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Children collect water in Uwinka.

Valuing Natural Capital

Accounting for the benefits that nature provides

© Benjamin Drummond

 

The wealth of a nation or a business is more than just what its people can produce.

The value of “natural capital” — the sources of the services that nature provides, including fresh water, flood control and forest products — is just as important, and often overlooked.

Natural capital supports human and financial capital: When climate change, overpopulation or pollution threatens nature, societies and economies are threatened, too.​ Natural capital has long been considered “free,” which causes the benefits that nature provides to be taken for granted and used at a rate that the Earth cannot replenish.

Conservation International is helping governments and businesses quantify our reliance and impact on natural capital to ensure it is managed well for future generations.

 

 Poverty will only be made history when nature enters economic calculations in the same way that buildings, machines and roads do. 

Partha Dasgupta 

 

Why valuing is important

Knowing the economic value of nature’s benefits can make the contribution of nature to livelihoods and economies visible, enabling smarter decisions that account for nature in our economic systems and ensuring that it can continue to sustain us.

Benefits of valuing

Both the public and the private sectors stand to gain from valuing the natural capital they depend on. Valuing natural capital enables governments to account for nature’s role in the economy and human well-being. For businesses, it enables efficiency, sustainability, and managing risks in their supply chains.

How to value natural capital

For the public sector, Conservation International has developed an accounting system that can help governments calculate exactly how nature supports their economies. For the private sector, we have helped create a groundbreaking guide for businesses to understand how nature fits into their balance sheets.

For governments

Ecosystem Values and Accounting

Natural capital accounting helps policymakers understand the dependence of economic development on natural resources, both for supplying materials and services as well as for absorbing waste and pollution. Conservation International’s Ecosystem Values and Accounting (EVA) system helps place a price tag on an ecosystem’s “goods.”

Parkranger in the Alto Mayo Protected Forest, Peru
© Adrián Portugal

How it works

EVA provides a framework to quantify a region’s individual resources and how each resource flows, or works to provide services, within a community or country. To determine the monetary worth of fresh water, for example, Conservation International’s EVA analysts add up the end values of the crops the water irrigates, the manufactured products that use it, the energy its flow generates through hydroelectric dams, and how it supports local households. Aggregating this information gives a more complete picture of a country’s water wealth.

Where it’s working

In the San Martín region of Peru, an EVA pilot project calculated the value of some environmental goods — including timber, firewood, water and others — to the region’s economy, conservatively, to be US$ 58 million.

For businesses

Natural Capital Protocol

Conservation International helped develop the Natural Capital Protocol, which provides a standardized framework for businesses to identify, measure and value their direct and indirect impacts and dependencies on natural capital, from the sourcing of raw materials to more efficient use of water. View the Protocol on the Natural Capital Coalition’s website »

Bare hillsides and erosion in the Sierra Nevada de Santa Marta, Colombia, South America
© Robin Moore/iLCP

How it works

The Protocol can generate credible and actionable information to help businesses measure and value their impacts and dependencies on natural capital, enabling them to integrate nature into their operations. The Protocol can be used by any business, in any sector and in any geography, to make smarter decisions.

Where it’s working

Launched in July 2016, the Protocol was developed with the support of more than 50 companies including Dow, Coca-Cola, Hugo Boss, Nestle, Roche and Shell. The Protocol is the latest example of our long history of working with companies to minimize their environmental footprints.

What's next?

Iron ore mining in Liberia 
© jbdodane/jbdodane.com

Gaborone Declaration for Sustainability in Africa

The Gaborone Declaration for Sustainability in Africa is an African-led initiative of countries committed to a new model of development that brings the value of natural resources to the center of all economic decision-making, and takes into account the vital role natural capital plays in promoting sustainable development.

EVA in Liberia

Conservation International’s EVA team, in collaboration with the government of Liberia, is gathering data with plans to apply what it has learned about ecosystem accounting at the national level. The goal: to determine and quantify the value that nature provides Liberia and inform the West African nation’s policy and development planning.

 

 

The World Business Council for Sustainable Development (WBCSD) recently launched this new video designed to explain how business can account for the value of nature and why this is important. More than 25 of the world's top organizations working on the value of nature in business have come together behind one message in this "Pitch for Nature" video, that's available in 20 languages. Click the "Captions" button to find yours! Natural Capital is the value of nature. It can be defined as the world's stocks of natural assets that we benefit from. Natural Capital matters because every single business in the world not only impacts on nature, but relies on it. So the degradation of ecosystems that we see today creates a real risk for companies, now and into the future. But where there is risk, there is also opportunity -- secure natural resources, to save costs, to manage future risks and engage people and companies throughout the value chain. Visit www.pitchfornature.com to find out more. Full script Hi, I'm John. I work for a company. A big company. A company that still doesn't realise it relies on nature. Which is why I'm arranging a meeting. A big meeting To discuss "Natural Capital". It's a new idea that'll boost our business. You've heard of 'financial capital, right? So what is "Natural Capital"? Take Company A. That's us. We make shoes. Lots of shoes. So let's take a shoe. This one's leather. Leather comes from cows. To make a cow you need grass and grain. That's a lot of land and a lot of water. To make shoes, you gotta have a sole. You think soles come from thin air? Get a grip. We need rubber and lots of it. This rubber comes from rubber trees. Trees need land, soil and water. We need aluminium for eyelets. Another. Natural. Resource So let's keep moving. We need energy; Water; Chemicals; Dyes; Our shops need building, lighting, cooling, heating. And when our shoes wear out? Imagine this: Severe floods hit somewhere important in our supply chain Livelihoods are lost Our factories fail 'Hashtag' corporatenightmare But does it have to be that way? What if we replant forests to protect our sites from floods? Or restore wetlands to filter water? Or even turn old shoes into something new? What if we realized that investing in "natural infrastructure" ...could save us cash too? So back to my question. What is "Natural Capital"? It's all the value that nature provides for us; the natural assets we have. If our company had to pay for our impacts on nature, we would owe $6.00 a pair. That's real money. So think about it. What does nature provide for your business? And shouldn't it be on your balance sheet? Take the first step: find out which of nature's assets your company should be investing in. Join us: www.pitchfornature.com

Still confused about natural capital? This video can help

The World Business Council on Sustainable Development explains why businesses need to account for their natural capital.

Additional resources

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