What is Natural Capital Accounting and Why Should You Care?
The Missing Piece in Our Economic Ledger
[PLACEHOLDER: Introduction paragraph about the gap in traditional economic accounting]
When we measure the health of an economy, we typically look at GDP, employment, inflation, and productivity. But these measures miss something crucial: the natural resources and ecosystems that underpin all economic activity. That’s where natural capital accounting comes in.
What is Natural Capital?
Natural capital refers to the world’s stocks of natural assets—forests, fisheries, water, minerals, biodiversity, and the atmosphere. These assets provide a flow of benefits to people, including:
- Provisioning services: timber, food, fresh water
- Regulating services: carbon sequestration, water filtration, flood control
- Cultural services: recreation, aesthetic value, spiritual significance
[PLACEHOLDER: Expand with specific examples relevant to your work]
Why Traditional Economics Falls Short
[PLACEHOLDER: Discussion of GDP limitations and externalities]
Consider a forest. In traditional national accounts, the forest only contributes to GDP when it’s harvested—when trees become lumber and lumber becomes houses. But standing forests provide enormous value:
- Storing carbon that would otherwise warm the climate
- Filtering water that communities drink
- Providing habitat for wildlife
- Offering recreational opportunities
This value is real, but invisible in our economic statistics.
How Natural Capital Accounting Works
[PLACEHOLDER: Explain the basic methodology]
Natural capital accounting creates satellite accounts that extend traditional national accounts to include:
- Physical asset accounts: Measuring stocks and flows of natural resources in physical units
- Monetary asset accounts: Valuing those resources in economic terms
- Ecosystem accounts: Capturing the services provided by ecosystems
Real-World Applications
[PLACEHOLDER: Examples of natural capital accounting in action]
The U.S. National Strategy
In 2023, the White House released a national strategy for natural capital accounting, signaling a major shift in how the federal government will measure economic progress.
[PLACEHOLDER: Discuss your involvement with this initiative]
International Efforts
The UN’s System of Environmental-Economic Accounting (SEEA) provides an international framework that countries are increasingly adopting.
What This Means for Policy
[PLACEHOLDER: Policy implications]
When natural capital is visible in economic accounts, it becomes harder to ignore in policy decisions. This has implications for:
- Infrastructure investment decisions
- Agricultural and forestry policy
- Climate mitigation strategies
- Land use planning
Getting Involved
[PLACEHOLDER: Resources for learning more]
If you’re interested in learning more about natural capital accounting:
- [PLACEHOLDER: Link to resources]
- [PLACEHOLDER: Link to your research]
- [PLACEHOLDER: Link to relevant organizations]
This is the first in a series of explainers about natural capital accounting. Stay tuned for deeper dives into specific topics.