UK’s environmental consultancy sector grows for second consecutive year

Environment Analyst (EA), a business intelligence and market research firm, said the performance was “impressive” given that the UK economy recovered only slightly with real GDP growing by 0.2% in 2012.

According to the EA’s report, growth across the sector is far from uniform with the impact of government spending cuts continuing to be felt.

In 2012, there was a 1.7% reduction in EC revenues from public sector commissioning bodies to stand at £335.5m, equivalent to 25.1% of the total market.

Overall, the government sector is 19% down on what it was worth to environmental consultancies in 2009.

Author of the report Liz Trew said: “Consultancies that are strongly reliant on public sector sourced work continue to come under significant pressure and will need to diversify in order to survive.”

However, the public sector decline was more than offset by increased spend from within the private sector and regulated industries, which together saw a solid growth rate of 9.0% in 2012 to reach £998.6m, equivalent to 75% of the total UK EC market.

Total growth in the sector for 2012 follows a rise of 4.5% in 2011, after two consecutive years of significant declines at the height of recession.

In terms of specific service lines, the report finds that three core EC practice areas in particular stand out for their strong growth in 2012: contaminated land/remediation with a year-on-year increase of 7.4%; ecological/landscape services up 8.0% and environmental impact assessment (EIA) / sustainable development up 23.1%.

There are currently more than 646 such projects in the pipeline worth more than £375bn, according to the latest government figures.

According to the EA’s projections, overall growth is expected to continue into 2013 but at a slightly lower rate of 3.4%.

Trew adds: “Although there are still significant uncertainties – whether economic growth will be sustained and issues relating to the government’s wavering support for green regulation and renewables – the fact that there have been two years of stable growth with specific areas forging ahead with some impressive growth rates against the climate of austerity, bodes well for the UKEC sector’s performance over the next few years.”

The report also highlights new market opportunities, and points to the UK’s shale gas industry in particular, which it says “comes with a whole host of as yet poorly understood environmental risks that need to be assessed, monitored and mitigated – offering potentially rich pickings for environmental consultants”.

Leigh Stringer