The Natural Capital Accounting Opportunity: Let's Really Do the Numbers

Natural capital accounting 1,2 will confirm what we know -without change we are headed for environmental disaster resulting from economic growth. We propose a Natural Capital Bank, a new institution to help maintain natural capital adequacy and chart a course to a sustainable future via accounting. In March 2021, the nations of the world adopted standards for natural capital accounting called the System of Environmental-Economic Accounting (SEEA) Ecosystem Accounting 3 . Our proposal is to take the next step towards sustainability by institutionalising the management of natural capital by government via accounting through a Natural Capital Bank. Dialogue with our peers about the merits of our proposal has revealed scepticism, raised many questions and shown different understandings about current institutions, why they have failed and how these failures could be addressed. But the problem is generally agreedwithout change we are headed for environmental disaster. To make the case for a Natural Capital Bank, we briefly recap some of what is well-known within individual disciplines, but maybe less well-known to the multidisciplinary readership of Nature Sustainability. We acknowledge that more than accounting and banking is needed to achieve lasting change, and that even if our proposal is accepted theoretically by the academic community, adoption by government would nevertheless still require strong leadership and considerable political will. Natural capital decline and accountingNatural capital is defined by Bateman and Mace 4 as: "those renewable and non-renewable natural resources (such as air, water, soils and energy), stocks of which can benefit people both directly (for example, by delivering clean air) and indirectly (for example, by underpinning the economy)". Managing natural capital is problematic because the responsibility for it is fragmented between nations, within different institutions of governments, or considered the commons 5 . Compounding the problem is that we do not know exactly how much natural capital we have, how much we need, how it is changing, and to what degree, if any, natural capital is substitutable 6 . What we do know is the natural capital balance is declining and that we are approaching 7 or may have already crossed, some critical ecological thresholds 8 . To address natural capital decline, goals and targets have been set via international agreements like the Paris Agreement on climate change, the Convention on

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confidence: 67%

From natural capital accounting to natural capital banking

et al. 2021

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“…The current approach to ES valuation for coastal and marine policy and planning is fraught with shortcomings. An alternative is to expand on the traditional national economic accounts that provide objective, regular, and standardized information that public and private interests rely on for planning and decision making [91]. A broader system of 'wealth accounting' would include natural capital accounts (NCAs) and ecosystem goods and service accounts (EGSAs) that could provide governments and businesses with information on the current status of a nation's (or the entire biosphere's) natural capital and ecosystem services [23,92,93].…”

Section: Alternative Directionsmentioning

confidence: 99%

“…The primary advantage of the wealth accounting framework is that it provides consistent, internationally recognized standards for valuation [17,91]. A major challenge for applying this framework to coastal and marine resources is that many of the ecosystem services are nonmarket outputs and often provide nonuse values.…”

Section: Alternative Directionsmentioning

confidence: 99%

The Elusive Quest for Valuation of Coastal and Marine Ecosystem Services

Milon

Álvarez

2019

Water

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Coastal and marine ecosystem (CME) services provide benefits to people through direct goods and services that may be harvested or enjoyed in situ and indirect services that regulate and support biological and geophysical processes now and in the future. In the past two decades, there has been an increase in the number of studies and journal articles designed to measure the economic value of the world’s CME services, although there is significantly less published research than for terrestrial ecosystems. This article provides a review of the literature on valuation of CME services along with a discussion of the theoretical and practical challenges that must be overcome to utilize valuation results in CME policy and planning at local, regional, and global scales. The review reveals that significant gaps exist in research and understanding of the broad range of CME services and their economic values. It also raises questions about the validity of aggregating ecosystem services as independent components to determine the value of a biome when there is little understanding of the relationships and feedbacks between ecosystems and the services they produce. Finally, the review indicates that economic valuation of CME services has had a negligible impact on the policy process in four main regions around the world. An alternative direction for CME services research would focus on valuing the world’s CME services in a wealth accounting framework.

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“…The 2019 release, thus, allows researchers to carry out longitudinal studies related to the ecological and socio-economic roles of trees. Such longitudinal data can be valuable for time-series analysis of, for instance, tree canopy change [12], ecological processes dependent on these, or ecosystem accounting [13,14].…”

Section: Introductionmentioning

confidence: 99%

Assessing the Accuracy and Potential for Improvement of the National Land Cover Database’s Tree Canopy Cover Dataset in Urban Areas of the Conterminous United States

et al. 2022

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The National Land Cover Database (NLCD) provides time-series data characterizing the land surface for the United States, including land cover and tree canopy cover (NLCD-TC). NLCD-TC was first published for 2001, followed by versions for 2011 (released in 2016) and 2011 and 2016 (released in 2019). As the only nationwide tree canopy layer, there is value in assessing NLCD-TC accuracy, given the need for cross-city comparisons of urban forest characteristics. Accuracy assessments have only been conducted for the 2001 data and suggest substantial inaccuracies for that dataset in cities. For the most recent NLCD-TC version, we used various datasets that characterize the built environment, weather, and climate to assess their accuracy in different contexts within 27 cities. Overall, NLCD underestimates tree canopy in urban areas by 9.9% when compared to estimates derived from those high-resolution datasets. Underestimation is greater in higher-density urban areas (13.9%) than in suburban areas (11.0%) and undeveloped areas (6.4%). To evaluate how NLCD-TC error in cities could be reduced, we developed a decision tree model that uses various remotely sensed and built-environment datasets such as building footprints, urban morphology types, NDVI (Normalized Difference Vegetation Index), and surface temperature as explanatory variables. This predictive model removes bias and improves the accuracy of NLCD-TC by about 3%. Finally, we show the potential applications of improved urban tree cover data through the examples of ecosystem accounting in Seattle, WA, and Denver, CO. The outputs of rainfall interception and urban heat mitigation models were highly sensitive to the choice of tree cover input data. Corrected data brought results closer to those from high-resolution model runs in all cases, with some variation by city, model, and ecosystem type. This suggests paths forward for improving the quality of urban environmental models that require tree canopy data as a key model input.

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The Natural Capital Accounting Opportunity: Let's Really Do the Numbers

Cited by 21 publications

References 5 publications

From natural capital accounting to natural capital banking

From natural capital accounting to natural capital banking

The Elusive Quest for Valuation of Coastal and Marine Ecosystem Services

Assessing the Accuracy and Potential for Improvement of the National Land Cover Database’s Tree Canopy Cover Dataset in Urban Areas of the Conterminous United States

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