World Forum on Natural Capital

One of the most dangerous misconceptions of the modern age is the widely held view that there is somehow a choice between the advancement of economic development on the one hand and the protection of nature on the other. Fortunately, however, this false choice is being rapidly dismissed. The reason is simple: it is because of the growing realization that natural systems are far from an impediment to growth and development, they are increasingly seen as an essential prerequisite for it.

The emerging idea of ‘natural capital’ rather sums up why this is the case. As is true with financial capital, natural assets, if managed well, provide a flow of benefits. These are seen in, for example, the renewal of soil fertility, the pollination of crops, replenishment of freshwater, protection of property from flooding, the stock of innovations created through evolution, control of disease and predation of pests. All these dividends flow from intact stocks of natural capital, and as is the case with financial capital, the returns can continue so long as the capital remains intact.

 Part of the reason why we continue to degrade and plunder natural systems is because of a dangerous confusion that has emerged between capital and dividends, in other words between stocks and flows. While the clearance of forests, depletion of aquifers and capture of wild fish is generally counted as a flow of economic benefit, very often it is the capital itself that is being liquidated. When this happens in finance it is called a Ponzi scheme, and its architects are sent to jail. So why do we behave so differently when it comes to nature?

 A big part of the reason is because of the invisibility of nature in economics. While some of what we rely on from nature has a market value (timber and fish for example), most of it doesn’t. Soil microbes recycling nutrients, the work of vultures in cleaning up rotting corpses, peat bogs soaking up water that would otherwise cause flooding, the capture of carbon by forests, plankton in the ocean recycling oxygen or songbirds predating pests in an orchard: these are nowhere to be seen on balance sheets or national accounts, and thus are generally regarded as worthless. Yet without these services our economies would either be unable to function or incur massive costs that are presently avoided because of what nature does.

 While our understanding of nature’s values is beginning to change, we are still at an early stage of awareness, and earlier still in developing the tools needed to capture and reflect those values. This is why the World Forum on Natural Capital is such an important initiative. Through bringing together leading thinkers and practitioners it is my hope that we might not only build consensus on how important nature is for our economic wellbeing, but also to help develop the tools that will enable these two systems to become one – biosphere and ‘buyosphere’ seamlessly joined, and in ways that will not only bring benefits for people now, but for long into the future.

All the tools we need to establish a sustainable economy already exist. I hope the Forum will sharpen them up and put them to good use.

This article was first published by World Forum on Natural Capital 16th April 2013.