Natural capital

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{company, market, business}
{theory, work, human}
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{specie, animal, plant}
{acid, form, water}

Natural capital is the extension of the economic notion of capital (manufactured means of production) to goods and services relating to the natural environment. Natural capital is thus the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future. For example, a stock of trees or fish provides a flow of new trees or fish, a flow which can be indefinitely sustainable. Natural capital may also provide services like recycling wastes or water catchment and erosion control. Since the flow of services from ecosystems requires that they function as whole systems, the structure and diversity of the system are important components of natural capital.

Contents

Background

In Natural Capitalism: Creating the Next Industrial Revolution[1] the authors see the world's economy as being within the larger economy of natural resources and ecosystem services that sustain us. This implies that we should attribute value to things such as human intelligence and cultures to hydrocarbons, minerals, trees, and microscopic fungi.[clarification needed] The authors argue that only through recognizing this essential relationship with the Earth's valuable resources can businesses, and the people they support, continue to exist. The book has many practical suggestions for companies interested in a sustainable future.[2]

According to the authors, the "next industrial revolution" depends on the espousal of four central strategies: "the conservation of resources through more effective manufacturing processes, the reuse of materials as found in natural systems, a change in values from quantity to quality, and investing in natural capital, or restoring and sustaining natural resources."[2]

Natural capital is described in the book Natural Capitalism as a metaphor for the mineral, plant, and animal formations of the Earth's biosphere when viewed as a means of production of oxygen, water filter, erosion preventer, or provider of other ecosystem services. It is one approach to ecosystem valuation, an alternative to the traditional view of all non-human life as passive natural resources, and to the idea of ecological health. However, human knowledge and understanding of the natural environment is never complete, and therefore the boundaries of natural capital expand or contract as knowledge is gained or lost.

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