- Need to re-imagine the country’s natural ecosystems as its ‘natural capital’
- Natural capital, if managed suitably can maximize the benefits of economic growth and development for any Nation.
What is natural capital?
- Natural capital is world’s stocks of natural assets which include geology, soil, air, water and all living things.
- Natural capital provide for a wide range of services, often called ecosystem services, which make human life possible.
- The most obvious ecosystem services include the food we eat, the water we drink and the plant materials we use for fuel.
Why is natural capital an issue?
- Just like Financial capital, natural capital too needs to be managed well.
- Exploiting too much stock from our natural environment, leads to debt which needs to be paid back
- Exploiting the stocks of natural capital without allowing recovering run the risk of local, regional or even global ecosystem collapse.
- Poorly managed natural capital becomes an ecological, social and economic liability.
Is natural capital really valuable in financial terms?
- There have been many studies that have calculated natural capital’s value in financial terms.
- The financial value of India’s forests is estimated to be $1.7 trillion.
- Mexico’s mangrove forests provide an annual $70 billion to the economy through storm protection, fisheries support, and ecotourism
- Street trees in California provide $1 billion per year through atmospheric regulation and flood prevention
How crucial is natural capital for any nation’s development?
Vast economic contribution
- India is one of the 17 most ecologically diverse countries, boasting 11% of the world’s flora and fauna
- With increasing economic activity, natural capital assets are on the decline affecting
- The quality of life
- Potentially giving rise to future inefficiencies in the economy
Earth Overshoot Day
- A figurative calendar date when total annual resource consumption exceeds the earth’s capacity to regenerate it.
- This year it was observed on August 2.
Limits of natural capital stocks
- Nine earth systems have been identified which mark the safe zones, beyond which there is a risk of ‘irreversible and abrupt environmental change’.
- Four of these boundaries have now been crossed
- Climate change
- loss of biosphere integrity
- land system change
- altered biogeochemical cycles
What are the steps that should/must be taken to ensure balance in our ecosystem?
- Business needs to consider measuring its impacts and dependencies as it would have a direct impact on capital assets
- There is the need for a comprehensive evaluation system that takes undesirable side-effects of economic activities into account
- It is necessary that we are aware of the limitations of natural capital and its role as a primary support system for the economy.
- Natural capital thinking can also create opportunities to innovate and adopt newer, more efficient technologies.
- Companies can consider environmental stress tests for issues such as natural disasters, air pollution, resource scarcity and climate.
- Making natural capital thinking the norm requires a strong policy push
- Adoption of valuation frameworks such as the Natural Capital Coalition’s Natural Capital Protocol
- Integrating natural capital assessment and valuation into our economic system is critical in a truly sustainable future for India