1/ What is natural capital?
Natural capital is a concept introduced by economist E.F. Schumacher in his 1973 book "Small is Beautiful," describing the stock of renewable and non-renewable resources such as plants, animals, air, water, soils, and minerals. These resources benefit humans, not just as raw materials but also by supporting ecosystems that enhance human well-being with services like clean water and fertile soils. Natural capital's economic value and the cost of its depletion are often overlooked in markets.
2/ Why does natural capital matter for economic growth?
Natural capital is vital for economic growth because it underpins the GDP, which only measures annual goods and services production, ignoring the depletion of resources like minerals. Including natural capital in wealth accounting is crucial, especially for developing countries where it constitutes a significant portion of total wealth and supports many people's livelihoods. GDP fails to account for services provided by natural capital, such as carbon sequestration by forests or water regulation for agriculture.
3/ What is natural capital accounting?
Natural capital accounting (NCA) involves using an accounting framework to systematically measure and report on natural capital stocks and flows, treating the environment as an asset essential for the economy and society. It includes accounting for individual environmental assets and ecosystem services within the System of Environmental Economic Accounting (SEEA) framework, an international standard for integrating economic and environmental data.
4/ What is ecosystem accounting?
Ecosystem accounting offers a framework for integrating data on ecosystems and their service flows with economic and human activity measures. It extends environmental asset accounting to include ecosystems' broader functioning and their spatial aspects within the SEEA Experimental Ecosystem Accounting (SEEA EEA) framework. This approach helps quantify ecosystems' contributions to the economy and monitor their condition and integrity over time, guiding sustainable management and policy decisions.
5/ What kind of information is contained in ecosystem accounts?
Ecosystem accounts provide spatial information on ecosystem extent, condition (using selected indicators), and service flows. This data is presented in physical and sometimes monetary terms, linking ecosystems to economic activity through maps and combined data presentations. The SEEA EEA framework organizes this biophysical data, offering a comprehensive ecosystem view through accounts for extent, condition, services, monetary assets, and thematic areas like land and water.
6/ What are ecosystem services?
Ecosystem services are the benefits that ecosystems contribute to economic and human activity, classified into provisioning (e.g., food, materials), regulating (e.g., climate regulation, flood control), and cultural services (e.g., recreation, spiritual reflection). Ecosystem assets, like forests and rivers, are considered based on their condition, extent, and the variety of services they provide.
7/ Are monetary values a necessary part of natural capital accounts?
Monetary valuation in natural capital accounts is not mandatory; accounts can organize physical data to support analysis and decision-making without monetary values. While monetary valuation can offer insights for specific decision contexts, it involves ethical and methodological considerations. The SEEA framework facilitates understanding economic contributions of ecosystems without necessarily assigning them monetary values, although it can be useful in certain analytical or policy scenarios.
8/ Does monetary valuation amount to putting a price on nature?
Monetary valuation within natural capital accounting does not equate to pricing nature but estimates the economic value of specific ecosystem services for decision-making. It is limited in scope and subject to ethical considerations, focusing on valuing services rather than the entire nature, and aims to support balanced development and conservation decisions.
9/ How does natural capital accounting relate to private sector efforts like the Natural Capital Protocol?
The Natural Capital Protocol (NCP) complements natural capital accounting by offering a private sector framework for assessing impacts and dependencies on natural capital. It facilitates the integration of natural capital considerations into business decisions, working alongside the SEEA framework to promote methodological standardization and enhance environmental-economic accounting practices across sectors.
