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 that 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 to us 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. Moreover, by focusing on capital maintenance, natural capital makes a clear distinction between renewable and non-renewable assets.

Damage to the natural environment accelerated during the twentieth century, and is now 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 wildflowers, insects, birds and mammals. As these disappear this century, we will come to realise what we have lost, and how much of our economic wellbeing 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) – it 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, provided we do not deplete it below the critical thresholds.

The new interest comes from carbon sequestration and its critical role in meeting the net zero 2050 targets, and the company targets under pressure from ESG (environmental, social, and governance) rating. The risks of a silo approach to natural capital are obvious.

Natural Capital

Natural Capital

Natural Capital

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  • Video Environment Introduction to Natural Capital
    May 12, 2015

  • Publication Environment Natural Capital - Valuing the Planet
    May 12, 2015

    A clear, insightful, path breaking account of the crises in global natural capital and what we can do in economic and political terms to reverse the destruction of our environment
  • Publication Water Water Catchment management, abstraction and flooding: the case for a catchment system operator and coordinated competition
    May 7, 2015

    Since 2010 there have been a number of piecemeal reforms and developments across the water sector. These have included: the periodic review of the water and sewerage companies; the provision of further financing for the Environment Agency to address flood
  • Publication Environment In defence of the Green Belt
    April 20, 2015

    A growing band of economists and geographers have been arguing the Green Belt is no longer fit for purpose and that it should be opened up for housing development. The argument is based upon a chain of assertions and purports to be based upon sound econom
  • Video Environment Natural Capital, Biodiversity & Environmental Restoration
    April 15, 2015

  • Presentation Environment Natural Capital
    March 13, 2015

    Envecon Slides from 13th March Presentation at the Applied Environmental Economics Conference.
  • Presentation Environment SONC 3 Launch Presentation
    January 27, 2015

    Slides from the SoNC 3 Lauch event on the 27th January 2015
  • Publication Environment Triennial Review of the Environment Agency and Natural England
    January 25, 2013

    1. The starting point is to focus on the objectives set by government policy, and to consider whether the current institutional arrangements are well designed to meet them. 2. The overarching aim is to ensure that the environment is integrated into the ec
  • 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
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