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Natural Capital

Definition

Natural capital is the world's stock of natural resources, which includes geology, soils, air, water and all living organisms. Some natural capital assets provide people with free goods and services, often called ecosystem services. Two of these underpin our economy and society and make human life possible.

What is 'Natural Capital '

A reference to the stock of natural resources, such as water and oil. Unlike other forms of equity (such as machines and buildings), which can be created on a regular basis, many natural resources are nonrenewable. Natural capital includes many resources that humans and other animals depend on to live and function, which leads to a dilemma between depleting and preserving those resources.

Explaining 'Natural Capital '

In economics, depletion of natural resources is a consequence that needs to be accounted for when looking at a company's effect on total welfare. A company might be making big profits, but if it is doing a lot of damage to the natural capital of an economy, it may actually have a negative effect on total welfare.


Further Reading


Natural capital and the economics of environment and development
books.google.com [PDF]
… Economy, University of Alberta, Edmonton, Alberta, Canada T6G 2H1 Edward B. Barbier—Department of Economics and Finance, University of … University of British Columbia, Vancouver, BC, Canada Marc Conte—Department of Biology and Natural Capital Project, Woods …

Natural capital and ecosystem services informing decisions: From promise to practiceNatural capital and ecosystem services informing decisions: From promise to practice
www.pnas.org [PDF]
… Economy, University of Alberta, Edmonton, Alberta, Canada T6G 2H1 Edward B. Barbier—Department of Economics and Finance, University of … University of British Columbia, Vancouver, BC, Canada Marc Conte—Department of Biology and Natural Capital Project, Woods …

Wealth, natural capital, and sustainable development: contrasting examples from Botswana and NamibiaWealth, natural capital, and sustainable development: contrasting examples from Botswana and Namibia
link.springer.com [PDF]
… Economy, University of Alberta, Edmonton, Alberta, Canada T6G 2H1 Edward B. Barbier—Department of Economics and Finance, University of … University of British Columbia, Vancouver, BC, Canada Marc Conte—Department of Biology and Natural Capital Project, Woods …

Valuing nature: From environmental impacts to natural capitalValuing nature: From environmental impacts to natural capital
www.sciencedirect.com [PDF]
… Economy, University of Alberta, Edmonton, Alberta, Canada T6G 2H1 Edward B. Barbier—Department of Economics and Finance, University of … University of British Columbia, Vancouver, BC, Canada Marc Conte—Department of Biology and Natural Capital Project, Woods …

Natural capital, subjective well-being, and the new welfare economics of sustainability: Some evidence from cross-country regressionsNatural capital, subjective well-being, and the new welfare economics of sustainability: Some evidence from cross-country regressions
www.sciencedirect.com [PDF]
… Economy, University of Alberta, Edmonton, Alberta, Canada T6G 2H1 Edward B. Barbier—Department of Economics and Finance, University of … University of British Columbia, Vancouver, BC, Canada Marc Conte—Department of Biology and Natural Capital Project, Woods …

Natural resources, capital accumulation and the resource curseNatural resources, capital accumulation and the resource curse
www.sciencedirect.com [PDF]
… Economy, University of Alberta, Edmonton, Alberta, Canada T6G 2H1 Edward B. Barbier—Department of Economics and Finance, University of … University of British Columbia, Vancouver, BC, Canada Marc Conte—Department of Biology and Natural Capital Project, Woods …

Frontier issues in ecological economicsFrontier issues in ecological economics
ideas.repec.org [PDF]
… Economy, University of Alberta, Edmonton, Alberta, Canada T6G 2H1 Edward B. Barbier—Department of Economics and Finance, University of … University of British Columbia, Vancouver, BC, Canada Marc Conte—Department of Biology and Natural Capital Project, Woods …

The ecosystem services framework and natural capital conservationThe ecosystem services framework and natural capital conservation
link.springer.com [PDF]
… Economy, University of Alberta, Edmonton, Alberta, Canada T6G 2H1 Edward B. Barbier—Department of Economics and Finance, University of … University of British Columbia, Vancouver, BC, Canada Marc Conte—Department of Biology and Natural Capital Project, Woods …

Ecological restoration: A new frontier for nature conservation and economicsEcological restoration: A new frontier for nature conservation and economics
www.sciencedirect.com [PDF]
… Economy, University of Alberta, Edmonton, Alberta, Canada T6G 2H1 Edward B. Barbier—Department of Economics and Finance, University of … University of British Columbia, Vancouver, BC, Canada Marc Conte—Department of Biology and Natural Capital Project, Woods …



Q&A About Natural Capital


How does accounting for natural capital occur?

Accounting for such goods may occur in physical or monetary terms. This process can subsequently inform government, corporate and consumer decision making as each relates to the use or consumption of natural resources and land, sustainable behavior.

What is natural capital?

Natural capital is the process of calculating the total stocks and flows of natural resources and services in a given ecosystem or region.

Why is it important to account for depletion when looking at a company's effect on total welfare?

A company might be making big profits, but if it is doing a lot of damage to the natural capital in an economy, it may actually have a negative effect on total welfare.

What is one example of this type of dashboard?

One example is the Eurostat Sustainable Development Indicators, which is a list over 100 indicators used to monitor EU Sustainable Development Strategy.

How does Natural Capital differ from other forms of equity?

Other forms of equity include machines and buildings that can be created regularly, but many natural resources are non-renewable.

What are some methods of accounting that aim to address sustainability?

There are several methods of accounting which aim to address the issue of sustainability. These are large and eclectic dashboards; composite indices; indices focusing on overconsumption; adjusted economic indicators.

What is Natural Capital?

Natural capital refers to the stock of natural resources, such as water and oil. Unlike other forms of equity (such as machines and buildings), which can be created on a regular basis, many natural resources are nonrenewable.

What are some examples of natural capital?

Some examples include water and oil.

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