What is Natural Capital?

We care for things that have value. Free stuff, on the other hand, comes with an implicit invitation to abuse it. The notion of nature as limitless and exploitable by all, at zero cost, has led to mismanagement and a colossal decline in its overall volume and regenerative potential.

Rooted in the ecological debate for the past decades, natural capital is a conceptual approach that looks at nature through the prism of economics. It provides a framework through which natural resources are valued alongside human and financial resources. The principle of pricing nature is at the heart of conserving and protecting natural assets.

The term natural capital embraces natural assets associated with land (such as woodlands, fields, urban parks and subsoil assets), the water environment (for example, rivers, lakes, groundwater and seas) and the atmosphere (for example, clean air, and an equable climate).

Natural capital also includes the myriad processes which underpin and generate the ecosystem services that nature provides (for example, the water cycle, soil fertility processes and atmospheric gas exchange). Therefore, natural capital comprises, quite literally, a wealth of component parts; parts whose sum underpins not only all economic activity but life on Earth itself.

ACTION NEEDED

Better stewardship of natural assets will maintain a level of sustained and sustainable economic growth while stabilizing, if not increasing, the health of the planet’s ecosystems. Genuinely embedding the value of natural capital into the fabric of economic decision-making is crucial to achieving a sustainable balance between man and nature.