This report was originally published by the European Commission.

“The growing human population and a shift to more resource-intensive habits and behaviours are increasing the demands on global ecosystems. Natural capital is a way to describe Earth’s natural assets, including soil, air, water, and living things, existing as complex ecosystems, which provide a range of services to humans. Depleting and degrading these reserves may irreversibly reduce the availability of benefits to future generations. This In-Depth Report presents an overview of ideas, debates and progress so far in natural capital accounting, in particular in accounting for ecosystems and their services.

We are at a critical moment to find ways to account for natural resources and their benefits in a systematic fashion. Many ecosystems may be so far degraded that future generations may not be able to benefit from the services they provide. Many of us living in highly urbanised societies are not being made aware of nature’s full ‘worth’ or ‘value’ — its ‘capital’ — which can be seen in the great number of services nature provides. There is a risk we may not appreciate these services until nature’s capacity to provide them runs out. The most evident services are food, drinking water and plant materials used for building, cloth, medicine and fuel, but there are also myriad, less evident services, such as the organisms that help clean pollutants from air, the insects that provide natural pest control and pollination (on which approximately 84% of all European crops depend), the defences from flood, noise and wind provided by trees, the tonnes of carbon captured and stored by soil and vegetation, the mental and physical health benefits that come from our experience of wildlife and the natural environment, and many more. Broadly speaking, ‘Natural capital’ describes all the natural assets and the related services that human societies need in order to survive and thrive.

The Millennium Ecosystem Assessment (MA), a global assessment of the consequences of ecosystem change published in 2005, found that 60% of a group of 24 ecosystem services are being degraded. One analysis of a broad set of indicators of Aichi Biodiversity Target 14 (ecosystem services restored and safeguarded; Box 1) supports the conclusion that there is no overall progress towards this target, and the overall ‘state’ of natural capital is in decline (Shepherd et al. 2016).

Societies are now depleting and degrading natural capital faster than it can regenerate and returning waste to the environment faster than it can be absorbed. Depletion and degradation of this natural capital will diminish not only nature’s capacity to regenerate itself but also the raw materials needed for all economic production and the flow of ecosystem services essential to human wellbeing. Depleting an entire forest not only means the loss of that asset but also the loss of future services that it could provide. Future generations are being left dependent on dwindling resources (Farley,2012). Indeed, natural systems underpin basic material conditions for life, wellbeing and all economic activity.

‘Natural capital accounting’ offers a way to create a register of the natural ‘assets’ — geology, soil, water, air and all living things — along with the range of services provided. Its purpose is to enable governments, businesses and individuals to value them sufficiently to take responsibility for maintaining and monitoring their health. Also, by including an analysis of the health of the ‘assets’ and their ability to function, it is hoped that better decisions can be made to improve them, to protect them, or simply to use them more wisely so they can continue to support future generations…”

This In-Depth Report aims to:

  • Summarise current knowledge on natural capital accounting.
  • Outline the key methods under development in natural capital accounting.

Read on and access the full report at the European Commission.