Natural Capital can be defined as the world’s stocks of natural assets which include geology, soil, air, water and all living things.
It is from this Natural Capital that humans derive a wide range of services, often called ecosystem services, which make human life possible.
The most obvious ecosystem services include the food we eat, the water we drink and the plant materials we use for fuel, building materials and medicines. There are also many less visible ecosystem services such as the climate regulation and natural flood defences provided by forests, the billions of tonnes of carbon stored by peatlands, or the pollination of crops by insects. Even less visible are cultural ecosystem services such as the inspiration we take from wildlife and the natural environment
“…there are both serious risks to business, as well as significant opportunities, associated with biodiversity loss and ecosystem degradation. There is also a need for business to quantify and value its impacts on biodiversity and ecosystems, in order to manage these risks and opportunities and enable a better future for all”
Chair, TEEB Advisory Board
UN Goodwill Ambassador
With financial capital, when we spend too much we run up debt, which if left unchecked can eventually result in bankruptcy. With Natural Capital, when we draw down too much stock from our natural environment we also run up a debt which needs to be paid back, for example by replanting clear-cut forests, or allowing aquifers to replenish themselves after we have abstracted water. If we keep drawing down stocks of Natural Capital without allowing or encouraging nature to recover, we run the risk of local, regional or even global ecosystem collapse.
Poorly managed Natural Capital therefore becomes not only an ecological liability, but a social and economic liability too. Working against nature by overexploiting Natural Capital can be catastrophic not just in terms of biodiversity loss, but also catastrophic for humans as ecosystem productivity and resilience decline over time and some regions become more prone to extreme events such as floods and droughts. Ultimately, this makes it more difficult for human communities to sustain themselves, particularly in already stressed ecosystems, potentially leading to starvation, conflict over resource scarcity and displacement of populations.
Ultimately, nature is priceless. However it is not valueless and there are now many studies around the world which have tried to calculate Natural Capital in financial terms. So, for example it is calculated that avoiding greenhouse gas emissions by conserving global forests would be worth US$3.7 trillion, or that insect pollination is worth US$190 billion a year to global agricultural output. A report published in April 2013 by the TEEB for Business Coalition, Natural Capital at Risk: The Top 100 Externalities of Business, estimates the world's primary production and processing sectors are responsible for ‘environmental externality’ costs totalling a staggering US$7.3 trillion annually.
In addition to being an opportunity to explore the opportunities and risks associated with this fast emerging issue, the World Forum on Natural Capital is one of the most pioneering and exciting conferences anywhere in the world. We see it as a new era of corporate and state responsibility to the natural environment and, more profoundly, a chance to reframe nature as the solution to global challenges, rather than a part of the problem.
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We do not have the luxury of doing nothing. While many of us have not fully assessed whether we are protecting the natural capital on which our businesses rely, I wonder if we have asked what the consequences are if this disappears?
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