- ‘Natural capital’ is often broadly defined as the Earth’s stocks of resources.
- Natural Capital and Ecosystem Services are intrinsically linked.
- “The term ‘capital’ is used to describe a stock or resource from which revenue or yield can be extracted” (6).
- Therefore, Natural Capital is the pool of resources that we draw from, in order to gain ecosystem services, such as food, fuel, materials, and indirect services, like climate regulation.
- Should we place heavy emphasis on monetising and regulating natural capital, in order to encourage sustainable development?
- If so, what policy implications does this have, and what opposing arguments should be considered?
The possibility of using monetary incentives to encourage and enforce more sustainable policy making has been debated for decades. Taxes, subsidiaries, and other cash motivations are often successful in encouraging governments and companies to prioritise new issues. However, some conservationists take issue with humans attempting to profit off a system which is in no way ‘man-made’ or human controlled (1). This POSTnote will examine both sides of this argument.
Unpacking the Issues:
Placing monetary value on services and resources that are naturally occurring has fundamental ethical and logistical questions to consider.
Firstly, and most basically, the ethical issue of whether humans should have the right to commodify nature, and profit should be involved in natural processes at all.
The assumption made when assigning monetary value to a system is that an individual, organisation, or government is benefitting from its distribution and trade. However, with naturally occurring processes such as climate regulation (which is largely carried out by rainforests and oceans on a planet-wide scale), are difficult to assign to a specific country or company. Therefore, it could be considered a potentially arbitrary system of trade; although the Amazon rainforest occurs in mainly Brazil, the effects of the air cycling of the forest effect the entire planet, and the Brazilian government is not responsible for creating this system, so why should they be beneficiaries of profit for this service?
Following this thought, many environmentalists contest that due to nature’s inherent value, it should be conserved for reasons other than financial gain.
However, the western world is arguably driven by capitalism, and thereby profit. Therefore, the case can be made that, to make conservation a priority to policy makers, a level of corporation with economics is essential.
Though the connection between politics and economics is undeniable, this doesn’t mean it shouldn’t pose some serious questions; such as “why doesn’t our current political system capture the more intangible aspects of nature”, and “how do we best implement valuation methods for protection of nature?” (2).
The issue of determining the value of ecosystem services has always been abstract and difficult to quantify. Should we focus on how much profit a natural industry makes, or what the ecological benefit it brings to the world is. For instance, the highest grossing natural resource is the food industry, estimated to reach $2 trillion by 2021 (3), but the most valuable system to the maintenance of the planet is debatably climate regulation, but there are no price estimates to suggest what this may be worth. It can be argued, that these more ambiguous sources of natural capital must be worth more than the tangible food and medicine industries, because if the climate, air, and water quality were to become unstable, the other industries would also become unstable, as they are the most fundamental underlying conditions.
Despite the varied moral and hypothetical questions about monetising nature, the logistics and practicalities must be thoroughly considered. The use of a ‘natural capital depletion tax’ (4) is one of the more favoured ideas by those who believe that human innovation and involvement is essential for the reduction of climate changes. This would involve highly taxing companies that degrade natural resources, such as those in the timber and fuel industries. The thought process behind this is that technology innovations are driven by investments, and it would now be in the interest of these companies to invest in technology companies to find more sustainable methods to make money.
If a straightforward and routine method of quantifying and valuing natural capital could be agreed on worldwide, to ensure regulated assessment, this will provide the foundation for action (5). This foundation will be calculated using science, but for these plans to have weight in the fight for sustainable world development, it must be in the interest for wealthy governments and businesses to follow them.
There are a huge number of Pros and Cons to monetising Natural Capital, but to be enforced successfully it must have the support, backing, and investment from governments, businesses, and scientists worldwide.
1. Daly, Herman E. Operationalising Sustainable Development by Investing in Natural Capital. [book auth.] AnnMari Jansson. Investing in Natural Capital: The Ecological Economics Approach To Sustainability. s.l. : Island Press, 1994.
2. Barnes, Paul. Unnatural capital: Our internal conflict with natural capital. Conservation Blog. 2014.
3. Gordon, Lydia. Global Packaged Food Market to be Worth US$2.2 Trillion by 2021. Euromonitor International. [Online] 18 October 2016. [Cited: 21 November 2018.] https://blog.euromonitor.com/global-packaged-food-market-worth-us2-2-trillion-2021/.
4. Constanza, Robert. Natural Capital and Sustainable Development. Conservation Biology . 1992 , Vol. 6, 1.
5. Daily, Gretchen C. Mainstreaming Natural Capital into desicions. [book auth.] Heather Tallis. Natural Capital: Theory and Practice of Mapping Ecosystem Services. s.l. : Oxford University Press, 2011.
6. Houses of Parliament. Natural Capital Accounting. Office of Science and Technology. London : United Kingdom Houses of Parliament, May 2011. POSTnote.