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.
Natural Capital
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]
- Natural capital and ecosystem services informing decisions: From promise to practice – www.pnas.org [PDF]
- Wealth, natural capital, and sustainable development: contrasting examples from Botswana and Namibia – link.springer.com [PDF]
- Valuing nature: From environmental impacts to natural capital – www.sciencedirect.com [PDF]
- Natural capital, subjective well-being, and the new welfare economics of sustainability: Some evidence from cross-country regressions – www.sciencedirect.com [PDF]
- Natural resources, capital accumulation and the resource curse – www.sciencedirect.com [PDF]
- Frontier issues in ecological economics – ideas.repec.org [PDF]
- The ecosystem services framework and natural capital conservation – link.springer.com [PDF]
- Ecological restoration: A new frontier for nature conservation and economics – www.sciencedirect.com [PDF]
