How do you measure natural capital?

1 Accounting frameworks

One way to measure natural capital is to use accounting frameworks that integrate environmental and economic information into a consistent system. For example, the System of Environmental-Economic Accounting (SEEA) is an international standard that measures the physical and monetary flows of natural resources, environmental services, and environmental assets. The SEEA can help to assess the contribution of natural capital to economic activity, the impacts of economic activity on natural capital, and the changes in natural capital over time.

2 Valuation methods

Another way to measure natural capital is to use valuation methods that estimate the economic value of the benefits that natural capital provides to humans. These methods can be based on market prices, revealed preferences, stated preferences, or benefit transfer. For example, market prices can be used to value the timber or fish that natural capital produces, revealed preferences can be used to infer the value of natural capital from the behavior of people who use or protect it, stated preferences can be used to elicit the value of natural capital from surveys or experiments, and benefit transfer can be used to apply the value of natural capital from one context to another.

3 Indicators and indices

A third way to measure natural capital is to use indicators and indices that summarize the status and trends of natural capital in a single or composite measure. These indicators and indices can be based on biophysical, monetary, or qualitative data, and can reflect different aspects of natural capital, such as quantity, quality, diversity, or resilience. For example, the Living Planet Index measures the changes in the population size of thousands of vertebrate species, the Natural Capital Index measures the changes in the potential of ecosystems to provide benefits to humans, and the Inclusive Wealth Index measures the changes in the productive base of a country, including natural capital.

4 Challenges and limitations

Measuring natural capital is not without its challenges and limitations. Data availability and quality can be scarce, incomplete, or outdated, especially in developing countries or remote areas. Additionally, different methodological approaches and assumptions can produce different results and interpretations. Furthermore, translating and communicating the results of natural capital measurement into policy-relevant and understandable messages can be difficult when dealing with complex and uncertain issues, competing interests, and diverse stakeholders. All of these issues make measuring natural capital a challenge.

5 Ways forward

Despite the challenges and limitations, measuring natural capital is essential for achieving sustainable development and ensuring human well-being. To improve and advance natural capital measurement, more efforts should be invested in collecting and sharing high-quality and timely data on natural capital using standardized and harmonized methods and indicators. This could be done through monitoring systems, remote sensing technologies, citizen science, and open data platforms. Additionally, more collaboration and coordination should be developed to apply consistent and transparent methods for measuring natural capital, using best practices and guidelines. This could be done through peer review, knowledge exchange, and capacity building among researchers, practitioners, and policymakers. Lastly, more integration and dialogue should be established to link the results of natural capital measurement with policy objectives and actions, using evidence-based and participatory approaches. This could be done by creating platforms, networks, and institutions that foster interdisciplinary and multi-stakeholder collaboration and learning.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?