Natural Capital

Natural Capital or Ecological Services are terms used for the outputs of land which deliver environmental benefits, alongside, or perhaps instead, of conventional benefits.

For instance these might include:

• moorland which filters and slows water running from upper to lower ground
• carbon sequestration by wetlands or trees
• field margins which provide habitat for diverse wildlife

As well as environmental benefits, it may also be possible to gain social benefits, such as a green lung in a city which provides space for recreation as well as habitat, and other environmental benefits.

As the enthusiasm and policy support for more sustainable land management grows, so does the need for accurately measuring the impact and effect of new ventures, or even just the status quo. Measurement is important for a number of reasons, but all relate to accountability. It is usually either necessary or desirable to measure what has or has not been achieved. It may be necessary to demonstrate achievement in order to receive a payment, or a renewal of funding, or in order to determine what the best opportunities for a given piece of land are.

Many organisations, public and private, also want to be able to demonstrate to shareholders, stakeholders, regulators, and beneficiaries, what they have achieved socially, environmentally, and financially. This has been known as ‘triple bottom line reporting’ or ‘integrated reporting’. The issue which has exercised academics, and professionals is how to go about measurement of social and environmental benefits, either to feed into integrated/triple bottom line reporting, or to measure achievement, and that is what this page is about.

Whilst we could measure achievement based upon how happy people feel, or how healthy they are, ultimately our world operates upon the basis of what objects or states of affairs are worth to others. Really money or worth is a proxy for happiness, health and a whole load of other statuses, and we use it for valuation purposes because it makes different things or matters easier to compare.

The problem is that there is no universal methodology. Take the example of a polluted river (or the converse, of keeping a river clean). What is cleaning up or keeping the river clean worth? Is it worth:

• The cost of cleaning?
• The amount which a person or group of people would pay to live next to or use a clean river?
• The value of the water when clean as compared to dirty?
• The value of the fish or other species which might live in a clean river, but not a dirty one?

The answer is not fixed, but may be a combination of factors, and may depend upon who is asking.