Some notes about Natural Capital

Natural capital is an idea whose time has come. It takes the analysis of the environment to a new level - way beyond the conventional sustainability and sustainable development approaches which have dominated in the last couple of decades.

The reasons why natural capital is the way to think about the great environmental challenges we face is because of three characteristics. Natural capital is all about assets – the assets nature provides us with for free; it forces us to see the environment as a (or indeed the) key input into the economy – ending the apartheid between economic growth and protecting and enhancing the environment; and by focussing on capital maintenance, it makes a clear distinction between renewable and non-renewable assets.

The damage to the natural environment accelerated during the twentieth century, and now is already reducing economic growth and development. The threat of climate change is widely understood. Perhaps less so is the destruction of biodiversity and ecosystems – from the loss of the great rainforests to the declines of wild flowers, insects, birds and mammals. As these disappear this century, we will come to realise what we have lost, and how much of our economic well-being depends upon a flourishing natural environment.

To stop the rot, we need to keep the aggregate of natural capital from falling further. Indeed it needs to be improved. Not everything can be preserved, but what is damaged should be compensated for with gains elsewhere. Natural capital needs to be maintained and enhanced. For non-renewables – natural capital that can only be used once (such as oil, gas and minerals) –is a matter of which generation uses it. But when it is depleted there needs to be compensation, and the surplus revenues should be used to protect and enhance renewables  - the natural capital model just keeps on giving, provide we do not deplete it below the critical thresholds.

Natural Capital

Natural Capital
Environment

Natural Capital
Water

Latest Publication

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Is rewilding the answer?

March 16, 2020

Environment Publication

The last decades have been characterised by the continued destruction of the natural environment, punctuated by the occasional “successes”, like Red Kites and Sea Eagles. Faced with the broad history of failure, many have turned to the idea that what is n

Publications

  • Publication Environment The Economic analysis of biodiversity: an assessment
    October 5, 2012

    Abstract: Biodiversity is complex, difficult to define, difficult to measure, and often involves international and intergenerational considerations. Biodiversity loss presents significant economic challenges. A great deal of economics is required to under
  • Publication Water The Draft Water Bill
    September 10, 2012

    Such a mix of concerns provides the backdrop to the focus of the Draft Bill, and this critique starts off by considering what the aims and objectives of the proposed legislation are, before turning to its central contention that competition is the primary
  • Publication Environment Green Growth- Infrastructure and National Accounts
    May 12, 2011

    Article from InsideTrack Issue 28 Spring 2011A Better Route: Mainstreaming the Green Economy We aspire to a low carbon economy, but we don’t really know what it looks like. As a result there’s a mismatch between the narrative and economic policy. As the c
  • Presentation Environment Environmental Challenges in a warming world
    February 21, 2009

    Slides presented at the Tanner Lecture on Meeting the Challenges of the 21st Century February 21st 2009
  • Presentation Environment Why conserve nature?
    June 11, 2008

    BBOWT Annual Directors' conference presentation June 11th 2008
  • Publication Water A new regulatory model for water: the periodic review, financial regulation and competition
    May 6, 2008

    Water regulation has been a rollercoaster ride for both the companies and the regulators.
  • Publication Environment Pros and Cons
    May 1, 2008

    Article for Green Alliance magazine. The environment is conventionally regarded as a public good...
  • Presentation Water Water Regulation: is it fit for purpose?
    October 23, 2006

    Presentation slides
  • Publication Environment House of Commons Environmental Audit Committee Evidence
    November 16, 2005

    This memorandum focuses on three issues: the supply/demand balance in the energy sector; the linkage between security of supply, investment and the climate change objectives; and the energy policy framework required to promote low carbon technologies. In
  • Publication Water Water, the Environment and Regulation: Changing Functions, Changing Framework
    February 20, 2005

    The objectives in privatising the water industry were multiple. The then Conservative government considered that the private sector was inherently more efficient than the public sector, that share ownership could be widened and deepened by selling monopol
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