Globally, we consume more natural resources than the planet can regenerate. With deteriorating ecosystems, the capacity to support human wellbeing and sustainable economic growth is decreasing. Natural capital pertains to the idea that natural resources can be valued in economic terms. Methods to account for natural capital are getting more attention. Can viewing natural assets as capital, thus as scarce, valuable goods, help us to integrate long-term sustainability thinking?
Over the past few years, the concept of natural capital and the practice of natural capital accounting have increasingly begun to be taken seriously among national governments and businesses. If a country is using its natural resources, such as minerals, forests, fisheries, wetlands, agricultural land and water resources, in an unsustainable way, it is actually depleting wealth. Growing awareness about this is driving ways to include natural assets in decision-making and financial reporting. However, the concept has roots earlier in history. In 1973, the term “natural capital” was coined by Ernst Friedrich Schumacher as an economic concept for the world’s natural resources — such as air, water, and soil — capable of flowing into goods and services.
Currently, the idea of describing natural resources as “capital” subject to depletion coincides with growing awareness that natural resources are disappearing faster than they can be replenished. A step towards recognizing the interrelation between our (economic) wealth and the state of the environment, is standardizing natural capital approaches. In 2012, the System for Environmental and Economic Accounts (SEEA) was adopted. It offers an internationally agreed upon framework for the recording of a comprehensive and integrated set of environmental data. Natural capital approaches consider a wider ranging set of environmental issues on potentially larger scales than traditional environmental assessments have been able to. Furthermore, natural capital accounting applies more quantitative methods to measure natural capital stocks and flows and hence account for them. For example, green GDP or adjusted gross domestic product, takes into account aspects of a country’s production of goods and services (e.g. the environmental degradation and natural resource depletion that are relevant to sustainability) that would not otherwise be included in the conventional GDP. According to the World Bank, because of these detailed statistics, natural capital accounts can support better management of the economy. For instance, natural capital accounts can support biodiversity-rich countries to maximize their contribution to economic growth while balancing tradeoffs among ecotourism, agriculture, subsistence livelihoods and other ecosystem services such as flood protection and groundwater recharge.
However, criticism of natural capital accounting is also becoming louder. Opponents state that natural resources are reduced to economic commodities, so that their value is described only in monetary terms. However, speaking of natural capital merely in quantitative terms is impossible, because we could never fully capture and express its value. Our dependency on natural resources is too complex. A more qualitative and holistic assessment of nature is thus needed. Opponents furthermore propose bearing with concepts of the commons, which concern communal resources that are (or rather could be) managed collectively without identified ownership but with shared responsibility. This method has been used for centuries by local communities living in and off their environment and offers a potential remedy for the commodification, commercialization and privatization of natural resources. Recent research titled “The tragedy of the commons – minus the tragedy” found cases of people successfully sharing and sustainably using resources under certain conditions all over the world.
As the idea of natural capital gains ground, technologies to regenerate or sustainably produce natural resources are becoming more valuable. For instance, regenerative agriculture is on the rise as technologies that support it are advancing. For instance, ultra-light tractors could help eliminate soil compaction problems and precision farming technologies such as robots that can work to a 2cm accuracy could optimize irrigation and improve biodiversity and yields. Another example comes from Skysource, the company that developed a water generator that extracts a high volume of water from the atmosphere using renewable energy, at low cost. These cases are of growing importance in a world where only 1% of the water is drinkable, with much of that becoming increasingly polluted by substances ranging from microplastics to antibiotics, and where there is more water in our atmosphere than in all our rivers combined. In the long run, water generators could reduce the dependence on centralized water systems and thus become an asset of the commons again. In combination with better management of natural resources, smarter methods to deal with earth’s valuable assets might help us to at least prevent earth’s balance sheet from further becoming out of balance.