Opportunity Spectrum and its change will alter the provision of nature-based recreation. 4.2.2 Data on agricultural statistics The agricultural statistics on yield/km2 for lemon, artichokes, broccoli and apples for the Murcia region are extracted from the regional Statistical Portal (Portal Estadistico de la Region De Murcia), at: Page 39 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. https://econet.carm.es/inicio/-/crem/sicrem/PU_datosBasicos/Indice1.html Table 2 and Table 3 provide respectively the surface area of cultivated land for the selected crops (km2) and the yearly agricultural production (kg). Surface area of cultivated land (km2) Type of crop 2020 2021 2022 2023 Apples 0,74 0,60 0,66 0,66 Artichokes 56 63 59 49 Cauliflower and Broccoli 133 149 145 136 Lemon 257 262 270 267 Table 2: Evolution of the surface area of cultivated land according to type of crop (km2) (source: extraction from CARM https://econet.carm.es/web/crem/inicio/-/crem/sicrem/PU590/sec21.html) Agricultural production (kg) Type of crop 2020 2021 2022 Apples 1.280.000 1.428.000 915.000 Artichokes 83.515.000 91.858.000 78.487.000 Broccoli 192.514.000 251.268.000 202.356.000 Lemon 640.588.000 648.288.000 546.460.000 Table 3: Evolution of agricultural production by type of crop (kg) (source: extraction from CARM https://econet.carm.es/web/crem/inicio/-/crem/sicrem/PU590/sec21.html) 4.2.3 Data on agri-food waste in the Murcia Region Table 4, sourced from A2C Deliverable 1.4 "Residues management plan", describes the volume of waste generated per year in the Region of Murcia considering the F&V that have been targeted in the project, the specific parts or structures that make up the waste (skins, leaves, pulp, etc.), and the time of the year at which waste is generated. Page 40 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. In addition, Table 5 includes information about the company supplying each of the wastes and the volume of waste they generate per year: Table 5: Amount of waste supplied by companies (source: Deliverable 1.4 "Residues management plan") Table 4: Volume of waste generated per year in the region of Murcia (source: Deliverable 1.4 "Residues management plan") Page 41 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. 4.2.4 Data on Agro2Circular Demonstrators Demonstrators 3, 4 and 5 have been selected for the Natural Capital Assessment in Task 6.4. A brief description of each Demo is provided below: Demo 3: High added value substances from agri-food waste by green extraction + ultrasound Figure 16: Demo 3 flowchart (Source: A2C project, Deliverable 1.9) In Demo 3, whose flowchart is displayed in Figure 16, agri-food waste is processed through enzymatic extraction to obtain a solid and a liquid phase. The liquid phase, rich in sugars, is concentrated and sent to Demo 5. The solid phase is purified through an oxidation treatment and dehydrated in an oven to produce a dry extract with a high fibre content. The liquid phase is concentrated and purified using adsorption resins, and then freeze-dried to obtain an extract enriched in phenolic components. Table 6 provides the quantity of biomass processed in Demo 3 per trial and in different scenarios: in a default scenario with current equipment and in an improved efficiency scenario, which could be potentially implemented always with the current equipment. Page 48 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. Yield for different F&V: Yield_lem (kg/km2) = 2,473,815.16 Yield_art (kg/km2) = 1,450,007.89 Yield_bro (kg/km2) = 1,684,440.57 Yield_app (kg/km2) = 2,380,000.00 Land calculation for each F&V: Land_lem (km2) = 0.0000004 Land_art (km2) = 0.0000007 Land_bro (km2) = 0.0000006 Land_app (km2) = 0.0000006 Equation 4 These values represent the amount of km2 needed in Murcia to generate respectively 1 kg of lemons, artichoke, broccoli and apples. Reference year is 2021. 3. The value of the ecosystem asset per km2 that is preserved to avoid land transformation is calculated by multiplying the €/km2 per Land Area (km2) (Equation 5): Avoided impact on ecosystems = Ecosystem asset in €/kg/km2 * Land Area in km2 EV_lem (€/kg/km2) = 1.19 EV_art (€/kg/km2) = 2.03 EV_bro (€/kg/km2) = 1.75 EV_app (€/kg/km2) = 1.24 Equation 5 This represents the value per 1 kg of organic biomass that ecosystems are still able to provide because they have not been transformed. The specific case study concerns the organic waste from lemon, artichoke, broccoli and apple production, which is used as a raw material for the production of food, cosmetics and Page 49 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. nutraceuticals. The aim of this exercise is to address the issue of food waste and promote circular economy strategies to promote sustainability in the agri-food industry and reduce environmental impacts. Sustainability in the agri-food industry can come from the material life cycle component where waste is transformed into resources. The monetary estimate expressed in terms of services generated by ecosystems is the following (Equation 6): Value of ES enabled by recycled biomass (€) = Recycled biomass (kg) * Ecosystem value enabled (€/kg/km2) Demo 3 – Lemon waste ES value_lemon_demo (€) = 178.8 ES value_lemon_def scen (€) = 1,490.1 ES value_lemon_impr scen (€) = 8,940.7 Demo 3 – Artichoke waste ES value_art_demo (€) = 305.1 ES value_art_def scen (€) = 2,542.2 ES value_art_impr scen (€) = 15,253.5 Demo 3 – Broccoli waste ES value_bro_demo (€) = 262.6 ES value_bro_def scen (€) = 2,188.4 ES value_bro_impr scen (€) = 13,130.6 Demo 3 – Apple waste ES value_app_demo (€) = 185.9 ES value_app_def scen (€) = 1,548.9 ES value_app_impr scen (€) = 9,293.1 Page 50 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. Demo 4 – Lemon waste ES value_lemon_demo (€) = 119.2 ES value_lemon_def scen (€) = 1,192.1 ES value_lemon_impr scen (€) = 2,384.2 Demo 4 – Artichoke waste ES value_art_demo (€) = 203.4 ES value_art_def scen (€) = 2,033.8 ES value_art_impr scen (€) = 4,067.6 Demo 5 – Lemon waste ES value_lemon_demo (€) = 137.3 Equation 6 This represents the value of services that, thanks to this specific recycling process and based on the crop type that is valorized, could still be provided by ecosystems that do not need to be transformed in order to generate additional organic biomass. It should be noted that the estimation of ecosystem services preserved by Demo 5 is provided only for information purposes. In fact, the waste processed in Demo 5 is constituted by residues coming from Demo 3 and 4, therefore considering related ES would generate a double-counting. 4.5 Sensitivity analysis and refinement 4.5.1 Sensitivity analysis The monetary values obtained for ecosystem services enabled by A2C Demos single trials are influenced by the small scale of the Demonstrators and related upcycling processes, as Page 51 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. the quantities of waste processed in the Demo refers to rather limited waste quantities. Therefore two additional scenarios have been provided, based on the following data: • quantity of biomass potentially processed in a year in a default scenario with current equipment, which served to calculate the ES in the “Default scenario”: ES value_def scen • quantity of biomass potentially processed in improved scenario with current equipment, which served to calculate the ES in the “Improved efficiency scenario”: ES value_impr scen These two scenarios show how the current equipment could treat higher amounts of agriwaste and thus lead to higher values of ES preserved thanks to the recycling process. In order to perform a deeper sensitivity analysis considering the upscaling of A2C technologies, further calculations can be done by taking into account the volume of waste generated by A2C partner companies each year (Table 5). Related results of these calculations are provided below in Table 11: Waste Amount (kg/year) ES value (€) Apples 350.000,00 ES value_partner apple waste = 433.679,12 Artichoke 3.000.000,00 ES value_partner artichoke waste = 6.101.383,34 Broccoli 33.400.000,00 ES value_partner broccoli waste = 58.474.726,20 Lemon 34.000.000,00 ES value_partner lemon waste = 40.531.165,69 Table 11: ES calculation considering all agri-waste produced by A2C partners However, such waste amounts are not concretely treatable at the moment due to the fact that the processes have been developed within the A2C project and are not currently diffused. The current equipment could treat the quantities shown in the “improve efficiency scenario”. Nonetheless, the ES valuation considering the total volume of waste generated by A2C partners provides a scale of the potential value enabled by a relevant upscaling of these treatment and valorization processes. Also, the result is influenced by the selection of the discount rate and lifetime values. Further sensitivity analyses could be conducted by varying these parameters. Page 52 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. 4.5.2 Refinement In order to refine the analysis, it could be interesting to value further costs or benefits that are generated by the use of waste and therefore avoided land consumption, instead of using primary raw materials. Such further costs and benefits are discussed below: - Avoided costs of waste treatment: using waste as a raw material for an upcycling process reduces the need to treat waste in other ways, and therefore could entail cost savings for the waste producers (avoided costs). Currently, F&V waste in Murcia is mainly used as animal feed (see [19]), and therefore no costs for waste treatment can be envisaged. - Value of ecosystem services impacted by the A2C Demonstrators: environmental impacts of A2C Demonstrators have been assessed within the LCA analysis (see [20), and for selected Demos (Demo 3, 4 and 9) environmental externalities have been monetized in the environmental LCC (see [21]) and added to the conventional costs of Demos. However, LCA/LCC assess impact categories that can indirectly affect ecosystem services, but do not directly measure them as standalone outputs. Further developments of the LCA could better connect the impact categories with their potential effects on ecosystem services. 4.6 Discussion The NCA analysis conducted for selected Demos in A2C has shown the value of ecosystem services that could be preserved by using agri-food waste into new productions processes, replacing primary raw materials. The extent of the estimated values varies according to the amounts of processed waste and type of crops considered, as summarized in Table 12: Demo 3 Demo 4 Demo 5 Waste Trial Default Improved Trial Default Improved Trial Apples 185.9 1,548.9 9,293.1 Artichoke 305.1 2,542.2 15,253.5 203.4 2,033.8 4,067.6 Broccoli 262.6 1,548.9 13,130.6 Lemon 178.8 1,490.1 8,940.7 119.2 1,192.1 2,384.2 137.3 Table 12: Summary table of ES valuation from selected A2C Demos Page 53 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. For these reasons, the most significant values are retrieved from Demo 3 due to the higher quantities of waste treated annually and types of crops treated. This analysis provides added value for A2C project. ES valuation provides information that is not currently available nor taken into consideration by companies in the definition of their strategies and in the assessment of their overall sustainability. NCA starts from a national accounting system, but thanks to the use of spatial-explicit environmental economic information it can also be used at different geographical scales and aggregated or disaggregated where needed, adopting different territorial perspectives. In this sense, NCA enables to overcome a distinction between a micro (corporate) and a macro (government) perspective, reuniting them together. Furthermore, NCA allows for more granularity in environmental assessment. At the moment ES assessment is not deepened within the LCA assessments, however given the increasing urgency to tackle ecosystem degradation, it is more urgent that ever to perform more detailed assessments on ES and include this information in decision-making. Also, the approach used in the analysis, based on the value of preserved ES, is original and not previously attempted in other endeavors. Finally, NCA relies on third-party data sources based on standards and approved procedures, providing companies with solid data to perform assessments [1]. Despite these points, the analysis is hampered by some limitations. Bio-physical models employed in the analysis are calibrated at European level, not specifically on the Murcia Region; as more data and models are available, it will be possible to further refine the analysis and calculations. The approach used in this report, that considers avoided land transformation, is applied to the first step of the value chain, namely the one related to the provision of waste input to the overall process. All other impacts, i.e. waste treatment costs, transportation, are added in the other steps of the product value chain. It is therefore important to combine the NCA analysis with LCA and LCC analysis in order to obtain a comprehensive overview of the environmental as well as economic impacts across the value chain and its different steps. Page 54 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. 5. Conclusions The NCA presented in this report contributes directly to Objective 2 of A2C project: “Providing to the A2C technological solution the circular systemic approach by building a multidimensional model enabling the solution territorial deployment and its replication and scalability”, and in particular to points: i) develop and demonstrate the A2C circular business models; iii) identify, analyse and quantify the territorial economic, social & environmental barriers/benefits and the relevant indicators. In fact, the results of NCA can be used by A2C partners to integrate their sustainability assessments with further insights into the Ecosystem Services positively impacted by their solutions, which can be leveraged and communicated effectively within their value propositions. Also, the NCA complements the LCA and eLCC results considering a deeper understanding of the relations between the Demonstrators and the local territory of Murcia, enabling a territorial perspective. In this perspective, the results support the following scopes of the Work Programme: 2. “Demonstrate the role of the territorial circular economy to …” ; Increase resilience and provide concrete options for socio-economic..”Sustainability, regeneration of ecosystems.. ” ; 3 Address economic, social and environmental dimensions and include science, technology and governance components; demonstrate circular governance models and support the active participation of all relevant actors in each cluster; prove the effectiveness and sustainability of circular business models. 9. Include eco-design, industrial symbiosis and industrial ecology. “ Promote the role of ecosystems services …… and the use of natural capital accounting ” By leveraging an original approach based on the value of preserved ES, the analysis aims to shed light on the contribution of circular economy to sustainability and integrate natural capital information effectively into the development and assessment of business strategies. Page 55 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. This deliverable develops a methodological framework for applying Natural Capital Accounting (NCA) to assess the performance of circular economy (CE) solutions— specifically those focused on organic waste valorization—through the lens of ecosystem services (ES). The proposed methodology is designed to be scalable and adaptable to different territorial contexts, provided that appropriate input data and ecosystem modelling tools are available. The core principle underpinning this transferability lies in the structure of the System of Environmental-Economic Accounting (SEEA) and its spatially explicit framework, which can be applied to any region where geo-referenced environmental and economic datasets exist. As described in the deliverable, two main system components are integrated in the proposed approach to apply NCA in CE contexts: • Material Life Cycle Analysis: to track the input/output of biomass along the production chain to determine how circular practices (e.g., upcycling, recycling) reduce demand for primary resources. • Ecosystem Assessment: to quantify the ecosystem services that would be lost if natural or semi-natural land were converted to produce additional raw biomass. In order to implement the approach to other circular cases and regions, the following activities are suggested: 1. Define the circular solution to be assessed and characterize it (e.g. in terms of waste type and source, quantity processed and recycled annually, technologies used) 2. Quantify the equivalent biomass demand that would otherwise require land conversion 3. Estimate the equivalent land area that would be required to produce the same amount of recycled biomass from primary production 4. Identify and value relevant ecosystem services likely to be lost in case of land use change (e.g., pollination, soil retention, flood control, carbon sequestration, recreation), using available biophysical models and valuation techniques 5. Calculate the value of preserved ES, multiplying the avoided land area by the ES value per km². Page 56 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. Possible data sources include direct data provision from the partners involved in the implementation of the circular solution, local agricultural statistics (e.g., yield per hectare) from regional statistical offices, while ecosystem service data can be obtained from European or national repositories (e.g., EEA, JRC, national environment agencies). Many ecosystem services—such as pollination, soil retention, carbon sequestration—are modelled using standardized procedures. Moreover, the valuation phase of ecosystem services is based on globally recognized methods—market price, replacement cost, benefit transfer—which can be calibrated to regional economic contexts. This flexibility allows the NCA to be customized while maintaining methodological consistency. Page 57 І59 This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement N° 101036838. 6. Bibliography [1] J. C. Ingram et al., ‘Leveraging natural capital accounting to support businesses with nature-related risk assessments and disclosures’, Phil. Trans. R. Soc. B, vol. 379, no. 1903, p. 20220328, Jun. 2024, doi: 10.1098/rstb.2022.0328. [2] P. H. Egger and C. Keuschnigg, ‘Resource dependence, recycling, and trade’, Journal of Environmental Economics and Management, vol. 128, p. 103064, Nov. 2024, doi: 10.1016/j.jeem.2024.103064. [3] United Nations Economic Commission for Europe (UNECE), Organisation for Economic Co-operation and Development (OECD), ‘Guidelines for Measuring Circular Economy. Part A: Conceptual Framework Indicators and Measurement Framework’, Palais de Nations, Genève; Switzerland. 2023. [Online]. Available: https://unece.org/statistics/publications/guidelines-measuring-circular-economy-partconceptual-framework-indicators [4] United Nations, European Commission, Food and Agriculture Organization of the United Nations, International Monetary Fund, Organisation for Economic Co-operation and Development, The World Bank, ‘System of Environmental-Economic Accounting 2012 Central Framework’, Statistics Division,ST/ESA/STAT/Ser.F/109, 2014, [Online]. Available: https://seea.un.org/sites/seea.un.org/files/seea_cf_final_en.pdf [5] United Nations, ‘System of Environmental Economic Accounting –Ecosystem Accounting’, Department of Economic and Social Affairs, Statistics Division, ST/ESA/STAT/SER.F/124, Statistical Papers Series F No. 124, 2024, [Online]. Available: https://seea.un.org/sites/seea.un.org/files/documents/EA/seea_ea_f124_web_12dec24.pdf [6] R. S. De Groot, M. A. Wilson, and R. M. J. Boumans, ‘A typology for the classification, description and valuation of ecosystem functions, goods and services’, Ecological Economics, vol. 41, no. 3, pp. 393–408, Jun. 2002, doi: 10.1016/S0921-8009(02)00089-7. [7] TEEB, ‘The Economics of Ecosystems and Biodiversity - Ecological and Economic Foundations’. Edited by Pushpam Kumar, 2010, Earthscan: London and Washington