• 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
  1. The quality of life
  2. 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.

Risk mitigation

  • 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
Print Friendly, PDF & Email

Did you like what you read?

Enter your email address below to get all our updates in your inbox the moment it is published. Once you enter your email address, you will be subscribed immediately.

We do not spam you, so you can easily unsubscribe anytime, by clicking on unsubscribe link in the email.