About Natural Capital

The importance of valuating natural capital

Developing Natural Capital Accounts demonstrates the economic benefits from preservation and protection of natural capital. For instance, the value of flood protection provided by ecosystems and the value as a tourist attraction. These benefits may have tremendous value, however, they are not accounted for in metrics such as GDP. This makes the value of ecosystem services not seen. Natural Capital Accounting helps us better understand the relation betwwen the economy, natural resources and the people's livelihood. And contribute to more effective management of our natural resources sustainably.

The conventional way of valuating natural capital

Conventionally, in the calcuation of Gross Domestic Product (GDP), the value of natural resources or the possible environmental damage from economic activities is not included. This may lead to overuse of natural resources or cause damage to the environment. Although, humans benefiting from the services provided by ecosystems, destruction is also caused by humans. An example is tourism activities generating economic benefits from nature, yet tourism causes pollution in local water sources which impact the natural resources in tourist attractions to deteriorate.

Environmental Account (Natural Capital Accounting)

The value of natural resources and ecosystem services supports economic activities and humans' well-being can be used as a tool to improve economic statistics. By incorporating these natural factors, the economic impacts of the loss or degredation of natural capital can be reflected in economic (monetary) terms.

Benefits

Natural Capital Accounting (NCA) demonstrates the capabilities of ecosystem services for the future, serving as an approach to support the policy design for sustainable management of natural resources. Additionally, it is beneficial for presenting a roadmap for the integration of NCA into policy and the economic sector at the provincial and national level.