Natural capital is our ‘stock’ of waters, land, air, species, minerals and oceans. This stock underpins our economy by producing value for people, both directly and indirectly. Goods provided by natural capital include clean air and water, food, energy, wildlife, recreation and protection from hazards.
What is natural capital?
The term ‘natural capital’ is increasingly used to describe the parts of the natural environment that produce value to people. Natural capital underpins all other types of capital – manufactured, human and social – and is the foundation on which our economy, society and prosperity is built.
Why do we want to value natural capital?
The idea that nature is valuable is not new. The natural environment has always underpinned humanity’s wealth and health. The study of natural capital aims to work out how much the services provided by nature contribute to the economy and wellbeing, so that we can make better decisions about how to manage our natural assets.
What is the state of England’s natural capital?
Although there have been recent policy successes, long-standing patterns of overuse have undermined the state of England’s natural assets. Much more research is needed, but the evidence we do have suggests that some of the key benefits that nature provides are at risk.
Why is our natural capital
Human activity has eroded natural capital, especially in the last 50 years. Increases in population and prosperity have led to growing demand for food, housing, land and transport links. At a global level, these pressures look set to persist and intensify in coming years.
How much is our natural capital worth?
This is not a question that can be meaningfully answered. In total, our natural assets are of infinite value because without them, life on earth simply could not exist. Although several studies have tried to answer this question in recent years, the values they estimate are not meaningful and do not help inform policy decisions. Meaningful economic valuation instead needs to ask the question: what would we be willing to give up in order to have more of something else? In doing so, it can help answer questions about how much small changes in our natural assets are worth and knowing this can help us make better management decisions.
Does putting a value on natural capital mean it will be ‘sold off’?
No. We need to be absolutely clear that ‘valuing nature’ and putting a price on nature are two very different issues; we are interested in the former not the latter. We live in a world where human wants inevitably exceed the resources available to satisfy them all. Every time we decide to do one thing, we are therefore making a decision not to do another. Valuation is
the essence of decision-making. By recognising these inevitable trade-offs, we avoid implicitly placing a value of zero on things like nature that are difficult to value.
What do we gain when natural capital is part of decision-making?
Despite its importance, the value of natural capital is routinely taken for granted. The benefits that come from nature are not taken into account in decision-making. There is growing evidence that uninformed decisions
not only damage the environment, but also have significant negative consequences for the economy.
How can natural capital be managed?
Significant environmental and economic benefits can be secured through effective and efficient management of our natural capital. Although restoration of natural capital often requires a long-term commitment, there are numerous examples that demonstrate it is both possible and desirable.