Mainstreaming Natural Capital 2025

1 The term “natural capital” derives from ecological sciences. It refers to the world’s stock of natural resources, both renewable and non-renewable, that combine to yield a flow of benefits to humanity.1 Figure 1 provides an overview of these flows, broken down into various ecosystem services and abiotic (non-living) services.2 These flows create benefits that are indispensable to socioeconomic progress and human well-being. For example, biomass provides us with food and fibre, while climate regulation leads to manageable temperatures and lower risk of extreme weather events. The experiential qualities of nature, captured in part by cultural services, provide critical contributions to health, arts, history, philosophy and connections between people. The full value of these benefits provided by natural capital is not captured in economic models today. Captured value typically includes natural resources that have been traded for millennia, particularly in primary sectors such as agriculture, fishery, forestry and mining. These usually have prices assigned to them, generating easily quantifiable “outputs” or benefits that can be included in routine economic statistics such as GDP or financial indicators in business accounts. “Leakage” occurs with benefits that are more challenging to quantify and therefore remain largely unpriced in the economy or production process, including water retention, flood mitigation, pollination and carbon sequestration. These services are not usually captured in economic or business statistics, since – being historically abundant – they are considered as “free” inputs. This is a major oversight, because natural capital as an asset or factor in the production process cannot be substituted by other man-made assets. So its decline is therefore detrimental to economic and human progress. These “leaked” benefits accrue to all economic actors, but the responsibility to maintain them often falls on governments and communities.3 The negative consequences of harming nature at the expense of these benefits are therefore “external” to economic systems. These are commonly referred to as “environmental externalities”, which total trillions of dollars each year.41.1 Legacy economic models and metrics are no longer fit-for-purposeUnderstanding natural capital Natural capital comprises the world’s stock of natural resources and its flows of ecosystem and abiotic services. It provides critical benefits to business and society – but is in severe decline today. Mainstreaming Natural Capital: Advancing the Global Agenda to Integrate Nature in Decision-Making 4