Syllabus Edition
First teaching 2015
Last exams 2025
Natural Capital
Written by: Alistair Marjot
Reviewed by: Bridgette Barrett
Natural Capital & Natural Income
What is Natural Capital?
The term natural resources applies to anything that comes from nature that can be used to benefit humans
Examples of natural resources include fresh water, soil, fossil fuels and oxygen in the air
In the environmental sciences, these resources are sometimes referred to as natural capital
You can think of natural capital as resources from nature that are managed by humans because they provide goods or services
These natural goods and services can include directly marketable goods, such as timber and crops, or broader ecological services, such as the flood protection provided by mangroves, or the erosion prevention and climate regulation services that forests provide
Natural Income
If sources of natural capital (i.e. these natural goods and services) are carefully and sustainably managed, they can provide even more resources over time
This is referred to as natural income
For example, if trees are cut down for timber but forests are also re-planted or left to recover, so that the rate of timber production is not greater than the rate of new tree growth, then timber production is a sustainable income that can be marketed and used to benefit humans
In other words, natural income is the term used to describe the sustainable income produced by natural capital
Again, using the timber production example, our forests are the natural capital and the sustainable timber we can obtain from these forests is the natural income
Non-renewable resources, such as fossil fuels (technically, they are non-renewable as they cannot regenerate faster than humans are using them) can be used to generate wealth but can only be used once and cannot be sustainably managed
Therefore, even if they can be considered as natural capital, non-renewable resources cannot produce sustainable natural income
Natural capital can be used to generate natural income, but this can be done in a sustainable or unsustainable way
Ecosystem Services
Ecosystem services usually fall into one of four main categories:
Supporting services
Regulating services
Provisioning services
Cultural services
Ecosystem Service | Description | Examples |
Supporting | Essential ecological processes for supporting life |
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Regulating | A diverse set of services that shape and stabilise ecosystems |
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Provisioning | The goods and services humans obtain from ecosystems |
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Cultural | These services derive from humans interacting with nature in a culturally beneficial way |
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Worked Example
Using a named example of an ecosystem and the society living there, discuss the value of ecosystem services to that society.
Answer
The Sundarbans, located in India and Bangladesh, is an example of an ecosystem that provides essential services to the societies that live there. The Sundarbans is the largest mangrove forest in the world (covering an area of approximately 10,000 km2) and is home to over 4 million people, whose livelihoods depend on the ecosystem services the forest provides. Some examples of these ecosystem services include:
Fisheries:
The Sundarbans supports a diverse range of fish species that provide a source of food and income for the local population.
Coastal Protection:
The Sundarbans provides natural protection to the coast from cyclones and tidal surges. The mangrove forests act as a natural barrier, helping to reduce the damage caused by these natural disasters.
Timber and Other Forest Products:
The Sundarbans provides a range of timber and other forest products that are used by the local population for various purposes, such as fuelwood, construction materials, and medicinal plants.
Ecotourism:
The Sundarbans is home to over 100 Bengal tigers. The Sundarbans tiger is a major tourist attraction and its presence in the area attracts tourists from all over the world. The tourism industry provides a source of income for the local communities, contributing to their economic development.
Examiner Tips and Tricks
The terms natural capital and natural income are very easy to confuse. If you are finding this concept tricky, try to remember the following analogy: money in a bank (sometimes referred to as capital) may gain interest over time if it is carefully managed. Natural income is effectively the interest that humans can live off and benefit from, if natural capital is sustainably managed!
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