Natural Capital

Valuing goods and services from the natural environment

Natural capital is the land, air, water, living organisms and all formations of the Earth's biosphere that provide us with ecosystem goods and services imperative for survival and well-being. Furthermore, it is the basis for all human economic activity.

Unfortunately, traditional measures to gauge economic performance, such as produced and human capitals, neglected natural capital leading to a depletion of natural environments and the loss of valuable ecosystem services.

To rectify this situation, IISD is developing ways to more accurately value natural capital and linking these values to economic policy options. The expected outcome is better decision-making for managing, preserving and enhancing our natural environments. Moreover, identifying and quantifying natural capital and its ecosystem goods and services provides additional economic rationale for effective natural resources management.

IISD, funded by Environment Canada, is undertaking research into the conceptual underpinnings of the Natural Capital Approach in order to devise a suitable framework for its application within Canada.

An Ecosystem Services Assessment of the Lake Winnipeg Watershed: Phase 1 Report - Southern Manitoba Analysis (PDF - 2.3 mb)
Assesses the ecosystem services provided by the current and pre-settlement distribution of southern Manitoba's natural capital or environmental assets, as this landscape contributes a substantial portion of the nutrient load flowing into Lake Winnipeg. The analysis is followed by a policy narrative that discusses the biophysical characteristics, economic and socio-political drivers that have transformed southern Manitoba.

The analysis framework used for the study was inspired by The Natural Capital Approach: A Concept Paper (PDF - 1.5 mb), which set out to develop a way to better manage and value natural environments. The natural capital concept reconciles economic and environmental interests by incorporating the value of natural environments in decision-making.