Natural Capital: Putting a price on nature
Natural capital is a way to quantify the value of the world that nature provides for us – the air, soils, water, even recreational activity. Advocates say this is crucial if biodiversity is to have any clout in a world governed by raw economics. Others believe the concept merely turns the natural world into a commodity. Is natural capital our last chance to halt the carnage mankind inflicts on the environment or are its supporters naively dancing with the devil?
In summer, the west coast of North Uist in the Outer Hebrides is swathed with the glorious technicolour of flowers on the sea meadows, or machair. This dense, carefully maintained floral carpet of up to 45 species of flower per square metre is a perfect habitat for the endangered great yellow bumblebee, found only here, in Orkney and a few other flower-rich parts of the Highlands. Some may criticise the amounts of money being spent on safeguarding a single species of bee; in raw economic terms, the machair is unprofitable as the crofters that use the land graze sheep with little commercial value. ‘The question that gets asked is why should we bother looking after the machair?’ says Dieter Helm, professor of energy policy at the University of Oxford and chair of the Natural Capital Committee. ‘But you quickly realise that the way to preserve the bee is to look after the machair. The reality is that the costs of maintaining the machair are far outweighed by the benefits – and benefits in material terms. The machair serves a public good in preserving a favourable landscape for the bumblebee. People benefit from knowing the bees are there. Visitors come, giving a tourist benefit. The flowers protect the soils. The economic case for maintaining the machair is very strong. In contrast, if you plough it up, it’s gone for ever.’
The arguments used by defenders of the natural world have changed over the decades. Originally they tried appealing to governments and industry that nature was worth saving for its own sake. As that fell on deaf ears, they resorted to more utilitarian arguments. Save an endangered species? Good: wildlife watching provides income from tourism. Stop cutting down the rainforest? Good, again: you make more money in the long-term from tourism and food supplies than from trees turned into garden tables.
Now there is a more nuanced concept taking hold and the bees of North Uist are an ideal example. The phrase ‘natural capital’ is an umbrella term for economically quantifying the world’s stock of natural assets – plants, animals, air, water, soils, minerals – which yield benefits that make human life possible. The concept is abstract. Traditionally ‘capital’ has been thought of as physical – the machines, tools and equipment used in the production of other goods. Increasingly though, the case is being put that our wealth and wellbeing also rely on natural capital. ‘The economy exists and prospers as a result of the enormous amount of “stuff” that nature gives us for free,’ says Helm.