Ecological Economics 44 (2003) 159/163 www.elsevier.com/locate/ecolecon

Identifying critical natural capital

1. An introduction from the editors tural intensification and water-intensive life- styles, is resulting in a global water crisis’. 1.1. The environmental challenge . Fish: ‘the state of the world’s fisheries has now reached crisis point’. All countries are now broadly aware of the need . Air pollution: ‘urban air pollution is reaching to take account of environmental issues in their crisis dimensions in most large cities of the policy making, and many haveevolved complex developing world’. and sophisticated procedures to accomplish this. While UNEP notes that awareness of these At the same time it is clear that, in many parts of issues, and policy responses to counter them, the world and across many different environmen- tal dimensions, environmental degradation is still have increased in recent years, they have so far accelerating, with uncertain but potentially very not proved anything like commensurate to the serious implications. Across issue after issue the problems. UNEP concludes: ‘‘If the new millen- prognosis offered by the United Nations Environ- nium is not to be marred by major environ- ment Programme (UNEP)’s Global Environmental mental disasters, alternative policies will haveto Outlook varied from worrying to potentially be swiftly implemented.’’ (quotes from UNEP, catastrophic: 2000). Despite European Union (EU) countries having . Climate change: ‘expected results include ... an had a longer and more substantial tradition of increase in extreme weather events and impacts environmental policy making than many other on human health’. parts of the world, the EU environment is subject . Nitrogen loading: ‘the scale of disruption to the to many of the same disturbing characteristics and nitrogen cycle may have global implications trends noted by the UNEP report (EEA, 1998). In comparable to those caused by disruption of the the European Environment Agency (EEA)’s major carbon cycle’. assessment Environment in the EU at the Turn of . Chemical risks: ‘the massive expansion’ of the Century, out of fifteen environmental cate- chemical use throughout the world ‘poses an gories or causes of concern: increasing threat to the health of humans and their environment’. . Only one current pressure on the environment . Biodiversity: ‘forests, woodlands and grasslands (ozone depletion), and no forecast future pres- are still being degraded or destroyed, marginal sure, was shown as having an adequate positive lands turned into deserts, and natural ecosys- development. tems reduced or fragmented. ... Reduced or . No current or future states were characterised degraded habitats threaten biodiversity at gene, as being adequately positive. species and ecosystem level’. . Six forecasts of future pressures were forecast as . Water: ‘rapid population growth combined having an ‘unfavourable development’, and a with industrialisation, urbanisation, agricul- further four were too uncertain to predict.

0921-8009/03/$ - see front matter # 2002 Published by Elsevier Science B.V. doi:10.1016/S0921-8009(02)00271-9 160 Editorial

The EEA’s overall assessment is of ‘some and policy to illuminate the fundamental role of progress, but a poor picture overall’. Apart from resources and ecological life-support systems in ozone-depleting substances, ‘progress in reducing societal development, and contributed to a world other pressures on the state of the environment has view of humanity and nature as co-evolving within remained largely insufficient’ and ‘the outlook for the constraints of the biosphere (Norgaard, 1994; most of the pressures is also not encouraging’. Berkes and Folke, 1998). (EEA, 1999) Thus, despite all EU countries being In November 1990, at a cafe´ in the central committed in principle to sustainable develop- square of Siena, Italy, the theme of the upcoming ment, it is clear that in practice most development ISEE conference in Stockholm in 1992 was dis- is environmentally unsustainable. Moreover, not- cussed. The working title of the conference ‘‘Main- withstanding the opportunities that undoubtedly taining Natural Capital’’ did not really capture the exist for activities, developments and policy in- essence of the issues to be raised. In an intense itiatives that could yield economic and social, as discussion Herman Daly suddenly proclaimed well as environmental benefits, it is clear that the ‘‘Let’s use ‘Investing in Natural Capital’ instead’’ dominant experience is still of trade-offs: economic (Jansson et al., 1994). The shift from maintaining benefits are still being achieved at the expense of (in essence preserving the stock of capital) to environmental deterioration. investing marked recognition of renewable natural Such a situation suggests that more weight still capital as a dynamic entity that needs to be needs to be given to environmental considerations understood and actively managed. The shift gave across the whole spectrum of policy making, in credit to the fact that it is not sufficient to assume both industrialised and less industrialised coun- that if we only live on the rent of the natural tries. But this then begs the question as to what capital stock it will be conserved. Instead we will criteria should be used, and how environmental have to find ways to value and manage the issues should be framed with respect to other capacity of natural capital to generate and sustain economic and social objectives, in order to in- the rent, actively adapt to the dynamic nature of crease the probability of environmentally favour- complex systems and learn to live with uncertainty able decisions being taken. Conceptualising the and surprise (Costanza et al., 1993; Levin, 1999; environment and its resources as natural capital is Carpenter et al., 2001; Limburg et al., 2002). one approach to addressing this question. But how much natural capital do we need? Some still assume that a constant output of economic 1.2. Introducing natural capital production can be maintained indefinitely through a high degree of substitutability between manu- Natural Capital is a key concept in Ecological factured and natural capital, i.e. that natural Economics, developed by pioneering ecological capital inputs can be drawn down so long as economists in the late 1980s (e.g. Costanza and manufactured-capital can be increased by func- Daly, 1992). Natural capital refers to the various tionally equivalent amounts. A high degree of ways that the environment powers production- substitution is implicit in the concept of weak and indeed supports most aspects of human sustainability (as discussed in Ekins et al., this existence. Natural capital provides a major exten- issue). sion of the concept ‘land’, one of the classical Ecological economists generally emphasise the factors of production in economic theory. It has complementary relationship between manufac- both nonrenewable and renewable dimensions, the tured and natural capital; that economic produc- latter including its generation of ecosystem services tion is a work process that uses energy to and other life-supporting functions (De Groot, transform materials into goods and services (Cle- 1992; Daily, 1997). The concept has helped in veland et al., 1984); that producing a manufac- bringing environmental issues and concerns into tured-capital substitute requires input of natural economic thinking and decision-making. It has capital (Costanza and Daly, 1992; Ekins, 1992) also effectively been used more broadly in science and that the multi-functional nature of ecosystems Editorial 161 in sustaining socioeconomic development makes it work programme was the derivation of a frame- difficult to substitute their life-support with man- work for the application of the strong sustain- ufactured-capital (Holling and Meffe, 1996)*/ ability principle and the identification of CNC. On strong sustainability arguments (Ekins et al., this the basis of this framework each institute then issue). focused on some general aspect of CNC relevant There undoubtedly are many opportunities for to its country situation. This Special Issue contains mitigating resource depletion and environmental a selection of the papers arising from this part of degradation through the substitution of manufac- the work, dealing with CNC from several perspec- tured-capital. However, a recent report on the tives. There are contributions that develop a actual decoupling from natural capital in eco- framework for CNC evaluation, that analyse nomic development (Azar et al., 2002), commis- current national approaches and indicators of the sioned by the Swedish Environmental Advisory condition and state of natural capital, that address Council as input to the World Summit on Sustain- the socioeconomic and sociocultural implications able Development in Johannesburg August 2002, of degradation of CNC, and that apply the CNC revealed that in absolute terms there has been little perspective in national assessments of environ- decoupling from the use and abuse of natural mental sustainability. Common to all papers is capital. New measures of wealth are under devel- their focus on renewable CNC in societal devel- opment, indicating, in contrast to measures of opment, an important focus in a biosphere in- GNP or the Human Development Index, that the creasingly driven by human action and in the light poorest countries of the world havedeveloped by of the relatively larger amount of work that has depleting natural capital relative to their high been put into analyses of nonrenewable natural population growth rates (Dasgupta and Ma¨ler, capital and sustainability. 2001), very much as the old industrialising coun- Critical renewable natural capital is often de- tries did during their phase of industrialisation and fined as that part of the natural environment that rapid population growth. Although complemen- performs important and irreplaceable functions. In tarity limits but does not exclude substitution, it the first contribution Ekins et al. seek to develop a seems that opportunities for substitutions have classification of CNC, and its functions, so that been more limited than many people assume. ‘environmental sustainability’ can be more clearly defined in operational terms. According to De 1.3. Critical natural capital: the CRITINC project Groot et al., the second contribution, natural capital can be critical because of its societal In what way and to what extent is natural significance without necessarily being threatened, capital critical in societal development? And how or it can be critical when threatened, although it can we capture criticality to make better decisions? may not be vital to human welfare, or it can be This special issue is about critical natural capital both important and threatened. Deutsch et al. (CNC) and addresses those challenges. It evolved argue that criticality is related to erosion of through a European Research project focusing on resilience in complex social/ecological systems. CNC (CRITINC) with researchers from France, They plea for monitoring ecosystem resilience and Germany, Italy, the Netherlands, Sweden and the performance and building understanding of criti- United Kingdom1. The first task of CRITINC’s cality into environmental indicators and manage- ment institutions to avoid undesirable state shifts. Chiesura and De Groot encourage a more com- 1 The full title of the CRITINC project was ‘Making plete accounting of the socio-cultural functions of Sustainability Operational: CNC and the Implications of a CNC like health, recreation, amenity, education, Strong Sustainability Criterion’. It was funded by (the then) heritage and the quality and sustainability of DGXII of the European Commission, Project Number PL9702076 of the EU Environment and Climate RTD human life. The tension between the appreciation

Programme*/ Theme 4: Human Dimensions Of of socio-cultural values of natural capital and Environmental Change. ecosystem contamination is analysed among 162 Editorial

French people in a cultural context in the con- Finally, we would like to record our thanks to tribution of Douguet and O’Connor. Finally, the European Commission for the grant which Ekins and Simon provide an application to the made the research possible. UK of the CNC framework. This involves classi- fying the characteristics of natural capital and the environmental functions to which it gives rise, and then defining standards of environmental sustain- References ability for these functions. Following the derivation of the CNC frame- Azar, C., Holmberg J., Karlsson, S., et al., 2002. Decoupling: work and its exploration from different perspec- past trends and prospects for the future. Report for the Swedish Environmental Advisory Council 2002:2, Ministry tives, each CRITINC institute then applied the of the Environment, Stockholm, Sweden, http:// ideas underlying the framework in undertaking a www.mvb.gov.se. case study of a particular issue of domestic Berkes, F., Folke, C. (Eds.), Linking Social and Ecological concern as follows: Systems: Management Practices and Social Mechanisms for Building Resilience. Cambridge University Press, Cam- bridge 1998. UK River systems of conservation Carpenter, S.R., Walker, B., Anderies, J.M., Abel, N., 2001. interest From metaphor to measurement: resilience of what to what. France Agricultural land and water Ecosystems 4, 765/781. resources Cleveland, C.J., Costanza, R., Hall, C.A.S., Kaufmann, R., Germany Forests 1984. Energy and the US economy: a biophysical perspec- tive. Science 255, 890/897. Italy Air quality Costanza, R., Daly, H.E., 1992. Natural capital and sustainable

Netherlands Coastal wetlands development. Conserv. Biol. 6, 37/46. Sweden Ecosystem functions in urban areas Costanza, R., Waigner, L., Folke, C., Ma¨ler, K.-G., 1993. Modeling complex ecological economic systems: towards an These case studies may be found on the CRI- evolutionary dynamic understanding of people and nature. 2 TINC website . Their conclusions are briefly BioScience 43, 545/555. summarised in the Conclusion to this Special Daily, G. (Ed.), Nature’s Services: Societal Dependence on Issue. Natural Ecosystems. Island Press, Washington, DC 1997. Each paper in this Special Issue needed to be Dasgupta, P., Ma¨ler, K.-G., 2001. Wealth as a criterion for sustainable development. World Economics 2, 19/44. able to stand alone so that it could be indepen- De Groot, R., 1992. Functions of Nature. Wolters-Noordhoff, dently assessed in the journal’s peer-review pro- Groningen, Netherlands. cess. This has inevitably resulted in a certain EEA (European Environment Agency), 1998. Europe’s Envir- amount of repetition of the key ideas and concepts onment: the Second Assessment, Office for Official Publica- that are common to all the papers, although we tions of the European Communities, Luxembourg. EEA (European Environment Agency), 1999. Environment in have sought to minimise this in subsequent editing, the European Union at the Turn of the Century, Environ- and provide appropriate cross-references. Overall, mental Assessment Report No. 2, EEA, Copenhagen. we hope that the papers’ consistency in their Ekins, P., 1992. A four-capital model of wealth creation. In: treatment of CNC, together with the diversity Ekins, P., Max-Neef, M. (Eds.), Real-Life Economics: Understanding Wealth Creation. Routledge, London/New which they also illustrate*/from conceptual devel- York, pp. 147/155. opment and framework creation to classification Holling, C.S., Meffe, G.K., 1996. Command and control and schemes and practical applications*/will provide the pathology of natural resource management. Conserv. food for thought and contribute to the improve- Biol. 10, 328/337. ment and better management of the natural capital Jansson, A.-M., Hammer, M., Folke, C., Costanza, R., 1994. basis on which future social and economic devel- Investing in Natural Capital: The Ecological Economics Approach to Sustainability. Island Press, Washington, DC. opment depends. Levin, S., 1999. Fragile Dominion: Complexity and the Commons. Perseus Books, Reading, MA. Limburg, K.E., O’Neill, R.V., Costanza, R., Farber, S., 2002. 2 http://www.keele.ac.uk/depts/spire/Working%20Papers/ Complex systems and valuation. Ecological Economics 41

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Norgaard, R.B., 1994. Development Betrayed: The End of London NW1 3SR, Progress and a Coevolutionary Revisioning of the Future. E-mail address: [email protected] Routledge, New York. UNEP (United Nations Environment Programme), 2000. Global Environment Outlook, Earthscan, London. Carl Folke Stockholm University, Stockholm, Sweden

Paul Ekins Rudolf De Groot Head of Enviroment Group Policy Studies Institute, Wageningen University, Wageningen, 100 Park Village, East The Netherlands