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Natural Capital

How can we define natural capital?

Natural capital consists of all renewable and non-renewable resources, as well as processes from the environment that provide products or services. Natural capital is also an economic metaphor for the limited stocks of natural materials, land and ecosystems; in other words natural assets.

Definition

Natural capital consists of all renewable and non-renewable resources and processes from the environment that provide products or services that support prosperity in the past, present and future, like air, plant and animal species.

Natural capital comprises two major components:

  1. Abiotic natural capital comprises subsoil assets that are non-renewable and depletable (e.g. fossil fuels, minerals, metals) and flows that are renewable and non-depletable (e.g. wind and solar energy).
  2. Biotic natural capital or ecosystem capital consists of ecosystems, which deliver a wide range of valuable services that are essential for human well-being. Biotic natural capital is renewable, but can also be depleted.

More information on the websites of the World Bank and the European Environment Agency.

Economic metaphor

Natural capital is an economic metaphor for the limited stocks of natural materials, land and ecosystems; in other words natural assets. Companies, and society in general, have many benefits from nature. Natural capital can be exhausted, just like other forms of capital, but also maintained or expanded. When this succeeds the interest can be used to invest again or can be seen as a reward for the investment without damaging the capital.

IUCN (2014), p. 50.