Intro to Natural Capital

1. What’s the Bottom Line?
J. Voytilla

2.  Dynamic Nature of a Resource
- The importance and/or value changes over time
- The availability changes over time
 Resources can be valued in different ways
1. Economic – having marketable goods
2. Ecological – providing life support systems
3. Scientific – useful for research and applications
4. Intrinsic – having cultural, esthetic, spiritual or
philosophical values

3.  Natural Capital: natural resources, services
and processes that have value to us.
- Are not manufactured but some could be processed
later
- E.g. trees, soil, water, living organisms, minerals, flood
and erosion protection provided by forests, water cycle,
photosynthesis
 Natural Income: yield or harvest or services
obtained from natural capital.
- Factories produce objects, cherry trees produce
cherries, water cycle provides fresh water

4.  The measure of true wealth of a country includes its natural
capital.
 In other words, how many resources, forests, rivers etc it has.
 In general, MEDC’s add value to natural income by
manufacturing goods from it
 LEDC’s may have greater unprocessed natural capital
 The World Bank now calculates a country’s wealth by including
the rate of extraction of natural resources and the ecological
damage caused by this.
 The depletion of natural resources at unsustainable levels (i.e.
providing more natural income than is sustainable), and efforts to
conserve these resources are often the source of conflict within
and between political parties and countries

5.  Natural Capital can be classified into 4 groups:
1. Renewable
- Living resources that can replace or restock
themselves
- Usually has solar energy as its primary source
of energy
- Can run out if not harvested sustainably

6. 2. Non-renewable:
- Exist in finite amounts on Earth
- Are not renewed or replaced after being
depleted (or if they are, it’s on a geological
timescale)
- Includes minerals and fossil fuels
- Represent short term solutions

7. 3. Replenishable:
- Middle ground between renewable and non-
renewable
- Are replaceable but over a long enough period of
time that they are not renewable, but not so long that
they are considered non-renewable
- The difference between replenishable and renewable
is the difference between the rate of resource use and
the rate of resource replacement.
- E.g. Groundwater

8. 4. Recyclable:
- Resources that can be transformed into usable
materials after already being used for something
else.
- E.g. iron, aluminium

9.  What does it mean?

10.  Living within the means of nature, on the
“interest” or sustainable natural income
generated by natural capital.
 However, economists and environmentalists
may have very different views on what is
sustainable.
 Any society that supports itself in part by
depleting essential forms of natural capital is
unsustainable.
 Why are we so darn unsustainable??

11.  The Tragedy of the Commons:
- When many individuals acting in their own self interest to
enjoy or harvest a resource may destroy the long-term future of
that resource, leaving none for anyone else
- Each individual benefits from taking the resource in the short
term
 Some people think that the real worth of natural capital
is about the same as the value of the gross world
product i.e. total global output $65 trillion US per year
 However, it could be far more since we are just now
beginning to give economic value to soil, water and
clean air and to measure the cost of loss of biodiversity.