Natural capital 

is the world's stock of natural resources, which includes geology,

soils, air, water and all living organisms. Some natural capital assets provide
people with free goods and services, often called ecosystem services. Two of these
(clean water and fertile soil) underpin our economy and society, and thus make
human life possible.[3][4]
It is an extension of the economic notion of capital (resources which enable the
production of more resources) to goods and services provided by the natural
environment. For example, a well-maintained forest or river may provide an
indefinitely sustainable flow of new trees or fish, whereas over-use of those
resources may lead to a permanent decline in timber availability or fish stocks.
Natural capital also provides people with essential services, like water
catchment, erosion control and crop pollination by insects, which in turn ensure
the long-term viability of other natural resources. Since the continuous supply of
services from the available natural capital assets is dependent upon a healthy,
functioning environment, the structure and diversity of habitats and ecosystems
are important components of natural capital.[5] Methods, called 'natural capital
asset checks', help decision-makers understand how changes in the current and
future performance of natural capital assets will impact human well-being and
the economy.[6]

Contents
• 1History of the concept
• 2Natural capital declaration
• 3Natural Capital Protocol
• 4Internationally agreed standard
• 5Private sector approaches
• 6Criticism
• 7See also
• 8References
• 8.1Notes
• 8.2Further reading
• 9External links

History of the concept[edit]

Part of a series on

Ecological economics

Humanity's economic system

viewed as a
subsystem of the global
environment
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 Concepts

• Carrying capacity
• Ecological market failure
• Ecological model of competition
• Ecosystem services
• Embodied energy
• Energy accounting
• Entropy pessimism
• Index of Sustainable Economic
Welfare
• Natural capital
• Spaceship Earth
• Steady-state economy
• Sustainability, 'weak' vs 'strong'
• Uneconomic growth
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The term 'natural capital' was first used in 1973 by E.F. Schumacher in his
book Small Is Beautiful[7] and was developed further by Herman Daly, Robert
Costanza, and other founders of the science of Ecological Economics, as part of a
comprehensive critique of the shortcomings of conventional economics.[8]
[9] Natural capital is a concept central to economic assessment ecosystem
services valuation which revolves around the idea, that non-human life produces
goods and services that are essential to life. Thus, natural capital is essential to
the sustainability of the economy.
In a traditional economic analysis of the factors of production, natural capital
would usually be classified as "land" distinct from traditional "capital." The
historical distinction between "land" and "capital" defined “land” as naturally
occurring with a fixed supply, whereas “capital,” as originally defined referred
only to man-made goods. (e.g., Georgism[10][11]) It is, however, misleading to view
"land" as if its productive capacity is fixed, because natural capital can be
improved or degraded by the actions of man over time (see Environmental
degradation). Moreover, natural capital yields benefits and goods, such as
timber or food, which can be harvested by humans. These benefits are similar to
those realized by owners of infrastructural capital which yields more goods, such
as a factory that produces automobiles just as an apple tree produces apples.