Framing nature as ‘natural capital’ is a way of looking at the environment from an economic perspective, with living and non-living elements of the environment seen as a ‘stock’ or an ‘asset’ from which numerous benefits flow in the form of ecosystem services. Recognising these benefits allows values, sometimes financial, to be associated with them. Whilst a wholly anthropocentric way of looking at the environment, this approach can be useful for influencing decisions driven largely by economic thinking (as most decisions in business and government are) as it allows some of the values of nature to be represented in equivalent terms.
A number of initiatives are making great progress in using natural capital approaches to better integrate the value of nature into accounting and decision making. The Natural Capital Protocol is rapidly gaining acceptance as the standard approach for businesses looking to better understand their relationships with the environment, whilst the World Bank WAVES partnership and the UK Natural Capital Committee represent two of the initiatives focusing on government accounting and management of environmental assets.
However, one of the challenges of these approaches is the incorporation of biodiversity. Biodiversity – the diversity of all living organisms at genetic, species and ecosystem level - forms the living component of natural capital stock. It is the interactions between biodiversity and non-living natural resources that generate most of the flows that benefit society. Some of these benefits can be measured and valued, but many remain hidden or missing (see paper below). Natural capital assessments are increasingly gaining acceptance as a way of integrating the financial implications of water management and carbon emissions into decision making, but unless the challenges of adequately capturing the same values from biodiversity are met there is a risk they will be excluded altogether.