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What is Natural Capital? WBCSD Video Explains

| Thursday November 21st, 2013 | 3 Comments

If you’re not already familiar with the concept of “natural capital,” take a gander at the video above, which debuted this morning to open the first ever World Forum on Natural Capital in Edinburgh.  Produced by creative studio Nice and Serious for the World Business Council on Sustainable Development (and others), the video is a great way to explain the concept of “natural capital” to a wider audience.  It also provided a an excellent opening to the conference now underway.

The fundamental concept is this: The best way to save the planet is to put a price tag on its resources.  Doing so is the only way to get business to take stewardship of the environment seriously, and only business can save the planet (after all, it’s economic activity that started the problem!).   If an acre of rain forest can be shown to be “worth” more standing up than cut down for palm oil, then it’s likely to stand.  Likewise, a business can be sent a bill for damages it causes by gobbling up land, polluting, or creating other externalities.

That’s the concept anyway.   

An impressive array of over 500 business leaders, NGOs, government folks and a handful of media are here in Edinburgh getting down to the nitty gritty details of exactly how one might go about pricing the myriad benefits of nature. They’re discussing the ways business, government, and organizations would have to cooperate in order to even begin to do so, and the possible unintended consequences of natural capital valuation. Some even question the concept of natural capital itself.

Economist Dieter Helm explained in the opening plenary that there are really two approaches to using natural capital as a change agent. The first is a “soft approach” which is simply introducing the concept of natural capital as tool of persuasion. The hope with this approach is that as companies and governments are introduced to the idea that nature in its raw form has economic value, they’ll be persuaded to begin taking it seriously. Such an approach has merit but can only go so far.  A hard line approach, with natural capital fully entwined into the economy and all its attending institutions, would have far greater effects but would also be wildly complex and controversial to install.

It’s the details of the latter that the conference will mostly focus on.  Helm explained further – there are two core principals that need to be realized in order to come up with any meaningful strategy for using natural capitalism to ensure sustainable growth.  The first is the concept of capital maintenance.  At the very least we must maintain the benefits of the natural capital we have left.  This is simple on paper but when one realizes the rate at which we’re burning through natural capital in our status quo economy it becomes clear how far beyond our means we’re living. This debt appears on no one’s balance sheet.  Getting basic maintenance on the table without other fundamental changes will be very expensive.

The second, even more radical, consequence to taking natural capitalism seriously is compensation.  We can’t possibly save every speck of natural land on the planet.  So what’s the price a developer has to pay for building a golf course on the coast of Scotland? What must they do elsewhere to offset any damage they cause? Determining this is incredibly complicated and will be fraught will all manner of politics and controversy.  However, it’s hard to argue that the alternative – that it cost nothing at all – is better.

Follow along over the next few days as we offer more details and more insights from the forum here in Edinburgh!


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  • globalman

    Q “The best way to save the planet is to put a price tag on it.”

    It is , if anyone can afford it!
    The problem arises on which bits do you place a price tag, and who should pay it.
    To my mind we all should pay for it equally and fairly with no exceptions based on the income of each and every one of us.

    This sounds simple enough, but we seem to have gotten ourselves in a real muddle on what the outcome is we all want to achieve.

    Simple you say, but we all seem to want something quite different.

    As individuals we want a nice environment, warm houses, with birds singing trees flowering and food clean and edible.
    As businesses we want cheap resources so we can compete in the market place , to make profits , so we can expand and take over smaller businesses and dominate the market from a position of strength.
    These interests conflict often and raise concerns over natural capital degradation, but at present there is no way of everyone in the consumer chain taking responsibility.

    This responsibility of the damage caused to the planet and its fragile ecosystems has to be shared equally and equitably with all in the chain of consumerism.

    To achieve this , their appears only one solution, making the citizen in charge of paying for damage done through the goods and services everyone purchases , as we are all consumers of the natural raw materials of the planet in direct proportion to our ability to pay for them.

    A revolutionary new tax system has to be designed to take all tis into account , and at the same time being able to simplify and cost reduce the whole procedure with reduced workload on businesses and individuals alike.

    This tax system should replace all existing taxes and be replaced with a single Natural Resource Tax based on the damage caused to ecosystems and environment by the use and employment of such resources This being payable as close to where the resource is first mined , extracted or used .

    This creates a tax that is then passed on down the chain direct to the consumer with little fuss with an overall tax dividend in reduced overall tax take .

    This does however have profound implications to way businesses operate , in that they have now expensive resources and a new wave of tecnology and management skills will have to undertake the massive taske of mitigating this increased tax burden and will have to make new designs , manufacturing methods and retailing methods to make the final goods at a fair price to compete, as the waste of energy and all other resources will be an expensive burden on the buisness.

    As this would be the only tax in town , then everyone would be treated equally from Starbucks to M&S, the village shop to the market stall BP to Halliburton.

    There would be no direct advantage over anyone else in tax terms and so everyone would pay their dues according to their ability to pay for the damage they are asking other to do on their behalf.

    • SLDI

      Globalman: “This responsibility of the damage caused to the planet and its fragile
      ecosystems has to be shared equally and equitably with all in the chain
      of consumerism.”

      Origin of Sustainability Movement Leads to Current Challenges:
      Individual components of sustainability have come together, but were
      initiated and promoted by separate advocates and frames of reference… http://www.triplepundit.com/20

      How do we develop a sustainable civilization?: By delivering the
      “holy grail of sustainable decision making” – a universal geometrical
      algorithm that balances the needs of people, planet and profit – The
      SLDI Code™… http://www.triplepundit.com/au

  • SLDI

    Globalman: “This responsibility of the damage caused to the planet and its fragile
    ecosystems has to be shared equally and equitably with all in the chain
    of consumerism.”

    Origin of Sustainability Movement Leads to Current Challenges: Individual components of sustainability have come together, but were initiated and promoted by separate advocates and frames of reference… http://www.triplepundit.com/2010/08/origin-of-sustainability-movement-leads-to-current-challenges/

    How do we develop a sustainable civilization?: By delivering the “holy grail of sustainable decision making” – a universal geometrical algorithm that balances the needs of people, planet and profit – The SLDI Code™… http://www.triplepundit.com/author/sldi/