Natural Capital & Natural Income (DP IB Environmental Systems & Societies (ESS)): Revision Note

Natural capital & natural income

What is natural capital?

• Natural resources are the sources of energy and raw materials that society uses and consumes

• In other words, the term natural resources applies to anything that comes from nature that can be used to benefit humans

  • Examples include:

    • Sunlight is essential for photosynthesis, solar energy

    • Air: oxygen for breathing, wind energy

    • Water: drinking, irrigation, hydroelectric power

    • Land: soils, agriculture, construction, habitat for wildlife

    • Rocks: minerals, construction materials

    • Ecosystems: forests, wetlands and coral reefs

    • Living things: plants for food and medicine, animals for food and clothing

  • In the environmental sciences, these resources are sometimes referred to as natural capital

• Definition: natural capital is the stock of natural resources available on Earth

• Types of natural capital:

  • Renewable resources are resources that can be replenished naturally

    • Examples: forests (timber), fish populations

  • Non-renewable resources are resources that are finite and cannot be replenished

    • Examples: fossil fuels (coal, oil), minerals (gold, iron ore)

  • Ecosystem services are the benefits provided by ecosystems that support human life and economic activity

    • Examples: pollination of crops, water purification, carbon sequestration

What is natural income?

• Definition: natural income is the flow of goods and services produced by natural capital

  • Examples of goods:

    • Fish: harvested from oceans and rivers

    • Timber: harvested from forests for building and paper products

  • Examples of services:

    • Climate regulation: forests reduce global warming by absorbing CO₂

    • Flood prevention: wetlands reducing flood risk by absorbing excess rainfall, or mangroves buffering against storm surges

Sustainable natural income

• If these natural goods and services are carefully and sustainably managed, they can provide even more resources over time

  • This is referred to as sustainable natural income

  • For example:

    1. Trees are cut down for timber but forests are also re-planted or left to recover

    2. The rate of new tree growth is greater than the rate of timber production

    3. Timber production is a sustainable source of income that can be marketed and used to benefit humans

• In other words, natural income is the term used to describe the sustainable income produced by natural capital

  • Again, using the timber production example:

    • Our forests are the natural capital

    • The sustainable timber we can obtain from these forests is our natural income

• Non-renewable resources, such as fossil fuels, can be used to generate wealth but can only be used once and cannot be sustainably managed

  • Therefore, even if they can be considered as natural capital, non-renewable resources cannot produce sustainable natural income

Perspectives on nature

• Economic value:

  • Viewing nature as natural capital highlights the economic value of resources

  • Encourages investment in their preservation and sustainable use

  • It helps policymakers and businesses recognise financial benefits of maintaining healthy ecosystems

• Sustainable management:

  • Emphasising natural capital and natural income encourages sustainable management practices

  • By valuing natural resources as capital, societies are more likely to invest in conservation efforts

    • Ensures a continuous flow of natural resources, such as clean water, air and fertile soil

• Anthropocentrism:

  • This perspective may imply that nature exists solely for human use and exploitation

    • This is an extreme anthropocentric view

  • It suggests that the environment's primary purpose is to serve human needs and economic interests

    • Leads to over-exploitation and degradation of natural resources

• Intrinsic value:

  • Some argue that this anthropocentric view reduces nature's intrinsic value

    • I.e. it ignores the inherent worth of ecosystems and species beyond their use to humans

Ecosystem services

• Definition: benefits provided by ecosystems that support life and human well-being

• Ecosystem services usually fall into one of four main categories:

  • Supporting services

  • Regulating services

  • Provisioning services

  • Cultural services

Examples of Regulating Ecosystem Services