Ask Your Mates Open Forum

natural assets capitalization

  • 1.  natural assets capitalization

    Posted 30 March 2017 00:50

    Hi all, Coming up to that peak time again when we are trying to get everything done before the EOFY and I have been given another luckily small project of benchmarking some of our systems and processes. Any information would be appreciated on one or all of the following.

    1)      Tree capitalization, systems and valuation methodology

    2)      Valuation of riparian corridors and stormwater detention basins

    3)      Planning maintenance and renewal of filtration planting

    4)      How are completed works handed over to asset management team for capitalization and asset register update



    Brandon Farr


    Assets Data Collector, Infrastructure Planning
    Camden Council  I  PO Box 183, Camden NSW 2570
    P: 02 4645 5131
      I  F: 02 4645 5917   

    E:  I  W:




  • 2.  RE: natural assets capitalization

    Posted 03 April 2017 00:15
    Hi Brandon 

    IPWEA's NAMS Council at its last meeting identified that "Valuing Natural Assets" is a hot topic for councils.  We are currently investigating whether there is sufficient interest from the industry for us to undertake a Practice Note on this issue.  I'll be keeping a close watch to monitor responses and comments to your post. 

    Robert Fuller
    Chief Executive Officer
    IPWEA Australasia
    Sydney NSW


  • 3.  RE: natural assets capitalization

    Posted 04 April 2017 20:21
    Hi Brandon,

    I can provide some info on questions 1 and 4

    We have a team of bush regenerators who regenerate (through planting, weed spraying and tree maintenance) key areas of our water supply catchments and riparian zones with an aim to improve catchment water quality. We do this work both on our land and on riverbanks of private land.

    Plantings on riverbanks of private land are essentially gifted to the owner and not capitalized. Plantings on our land are capitalized and captured in our asset register. Each year we capture the area planted and/or maintained and the capital cost to do so - this gets entered into our asset register as a financial year asset  - e.g. for planting upstream of our river offtake this would be captured as River Planting 2016/17 and the area of planting is mapped with assistance from the bush regen team. So after 5 years we have 5 planting assets at this site.

    The theory then goes that every 5 years when the assets are revalued, we combine the 5 mapped areas at this site into 1 asset and revalue the 1 asset.

    Our current methodology for revaluation is that the replacement value is what it would cost to replace the plantings from scratch. And because we would only replace a planting with seedlings and not full size trees, the replacement value is therefore the cost of supply and planting the seedlings. Also the idea of these plantings is that they become self sufficient and self regenerating so we don't depreciate these assets.

    I am also interested to hear what others are doing in this space.


    Samuel Curran
    Rous County Council


  • 4.  RE: natural assets capitalization

    Posted 06 April 2017 00:42



    Theres a system called i-tree which might be usefull to it.


    It is basically for capturing the true value of urban forests assets and so takes into account a number of parameters such carbon sequest, storm water amenity. and a number of other sustainability criteria. might be a bit overkill but the actual output might be useful.




    Niall Simpson I FAILA. B.Env.Des. Grad. Dip. L.Arch | Landscape Architect & Urban designer | Parks & Recreation | City of Launceston
    T | 03 6323 3623 M | 0407 875 213 I



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  • 5.  RE: natural assets capitalization

    Posted 03 April 2017 00:19
    Hi Brandon
    You can refer to IPWEA Parks Practice Note 10.2, available from the bookshop. This deals with valuation of trees and other living and natural assets.
    In short, as far as we are aware, no one in Australia is capitalising trees or other living assets for financial reporting purposes.

    I would be interested to hear from anyone who is doing this


    Brian Milne
    Xyst Ltd
    Brisbane QLD


  • 6.  RE: natural assets capitalization

    Posted 03 April 2017 19:43

    An interesting example of valuing natural assets can be found on the Town of Gibsons (in British Columbia, Canada) website: Eco-Assets - Town of Gibsons

    Margaret Whidden

    Margaret Whidden
    City of Revelstoke
    Revelstoke BC


  • 7.  RE: natural assets capitalization

    Posted 04 April 2017 00:51
    Hi All,

    Just in response to Brains post:

    I have had a look at other capital city's balance sheets and they have trees as assets. I also believe most councils would be valuing other living assets like turf, garden beds etc. Also I have had a look at the practice note 10.2 and it leaves it open to whether they are capitalised or not depending on an organisations particular circumstances or requirements. But it does not tackle all the issues and complexities of valuing these types of assets.

    Also, in response to Roberts post:

    Having had discussions with colleagues from AM & Parks determining an accurate replacement cost/fair value for living assets and in particular trees could be quite complex. There are issues about whether you replace like for like or just use the price of a sapling, developing different unit rates based on maturity, priority areas /LOS and then there are discussions about amenity value not being in-line with fair value. So yes I think a practice note would be of great benefit. I would expect an added benefit is that it would provide consistency and comparability of asset valuations across all councils.

    In the meantime it would be good to hear how councils that are valuing & revaluing trees are doing it?

    John Wunhym
    Financial Asset Management Officer
    City of Perth
    PERTH WAau


  • 8.  RE: natural assets capitalization

    Posted 09 April 2017 19:59
    Hello Brandon,

    Thanks for raising the topic of natural asset capitalisation. It is an area many natural asset planners and managers have a strong professional interest in, especially as it encompasses not only the planning and management of natural assets but the advocacy for natural assets as well.

    In summary, natural (soft) assets are at a disadvantage when compared to hard assets as the Australian Accounting Standards Board (AASB) does not recognise natural assets as a financial asset unless they are intended to be raised for some money making purpose (eg timber production). This is reflected in their Australian Accounting Standard 27 (AAS 27) Financial Reporting by Local Government Natural assets also tend to appreciate in value until they reach their over-mature phase and local government financial and asset management systems are unable to deal with appreciating, rather than depreciating, assets. Natural assets are often placed outside the “cradle to grave” costing models associated with built assets, which leads to the perception in some quarters, that they have little or no monetary value and can be removed or replaced at whim. This has created an inordinate amount of waste and rework, and a greater reliance on staff skills and expertise to ensure that appropriate measures are in place to advocate, plan and manage natural assets. It also places asset financial planning and management at loggerheads with initiatives such as 202020 vision plan (20% more trees by 2020), a major initiative that is supported by over 250 public and private sector organisations. 

    Despite the abovementioned challenges, a number of local government authorities have created parallel measures to value trees. The modified Burnley method and i-Tree Eco are two commonly used methods of tree valuation.

    Kind regards

    David Vial
    Kenmore QLD


  • 9.  RE: natural assets capitalization

    Posted 13 April 2017 00:46
    One slight addendum, 202020 stands for 20% more green space by 2020; not 20% more urban trees by 2020 as I previously stated. Cheers David.

    David Vial
    Kenmore QLD


  • 10.  RE: natural assets capitalization

    Posted 17 April 2017 21:28
    Hi all

    Looking for some views - I note the commentary re Australian Accounting standards... Does this apply to NZ as well ?

    Of particular interest is how to value green infrastructure assets - namely swales, ponds, basins, open spaces, tree pits, road side rain gardens, etc - They all perform a function in relation to Stormwater management however have historically not been incorporated into Council asset valuations from what I make of it...

    Any examples of them being included that you are aware of ? They deteriorate over time and are subject to on going maintenance so surely you should seek to depreciate them over time - particularly where there is a capital cost in recent years invested to create or amend them.

    Regards and thanks for your time !


    Liam Foster
    Opus International Consultants


  • 11.  RE: natural assets capitalization

    Posted 09 April 2017 20:02

    HI Brandon


    This is an interesting topic for discussion and I think is highlighting the difficulty of linking asset management and financial management practices.


    I firmly believe that when managing natural assets that they should be managed using an asset management approach. That is consider, the whole of life costs such as maintenance and operational expenditure, consider the desired service levels etc. The Natural assets AMP should identify all these costs as well as the linkages between natural assets and the Councils Community Strategic plan and community aspirations


    My problem arises in the valuation of the natural assets.


    Infrastructure assets are generally valued on gross replacement cost, and we can have discussions whether that is replacing like with like or green field v brown field, and modern engineering equivalent etc. It is clear that infrastructure assets generally degrade over time and loose value (depreciate). This loss of value represents at a high level the required annual renewal expenditure for the asset should we wish to maintain this asset for long term use.


    I am not sure that this is the case with natural assets. Firstly, the valuation of natural assets from my limited knowledge is an economic assessment of value not replacement cost for the asset. Natural assets tend to gain economic value over time rather than loose economic value and the loss of value happens very quickly towards the end of the asset life. This then leads to the issue of the rate of depreciation or rate of appreciation in some cases.


    You would I think need to clearly understand why you are valuing these assets and what you hope to achieve from this. By all means value natural assets to understand the value to the community and using these values in business case analysis for funding applications or to emphasis the value of natural assets to the community. For asset management purposes, I would not value and capitalise these assets.


    It would be a good idea to talk to your finance people to determine the impact of this on Councils overall financial position, my understanding is that the only natural assets that should be valued are commercial tree plantations but please check with your CFO.


    From an asset management perspective please manage these assets in the same manner as your infrastructure assets.

    • Collect and know your asset inventory (not an easy task in some cases)
    • identify what the condition the assets are in, and how they degrade or fail.
    • What are the future demands and constraints on the asset class
    • Identify the lifecycle cost of the asset
      • Maintenance costs
      • Operational costs
      • Replacement costs
    • Clearly understand the organisational commitment to the asset class and how it links to the CSP
    • Identify and agree with your community on service levels
    • Identify any funding shortfall or excess funding.
    • Develop and adopt a strategic Asset Management Plan for the natural assets

    This would be my preferred approach.


    Hope this helps




    Timothy McCarthy
    Morrison Low Consultants Pty Ltd
    Phone: +61 2 9211 2991
    Mobile +61 407 247 256


  • 12.  RE: natural assets capitalization

    Posted 19 April 2017 00:10

    Hi All,
    I have thoroughly enjoyed the conversation. Natural Assets Capitalization has a many facets that need to be addressed. I just wish to stress that identifying the "value" in an ecological sense is vastly different than assets and $$$. Say for example if in NSW you want to remove trees from the roadside, one of the large state organisations see the value of that one tree removal worth at least the equal to five - 15 trees (this is just an example) to replace that tree with an offset. And the fact that natural assets in city centres reduces urban heat, reduces air pollution and noise pollution.

    There are so many additional benefits to natural assets, just remember the more intact the natural comunity is and connected it is, the higher value!
    Cheers Jo

    Joanne Spicer
    Stokks Consulting Pty Ltd
    Tumut NSW