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
