Beyond the metaphor: Natural capital as a foundation for integrating ecological and economic research
Natural capital has been a powerful metaphor for communicating that nature generates services and contributes to the productive base of society. Yet, natural capital is more than a metaphor. Natural assets can be valued in a way fully consistent with traditional economic capital theory. Natural capital prices have a role to play in national wealth accounts. However, wealth accounts and valuing natural capital can guide interdisciplinary research and resource management. Natural capital asset prices reflect current management and institutions and recovering natural capital asset prices involves measurement of ecological and human behavioral dynamics and ecosystem service valuation. These features mean that (1) wealth accounting can play an important role in ecosystem based management and (2) natural capital valuation can serve as an organizing framework for integrated ecological – economic research projects.
First, I present the single stock natural capital asset value equation and show how calculating natural capital asset prices integrates ecological and economic knowledge. I explain how the natural capital asset pricing equation can be useful for organizing integrated research. Second, I illustrate two applications of natural capital pricing in the single stock context (to fisheries and groundwater). I show how ecological and economic research contributed to the pricing approach and how our own work could be improved by greater cross disciplinary organization. Third, I illustrate how the natural capital asset pricing equation is generalized for multiple stocks. This generalization shows that changes in one stock can affect the natural capital asset price of other stocks. For example, as the stock of prey fish rises, the asset price for prey fish will decline, but the asset price for predator fish may rise or fall – even without a stock change in predatory fish. Specifically, natural capital asset prices reflect relationships among stocks. Fourth, I review the concept of wealth accounting with a focus on the role of natural capital in wealth accounts. Non-declining wealth accounts are considered a necessary condition for weak sustainability. However, when natural assets are priced correctly, the prices reflect the limits of substitution and complementarity relationships, so the non-declining wealth is a not-so-weak sustainability condition. Furthermore, creating wealth accounts for ecosystems could be an important step understanding whether ecosystem based management is actually leading to sustainable ecosystems. Thus, using the natural capital and wealth accounting framework can guide joint ecological and economic research and help both disciplines develop policy relevant products.