Natural Capital

Posted in Finance, Accounting and Economics Terms, Total Reads: 329

Definition: Natural Capital

It is an approach to ecosystem valuation. In this land would classified different from capital as in traditional sense. It yields how the ecosystems will flow into the future. It is basically an extension of the concept of economic capital to nature. System of Environmental-Economic Accounting (SEEA) defines international standards for natural capital evaluation.

Even OECD and bodies like UN have their own indicators. Such evaluations typically involve cost accounting, triple bottom line analysis. For example, the Boreal Forest in Canada are said to hold natural capital worth 93.2 billion$.

According to authors of Natural Capitalism say that “the conservation of resources through more effective manufacturing processes, the reuse of materials as found in natural systems, a change in values from quantity to quality, and investing in natural capital, or restoring and sustaining natural resources." And SEEA evaluation is a step in this regard. According to the OECD, natural capital is “are natural assets in their role of providing natural resource inputs and environmental services for economic production” and is “generally considered to comprise three principal categories: natural resources stocks, land and ecosystems”


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