What is natural capital?
- During the development of the Natural Capital Protocol, the Coalition and our partners worked to distil the many working definitions of ‘natural capital’ into a single, common, harmonised definition that encompassed the core themes and messages of its previous iterations. This harmonized definition is:
- Natural capital is another term for the stock of renewable and non-renewable resources (e.g. plants, animals, air, water, soils, minerals) that combine to yield a flow of benefits to people.
Read more here.
What are ecosystem services?
- Ecosystem services (where service is defined as ‘a system supplying a public need’) are broadly understood as ‘the benefits people obtain from natural capital’.
- These benefits can be cultural, spiritual, economic, social, eudemonic or any other type of benefit that you can imagine.
What’s the relationship between natural capital and ecosystem services?
- Natural capital is a way of describing a resource, environment, habitat or ecosystem (sometimes called a ‘stock’) that underpins ecosystem service benefits (sometimes called a ‘flow’).
- For example a pollinator habitat can be thought of as natural capital, as are the pollinating insects themselves. However, the benefit or service of pollination, is an ecosystem service.
- The provision or ‘flow’ of the service (pollination) is underpinned by the health of natural capital ‘stock’ (i.e. pollinators and their habitats).
- Damage to the underpinning stocks will correspondingly lead to reduced flow of services and a loss of benefits for people.
What are ‘nature’s contributions to people’?
- In January 2018, scientists associated with the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) suggested a move away from the term ‘ecosystem services’ and towards, ‘Nature’s Contributions to People’, arguing that the latter was a more inclusive term that bypassed what they perceived as failings of the ecosystem services framing.
- This is still an evolving conversation, with strong opinions on both sides, and the Coalition has not taken a position, but is rather working to provide a space to facilitate this conversation between the community.
- This is not a zero-sum game. It is possible that a compromise emerges that includes both framings. ‘Ecosystem services’ for instance, could remain the dominant term used in conversations with the private sector, governments and science/academia and other organizations, while Nature’s Contributions to People may be adopted in order to engage broader groups of individuals such as the general public.
- Fundamentally, both ‘camps’ advocate the same message: that we fundamentally depend on nature in a multitude of ways, and if nature continues to be degraded, we will all suffer.
- You can read our letter on this subject that was published in the journal Nature here.
Do natural capital approaches commodify or ‘put a price on nature’?
- Advocates of natural capital are sometimes accused of ‘putting a price on nature’ or ‘pricing the priceless’, but in fact our core assertion is that prices have failed to reflect the true value of the natural world, and that the economic systems that we are using are broken.
- We use the common definitions of price and value: Where price is ‘the quantity of one thing that is exchanged or demanded in barter or sale for another/the amount of money given or set as consideration for the sale of a specified thing’ and value as ‘The regard that something is held to deserve; the importance, worth, or usefulness of something i.e. “your support is of great value”. If something is not for sale, we do not describe it as having a ‘price’, but we may nevertheless recognise the value that it holds, and make decisions on this basis.
- A natural capital approach works to illuminate nature’s (often hidden) value, whether it be economic, social, environmental, cultural or spiritual value, and whether this value is expressed in qualitative or quantitative (including economic) terms.
- The point is that price and value are not interchangeable concepts, and traditional prices almost never reflect the immense value of nature.
- When we purchase almost any physical good, we are, in a sense, commodifying nature in that we are signifying our willingness to pay a designated price in exchange for ownership of natural materials, organisms and their derivatives.
In this way, much of nature is already commodified, and has been for thousands of years. A natural capital approach, far from abetting this neoliberal model, turns it on its head. While there are many prices for the products that are created with nature and natural derivatives, the value of leaving the natural world intact is often far less understood, or worse regarded as 0. Natural capital approaches work to illuminate the value of an intact natural world, by recognising the value created in the absence of traditional economic activities.
Do natural capital approaches reduce the natural world down to “pieces of nature”, ignoring nature’s interconnectivity and symbiosis?
- Central to natural capital approaches is the need to view nature, society and the economy as parts within a single overarching and fundamentally interconnected global system.
- The natural world and its ecosystems are fundamentally symbiotic, so our approach to their conservation and restoration must be similarly interconnected and systemic if it is to succeed.
- A natural capital approach helps to illuminate the connections in this overarching and fundamentally complex system, and moves us beyond conservation to also understanding the intricate role of the natural world in the success of human societies and our social systems, for example our economies.
- Many organisations have a policy on water, another on energy, another on biodiversity, another on forests – the list goes on. Often the people working in these areas don’t talk to one another; in some cases they are actually in competition for budget allocation. A policy on one of these areas, without an understanding of how it connects with the others, means we’re often playing a four-dimensional game of tug of war, attempting to keep interconnected systems in balance without understanding the ways in which they work and connect.
- Rather than separating nature into different parts, to be addressed by different teams with unaligned strategies, a natural capital approach encourages organisations to integrate these different considerations into centralized core strategy and decision making.
What is the difference between ‘natural capital accounting’ and a ‘natural capital assessment’?
- As a rule, assessments are used use by the private sector, and accounting is used in the public sector, although this is not always the case, and many consider natural capital accounting to be a form of assessment.
- Both approaches offer valuable insights and those applying them are now combining forces to better understand how they interconnect and can learn from one another.
- Natural Capital Assessments – Assessment is the method most typically used in the private sector. The majority of assessments will use natural capital information to answer a specific question, or inform a decision. The aim is not about collecting a set of indicators, and it is uncommon to collect information without a specific application in mind. Often assessments measure & value the flow of ecosystem service benefits, as opposed to measuring & valuing the natural capital stock. Assessments often inform internal decisions rather than disclosure.
- Natural Capital Accounting – The majority of applications are done at a national level and by the public sector. Accounts focus on measuring & valuing the stock of renewable and non-renewable natural capital assets that combine to yield a flow of benefits to people. Natural Capital Accounts are a specific type of natural capital assessment.