What is natural capital?
Natural capital comprises the elements of the Earth + Life.
That’s Earth, Air, Water, and Fire. Life harnesses these to multiply. There is living natural capital, such as trees and soil, and dead natural capital like oil or diamonds. Today, it is renewable natural capital that is under threat and that is now the focus of rising regulatory and investor attention - worldwide.
Our atmosphere (Air) is a function of nature. Plants created it through photosynthesis. Deplete plants and burn fossil fuels, and we reduce the ability to create oxygen and pollute the air we breathe, reducing our climate security.
Soil and the biotic life dependent on it (Earth), provides the conditions of life that we all need to survive. Degrade this and we loose our food security.
Our planet is the only one we know to have an abundance of water. All water on land comes originally from the ocean. Getting it there for us to use, depends on both plants and atmosphere. So water security is not just about pollution, it’s about maintaining the system that delivers it, intact.
The Sun and geothermal energy (Fire) can provide all the energy we need. We just don’t know how to store it, raw. But burning big energy ‘stocks’ like oil or coal carries consequences for our atmosphere. So energy security needs re thinking.
‘Eco’ has always been in economy - it’s just invisible to most of us. It’s a public good that is utilised to make private profits. It underpins our whole economy. Today, in business and finance it is part of ESG.
Tomorrow, it could be the difference between profit and loss.
The challenge now is, that as human population has grown, our global economy is sustained by uncontrolled exploitation of natural capital. This is a US$ trillion “free lunch” that leaders need to face up to. It’s analogous to burning the family silver to pay for a happy life style that cannot be sustained. What is needed is a new kind of 'dynamic equilibrium' where services taken out are balanced by services being maintained or restored. The financial sector can have a key role in making this happen.
Here are some numbers:
The economic value of freshwater is valued at $73.5 trillion annually
Fish stocks are estimated to contribute $2.5 trillion annually to the global economy
Forests provide more than $1.5 trillion in ecosystem services each year directly through forestry and indirectly by providing energy, food, shelter, medicine, soil and water conservation, desertification control and carbon storage