Its report said measures like investing in improved air quality and greener cities would bring economic benefits.
Defra said it had set « long-term goals » to halt « decades of decline ».
The committee also advised that creating hundreds of thousands of hectares of woodland and wetlands would lead to multi-million pound benefits, including avoiding flooding and improving health.
It says the government, businesses and society as a whole should be involved in the 25-year strategy to protect England’s « natural capital » – its assets which include forests, rivers, land and wildlife.
Committee chairman Professor Dieter Helm said in the introduction to its third and final report:
There is now a great opportunity to improve the wellbeing and prosperity of both urban and rural populations and restore some of the natural capital that has been lost.
This will enhance prospects for long-term sustainable growth and therefore bequeath to the next generation a set of properly maintained and enhanced natural assets. »
The report said air pollution reduces productivity and also causes some 40,000 premature deaths each year. It also called for investment in urban green areas to improve physical and mental health for those living in cities.
The report calculates that health costs can be reduced by cleaning up dirty air; floods can be tempered by creating new wetlands; and better green spaces in cities can tempt people outdoors to improve their physical and mental well-being.
The NCC puts numbers on the benefits of environmental investment. It says planting woods near cities of up to 250,000 additional hectares can generate a benefit to society of £500m per annum as people exercise and enjoy nature.
It says restoration of around 140,000 hectares of upland peat bogs would deliver net benefits of £570m over 40 years in storing carbon.
Restoring commercial fish stocks, particularly white fish like cod and shellfish, would cause short-term problems for the industry, but bring long-term gains for generations to come, the report maintains. The cost of restoring some stocks of shellfish could be outweighed 6:1 by the benefits, it says.
A Defra spokeswoman said: « We have set long-term goals to stop the decades of decline in wildlife and habitats and have already seen some improvements. »
« Since 2010 we have helped to create over 150,000 acres of field margins, wetlands and woodlands, and woodland cover is at its highest level in 700 years.
Economic growth and improving the environment go hand in hand.
She said the department would analyse recommendations made by the committee and respond later this year.
By Roger Harrabin, Environment Analyst
When the government came to office ministers said they wanted to leave the environment in a better state than before. They set up a committee to report on the state of the UK’s natural assets.
Shadow environment secretary Maria Eagle said: « David Cameron pledged to lead the ‘greenest government ever’ but the reality is that we have had almost five years of non-stop degradation and decline of the natural environment under this Tory-led government.
This report makes it clear that improving the natural environment provides valuable goods and services to people such as clean air, clean water and recreation in both urban and rural populations, and can save our NHS billions.
She said a Labour government would « make public access to green spaces a priority » and « take real steps to give communities power to protect and improve the natural environment. »
The document has been welcomed by some environmental groups. « Nature is priceless, » said Martin Harper from the RSPB.
« But you can’t make good economic decisions without taking nature into account.
Photo © Songquan Deng / Adrian Reynolds