The current global economy is unsustainable. Traditional economic models do not account for the decline in natural capital (such as conversion of land to cropland, pastureland and forest plantations.1World Bank, “The Economic Case for Nature”,https://openknowledge.worldbank.org/server/api/core/bitstreams/9f0d9a3a-83ca5c96-bd59-9b16f4e936d8/content#page=5.19.It is estimated that the value of nature’s services is over one and a half times the size of the world’s gross domestic product (GDP).2Robert Constanza et al.,“Changes in the Global Value of Ecosystem Services”, Global Environmental Change 26 (May 2014): 152-158
Acknowledging that economies are embedded in nature, development policies should also be beneficial to nature – hence the growing importance of ‘nature-smart’ policymaking that creates win-win outcomes for nature and economic growth. Natural capital accounting (NCA), when founded on comprehensive and reliable data, is an essential ingredient for guiding nature-smart policies towards achieving long-term development objectives, not least the Sustainable Development Goals.
Economies rely on natural assets, especially low-income countries, which depend on natural capital for 47% of their wealth (2018 estimates)3 Glenn-Marie Lange, Quentin Wodon and Kevin Carey, The Changing Wealth of Nations 2018 (Washington DC: World Bank Group, 2018). and cannot afford the risk of collapse in the services provided by nature.
Concerted efforts by the UN and partner organisations are underway to integrate natural capital in standard systems of national accounting through new frameworks such as the System of Environmental Economic Accounting (SEEA) and SEEA Ecosystems Accounting (SEEA EA). The System of National Accounts is due for an update in 2025, which is set to include recognition of natural capital as a separate class of assets.
