Natural Capital

Natural Capital 2017-08-05T18:56:54+00:00

Natural capital is another term for the stock of renewable and non-renewable resources (e.g. plants, animals, air, water, soils, minerals) that combine to yield a flow of benefits to people. The benefits provided by natural capital include clean air, food, water, energy, shelter, medicine, and the raw materials we use in the creation of products. It also provides less obvious benefits such as flood defence, climate regulation, pollination and recreation.

Natural capital supports all of the other capitals by providing essential resources, that support a healthy planet and underpins thriving societies and prosperous economies. Regrettably, we have grown financial capital in large part through the use, exploitation, and degradation of natural and social capital.

Understanding the connections between business and society and the associated risks and opportunities inform better, more timely decision making.


two girls on a paddle board look tiny in a blue lake under a broad green forested mountain on Bowen Island BCMost financial decisions are made with only a fraction of the variables taken into account. For the most part we have become quite good at looking at return-on-investments and payback periods, but we’re still falling sort when it comes to valuing the physical, social and local environments.

This is where Natural Capital calculation comes in. It incorporates the usual financial numbers along with the services that are provided by nature like clean air, water, minerals, animals, plants, timber, biodiversity, micro-organisms and so on. It also incorporates societal/community benefits, health (of humans, the environment and the financial system) and the local economy.

In Thailand, a study shows mangrove forests are worth about USD $1000 per hectare if exploited for wood. According to the World Bank*, their value is in excess of USD $21,000 per hectare if left intact. (*Source: The World Bank 2012, UN Environment Program, Department of Environment, Food and Rural Affairs (UK) Natural Capital Committee 2013)

According to the same study, the value of conserving forests just to cut greenhouse gas emissions is USD $3.7 trillion annually. Compare this to the annual gobal vallue of the timber industry, an estimated USD $0.4 trillion annually.

Using the Natural Capital method of accounting, Forest Enterprise England estimates that English forests are worth 20 times more than the timber within them. The organizations explains that: “Over 95% of this value is as a result of the benefits it provides to society, for example. This value is not captured in traditional financial accounts.”

Here is what we get from wood:

  • Timber
  • Wood fuel
  • Employment

Here is what we get from trees/forests:

  • Timber
  • Wood Fuel
  • Employment
  • Tourism
  • Healthy Soil
  • Fresh Air
  • Carbon Storage
  • Pollinators
  • Climate Regulation
  • Improved Water Quality
  • Spiritual Benefits
  • Biodiversity
  • Storm Protection
  • Recreation
  • Shelter
  • Medicines
  • Resilience to Disease
  • Natural Flood Defense
  • Food
  • Education

Logging Bowen’s forests to deliver 1/20th the value that they are already providing us is simply irrational. Decision-making needs to be made with as much information as possible. Now that tools have emerged that better educate us, we can be freed to move towards not just ‘best practice’ but wise practice.

Here are some examples of the value and benefits that the forests add as natural capital.

Land value

  • Land value just needs to drop by 0.1% for the impacts on Bowen house/land values to equate to a greater financial impact than the money that is expected to be generated from the logging.

Main employer on Bowen Island

  • Construction, which is highly susceptible to house/land value reductions.

BC forest products

  • Have contributed around $34 million a year to the Provincial Government over the last 11 years. Important as it is, this industry contributes only about 5% of BC’s GDP, which is in excess of $220 billion annually.
  • Based on typical timber lot sales, Bowen Island would likely earn around $4-5 million.

Main Industry in Vancouver

  • Tourism

Tourism on Bowen

  • Over 70% of visitors surveyed identified hiking and trail use as the main reason for visiting Bowen.
  • Bowen is highly dependent on this income as we are an island with small local businesses.

Climate change

Canada is a signatory of the COP 21 Paris climate change accord. Governments agreed:

  • A long-term goal of keeping the increase in global average temperature to well below 2°C above pre-industrial levels;
  • To aim to limit the increase to 1.5°C, since this would significantly reduce risks and the impacts of climate change;
  • On the need for global emissions to peak as soon as possible, recognising that this will take longer for developing countries;
  • To undertake rapid reductions thereafter in accordance with the best available science.

Continuing BC forest harvesting practices (as per those laid out in the FSP) works in contravention of our global commitments. Best available science clearly indicates that clear-cutting costs much more than the value of timber that is harvested in both a financial and an environmental sense.

It is time that the Government’s commitments are matched with how we manage our country’s actions and strategies.