Natural Capital: how commodifying nature changes our understanding of it

Sustainable Leaders | Global

By Julia Riopelle, Co-Editor in Chief

Published May 25th, 2022

As we head towards a 2.4°C warmer climate, policymakers and conservationists continue to pioneer methods to try to protect biodiversity and mitigate climate change. One of these methods, promoted by the Natural Capital Project and the United Nations, is commodifying nature in order to save it.

The aim of this tool is to provide an economic incentive to protect nature—or natural capital—by directly comparing the financial value of conserving or restoring ecosystem services versus developing them. The idea is to establish scientific evidence to investors, demonstrating that the services that ecosystems provide may actually be more financially beneficial to them than if they were to develop on the land.

Rather than investing $8 to $10 billion on constructing a water filtration plant, New York City invested around $1.5 billion into the ecological preservation of the Catskill/Delaware watershed, which if protected, naturally provides clean drinking water to New York residents. The City did this by privatising land upstate, in order to protect the watershed from development and pollution. | Gerald Berliner / Unsplash

The rise of the neoliberal ideology during the 1990s was closely tied to the privatisation of natural resources, as well as the marketisation of the environment in order to protect it. This approach has received both support and criticism, calling into question our fundamental view of nature itself and, subsequently, how we manage it.

Historically, scientific research and intrinsic arguments were used to justify conservation policy, however, these alone have shown to be insufficient. The ecosystem services framework (ESF) provides a cost-benefit analysis of such services and according to Turner and Daily (2007), is able to ‘delineate socio-economic and political contexts.’

The wide adoption and implementation of natural capital by the IUCN, UNEP, and countless other institutions as a method to conserve biodiversity shows that our understanding of political ecology, and nature itself, has become that of an economic one.

‘Our understanding of political ecology, and nature itself, has become that of an economic one.’

As Professor John Henneberry (2018) explains: ‘in a neoliberal world where the market is the dominant mechanism for distributing scarce resources, those assets that cannot be priced and traded are either undervalued or overlooked. Putting a price on nature allows it to be included in the market calculus and, thereby, to be noticed.’

The Natural Capital Project argues against the perception that natural capital continues to ‘crudely’ commodify nature. Farrell et al. (2021), in collaboration with the Natural Capital Project, argue that ‘natural capital approaches shine a light on these many values of nature, in biophysical, social, health, and economic terms.’

Whilst the concept of natural capital still places human well-being at its core—simply seen through the phrasing of ‘ecosystem services’ as nature solely functioning to serve humans—Ernst Schumacher (1973) challenged the neoliberal assumption that exponential market growth is good and promoted natural capital as a method to limit human overconsumption. Anderson and Leal also support that ‘market environmentalism is the only viable solution towards the protection of environmental resources.’

Can economic development and neoliberal market expansion coincide sustainably with conservation objectives? | Robert Bye / Unsplash

However, do the theoretical underpinnings surrounding natural capital and the ESF accurately translate into a practical setting? In order to commodify goods, they need to be distinguishable and distinctive. According to Adams (2014), the ESF attempts to distinguish ecosystem services via (1) determining which biophysical processes deliver ecosystem services, (2) how ecosystem services can be valued as an economic good, and (3) whether these goods have a net benefit towards human well-being.

Although there are advantages to producing comprehensible numbers for policymakers and beneficiaries, there are fundamental issues with simplifying and categorising the interconnected complexity of nature. Ordinarily, commodities can be taken out of their original context and exchanged in markets, however, one cannot assign a monetary value to ecosystem services in the same way.

Additionally, this framework proves that natural capital does not necessarily mean conservation is at its forefront. In order to evaluate what encompasses an ecosystem service, one needs to assess how many species and how much genetic diversity can be lost until an ecosystem no longer provides a service. George Monboit from The Guardian, a strong opposer of bioprospecting, argues that our neoliberalist obsession towards the economisation of everything means that we no longer view nature as worth conserving for its own sake.

‘Our neoliberalist obsession towards the economisation of everything means that we no longer view nature as worth conserving for its own sake.’

Some may also argue that another conceptual flaw of privatising and commodifying nature via property rights is biodiversity offsetting. Although a beneficiary is liable to environmental destruction, they can still develop or extract resources from their land as long as the ecosystem service is ‘reconstructed’ elsewhere.

However, this is not always so easy in practice. In terms of replanting forests, immediate conservation goals would fall short, as a study by Heinrich et al. (2021) found that it takes 50 to 100 years for secondary forests to reach the same aboveground carbon potential as old-growth primary forests.

Natural capital aims to provide a win-win situation for both conservationists, states and corporations. Private capital is able to close the funding gap towards conservation and in turn investors gain from the services nature provides free-of-charge. However, some argue that the shift in the rhetoric surrounding how expansive capitalism uses nature to how it conserves it, and according to Dempsey and Suarez (2016) it essentially rewards people who refrain from destroying nature.

Tropical forests in Southeast Asia are popular investments in carbon offsetting projects. Pictured is a tropical forest in Darjeeling, India. India is the largest host of afforestation and reforestation projects for carbon offsetting schemes. | Boudhayan Bardhan / Unsplash

Adaman and Madra (2014) highlight both sides of this argument: ‘on the one hand, […] economic rent-seeking and slackness are seen as endemic problems in the political control of natural resources; on the other, competition in the marketplace […] provides a powerful incentive for actors to acquire and discover information needed to […] manage natural assets.’

Whilst natural capital displays biodiversity as a business opportunity, in a world where free-market behaviour is unlikely to change soon, it may be the most effective way to conserve what is left. Although many may argue that the natural capital framework reduces nature to an asset, it is not much different to how it has been used before.

Nature has always been consumed for human purposes, without regard for the destruction left in its wake. Natural capital simply places the environment into an economic and political framework and allows it to be recognised as a serviceable good worth investing in.

Featured Image: Jaanus Jagomägi | Unsplash

Adaman F. And Madra Y. (2014) Understanding Neoliberalism as Economization: The Case of Ecology. Global Economic Crisis and the Politics of Diversity. Pages 12-14.

Adams W. M. (2014) The value of valuing nature. Science—Perspective Conservation. Volume 346, issue 6209, pages 546-550.

Apostolopoulou E. and Adams W. (2015) Biodiversity offsetting and conservation: reframing nature to save it. Cambridge University Press. Volume 51, issue 1, pages 23-28.

Bresnihan P. (2017) ‘Valuing Nature—Perspectives and Issues.’ National Economic & Social Council. Page 6.

Dempsey J. and Suarez D. (2016) Arrested Development? The promises and paradoxes of ‘selling nature to save it.’ Annals of the American Association of Geographers. Volume 106, issue 3, pages 656-657.

Farrell C., Aronson J., Daily G. et al. (2021) Natural capital approaches: shifting the UN Decade on Ecosystem Restoration from aspiration to reality. Restoration Ecology. Pages 1-6.

Heinrich V., Dalagnol R., Cassol H. et al. (2021) ‘Large carbon sink potential of secondary forests in the Brazilian Amazon to mitigate climate change.’ Nature Communications. Volume 12, issue 1785, page 3.

Henneberry J. (2018) ‘How the neoliberal obsession with valuing nature changes our understanding of it.’ (WWW) The Conversation (; 13 November 2021)

Marris E. (2009) ‘Putting a price on nature.’ Nature. Volume 462, pages 270-271.

Turner R. and Daily G. (2007) ‘The Ecosystem Services Framework and Natural Capital Conservation.’ Environmental and Resources Economics. Volume 39, page 26.

Turnpenny J. And Russel D. (2017) ‘The idea(s) of ‘valuing nature: insights from the UK’s ecosystem services framework.’ Environmental Politics. Volume 26, issue 6, pages 974-975.

Voora V. A. and Venema H. D. (2008) ‘The Natural Capital Approach: A Concept Paper’. International Institute for Sustainable Development. Page 9.

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