The Natural Capital Framework

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The Natural Capital Framework

• Presentation to the Seminar
• Environmental Economics and Natural Capital
• In the series
• Sustaining Future Ecosystem Services From
  Understanding to Action
• By
• Professor Paul Ekins
• Professor of Energy and Environment Policy,
  Kings College London
• National Liberal Club, London
• Wednesday 16th April 2008

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CRITINC Project

• DG Research Framework 5
• Making Sustainability Operational Critical
  Natural Capital And The Implications Of A Strong
  Sustainability Criterion (CRITINC)
• Ekins, P., Simon, S., Deutsch, L., Folke, C. de
  Groot, R. 2003 A Framework for the Practical
  Application of the Concepts of Critical Natural
  Capital and Strong Sustainability in Special
  Section of Ecological Economics, edited by Paul
  Ekins, Carl Folke Rudolf de Groot, Vol.44
  No.2-3, pp.165-185

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SRDTOOLS Project

• DG Research Framework 6
• Methods and tools for evaluating the impact of
  cohesion policies on sustainable regional
  development (SRDTOOLS)
• Arose out of DG REGIO evaluation of contribution
  of structural funds to sustainable development
  (SD) which
• Used 4-capitals model of SD, which
• Enabled identification of UNsustainable
  development
• Structured dialogue in recognisably economic
  language
• Identified trade-offs between different
  dimensions of SD BUT did not identify how
  decisions should be made about trade-offs
• Ekins, P., Dresner, S. Dahlström, K. 2008
  (forthcoming) The 4-Capitals Method of
  Sustainable Development Evaluation in European
  Environment, Special Issue on Sustainable
  Development Evaluation, edited by Paul Ekins and
  Simon Dresner

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The Concept of Capital and 4-Capital Framework

• Capital stocks (assets) provide a flow of goods
  and services which contribute to human
  well-being. The stock value is the net present
  value of the flow
• Four types of capital recognised
• Manufactured Capital produced assets used to
  produce other goods and services, e.g. buildings,
  transport infrastructure, machines
• Natural Capital traditional natural resources
  (timber, water, minerals) and other natural
  assets such as biodiversity, climate, ecosystems
• Human Capital health, wellbeing and productive
  potential of individuals
• Social Capital social networks that support
  efficient and cohesive societies, e.g. social
  trust, norms, political and legal structures

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Capital and Sustainability

• Places Environment in recognisable economic
  framework on an equal basis with other factors of
  production (cf externality concept)
• Capital and sustainability in the provision of
  goods and services, capital depreciates for
  sustainability it must be replenished
  (investment)
• Economic, social, environmental sustainability
• Weak and strong sustainability (substitutability
  between capitals)
• Potential for unsustainable development lies in
  loss of one or more capital stocks, or in
  trade-offs made between different forms of
  capital, and extent to which
• Any decline represents a breach of some critical
  threshold (breach of which threatens system
  integrity), and if not, whether
• Any decline in one form is compensated by
  increases in other forms

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Natural Capital

• Characteristics, Values and Functions of Nature
• Characteristics air, water, land, habitats
• Values ecological (conservation, existence),
  social (human health, personal, community,
  option), economic (production, consumption,
  employment)
• Functions
• Natural capital can only be inferred from the
  performance of environmental functions
• Environmental function the capacity of natural
  processes and components to provide goods and
  services that satisfy human needs (directly
  and/or indirectly) (de Groot 1992, p.7).
• de Groot Regulation, Habitat, Production,
  Information
• CRITINC Life support, source of resources, sink
  for wastes, maintenance of human health, other
  contributions to human welfare (e.g. amenity)

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Environmental sustainability

• Sustainability capacity for continuance
• Environmental sustainability maintenance of
  important environmental functions
• Importance
• Not substitutable, irreversible loss,
  immoderate losses
• Maintenance of health, evidence of threat,
  economic sustainability

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Environmental sustainabilitymaintaining
important environmental functions

-
Biosphere

• Functions of Nature
• Life Support
• Source
• Sink

• Functions for Humans
• Economy
• Human health
• Human welfare

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Critical Threshold Analysis

• Environmental Sustainability possible to
  articulate principles (e.g. sustainable use of
  environmental functions) based on scientific
  evidence and derive environmental thresholds and
  standards.
• Identification of
• Critical thresholds (change of state)
• Critical trends (may refer to state or pressure)
• Policy targets
• Analytic questions
• What critical thresholds are currently being
  breached?
• What critical trends threaten to breach critical
  thresholds in the future (traffic lights
  representation)?
• What policy targets have been adopted in relation
  to these critical thresholds and what is their
  relation to them?
• What policies have been implemented or proposed
  to meet the policy targets?
• Do these policies seem adequate, either to
  achieve the policy targets or to address the
  criticality or both?
• What is the relationship between these issues of
  criticality and issues of quality of life?

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Criteria for Environmental Sustainability (1)

• Non-substitutable, irreversible, immoderate cost
  (Ciracy-Wantrup) Safe minimum standard (Bishop)
• Maintenance of biodiversity 
• Renewal of renewable resources 
• Daly
• Limit the human scale (throughput) to the earths
  carrying capacity.
• Efficiency (not throughput) increasing
  technological progress
• Renewable resource harvest less than regeneration
  rate waste emissions less than assimilative
  capacities
• Non-renewable resource exploitation rate less
  than the rate of creation of renewable
  substitutes.

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Criteria for Environmental Sustainability (2)

• Prevention of destabilisation of global
  environmental features such as climate patterns
  or the ozone layer 
• Maintenance of biodiversity 
• Renewal of renewable resources 
• Maintenance of a minimum life-expectancy of
  non-renewable resources 
• Ensuring that emissions into air, soil and water
  do not exceed their critical load for ecosystems
  nor lead to adverse effects on human health 
• Conservation of landscapes of special human or
  ecological significance 
• Avoidance of risk of potentially catastrophic
  events

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Functions and Sustainability Principles
TYPE OF FUNCTION SUSTAINABILITY PRINCIPLE (related to an environmental theme)
Sink 1. Prevent global warming, ozone depletion 5. Respect critical loads for ecosystems
Source 3. Renew renewable resources 4. Use non-renewables prudently
Life Support 2. Maintain biodiversity (especially species ecosystems) 7. Apply the Precautionary Principle
Human Health and Welfare 5. Respect standards for human health 6. Conserve landscape/amenity
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Measurement Indicators and CRITINC Framework

• Indicators
• Frameworks, e.g Quality of Life Counts, 15
  Headline, 139 supporting indicators, economic,
  social, environmental
• National wealth, weak sustainability, World Bank
  Genuine Savings (rich countries are sustainable)
• Top 60 indicators in ten policy fields
• Sustainability Gaps
• Physical standard, physical SGAP, monetary SGAP
  (MSGAP) (MSGAP/GDP - unsustainability intensity)
• Years-to-Sustainability
• CRITINC framework SGAP plus economic and social
  indicators

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Sustainability Gap Calculations
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The CRITINC Methodology

• Identification of the function(s) under threat or
  investigation, and their placement in the
  relevant category (source, sink, life-support or
  human health and welfare).
• Relation of the functions back to the natural
  capital from which they emanate.
• Preparation of the various environmental impact
  matrices.
• Derivation of sustainability standards for the
  functions, if possible, or trends in those cases
  where sustainability standards cannot be
  identified.
• Where standards have been identified, calculation
  of the SGAPs in relation to them.
• Description of the economic or social aspiration
  that is putting the function under threat or
  pressure, in terms of the benefit that its
  realisation would yield. Investigation of
  alternative ways of partially or wholly achieving
  the aspiration.
• Application of a system of decision-analysis,
  such as multi-criteria analysis, to give insights
  into the implications of closing the SGAPs

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SRDTOOLS A nested approach to assessing
sustainable development
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Choosing assessment methodsTaking account of
complexity
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Thank you

• Paul.Ekins_at_kcl.org.uk