Sustainable entrepreneurs: This is natural capital

What is natural capital and how do you make use of it in a sustainable way?
Sustainable entrepreneurs: This is natural capital

People and companies use what nature provides on a daily basis. Think about clean air, sufficient water, or the pollination of food by insects. Nobody charges us for these “services”, causing us sometimes to forget how valuable they are. However, both the economy and our lives depend on these services.

A sustainable account

You could say that the value of nature is infinitely large. But it can also be useful to calculate a more precise economic value of an ecosystem[1] in order to take them into account in a business plan. Similar as financial capital, manufactured capital, and human capital, we can speak of natural capital. 'Capital' refers to the stock of material or information that exists at a particular moment in time. Natural capital is the 'stock' of nature in a given area; air, land and water, flora and fauna, including the useful services that it provides. This can then be expressed in the monetary value it has for humanity.[2]

The role of companies

Business operations can both reduce or increase the value of natural capital. Consider, for example, a factory that discharges untreated waste water in a lake. The contaminated water and fish mortality reduces the natural capital of that lake. Or consider a recreation company that plants trees on an abandoned piece of land, and then organizes excursions there. This increases the natural capital, because trees, among other things, absorb CO2 and provide a habitat for other species.

Value and valuation

Unfortunately, most economic activities reduce the value of natural capital (much) more than they increase it. The global decline in natural capital will have a major impact, and this can possibly create large and unforeseen risks for companies. However, a good understanding of your relationship to natural capital can actually improve your business performance. The proactive management of natural capital provides new business opportunities and contributes to a sustainable future.

We divide the broad concept of natural capital into four sub-themes. For each theme, read which developments are taking place, and how natural capital contributes to your business.

Rich biodiversity

Great biological diversity is important for human welfare. Variety in plants and animals causes the soil to remain fertile, flowers to be pollinated, and pests and diseases to be limited. According to recent research, however, the state of the world’s biodiversity is very poor, and we’re facing a new wave of mass extinction of species.
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Resilient ecosystems

Healthy ecosystems are, among other things, important for protection against storms and floods, and they regulate our water supply. But they’re facing pressures. Not only by construction and infrastructure, but also by climate change. The resilience of an ecosystem is about its quality: it can handle shocks, and can – even in a changing climate - continue to perform its useful functions.
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Stable climate

Of course, we also want to mitigate climate change. Luckily, plants and trees absorb CO2 – which is very useful these days. But nature also plays an important role in regulating the local climate and precipitation patterns. And that is essential for the production of our food and other commodities.
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Economic benefits

Except that nature provides us with these basic necessities, it also has a direct financial value. We can, for example, harvest products such as timber or fish (given that it’s managed sustainably), it is an important source for the development of new drugs, or nature can be used for recreation.
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[1] All plants and animals in an area, their interactions, and their environment.

[2] Note that a financial view on nature is just one of many visions. We could also talk about the cultural, aesthetic or spiritual value of an ecosystem.

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