What Is Natural Capital?

Natural capital refers to the natural resource stocks (such as land and water) and environmental services (such as the water cycle) from which resource flows and services that are beneficial to livelihoods can be derived. Natural capital includes not only resources used by humans, such as water resources, minerals, and timber, but also forests, grasslands, swamps and other ecosystems and biodiversity.

Natural capital

In September 2013, when General Secretary Xi Jinping visited Kazakhstan's Nazarbayev University, he once again proposed, "We want both green water and green mountains, and golden mountains and silver mountains. And green water and green mountains are the golden mountains and silver mountains." The value of Shui Qingshan is precisely the goal and purpose advocated by the new economy and natural capital in the future. Natural capital is one of China's new growth drivers in the future. The emergence of natural capital,

On the one hand, in the traditional development model, financial capital and natural capital are reversed, and the expansion of financial capital leads to the contraction of natural capital. To change this situation and turn the reverse development into a co-coupled, co-directional, mutually beneficial development, change the traditional development model and attach importance to investment in natural capital.

On the other hand, investing in natural capital is an important part of sustainable development. It has both a direct role in promoting economic growth and a non-economic role. Its benefits have two aspects: first, in the so-called source of economic and social system imports, increase the natural capital resource supply capacity, including water, land, energy, timber and other natural resources. The second is to improve the environmental adjustment function of the so-called sink of the economic and social system, and to improve the ecological support function and cultural pleasure function as the background of human society.

In real life, people can also feel that the greater the stock of natural capital, the greater the economic safety factor and development prospects. From an international perspective, since the international financial crisis in 2008, the United Nations has advocated a Green New Deal and a green economy, which is to adopt a method of investing in natural capital for economic recovery, and guide the world into a new model of green growth through the Green Keynes New Deal. But this is still a serious concern in current mainstream economics.

Investing in natural capital includes traditional environmental governance, which goes beyond traditional environmental governance. Environmental governance is a passive "burning money" thing, which mainly solves the problem of negative externalities caused by economic growth; while investing in natural capital is an initiative with economic benefits, it is necessary to use the positive externalities of natural capital to create new momentum for economic growth. In addition to subtracting GDP, we also need to add to increase the total integrated capital for regional development. ^[1]

If natural resources are to be regarded as a kind of capital, a system must first be established to find out the bottom line of natural resources and judge the value of natural resources. At the Future New Economy Summit in February 2014, the research results of China s first prefecture-level citySanya s natural balance sheet were released. The value of Sanya's natural resources is about more than 200 billion yuan, more than five times the city's 2014 GDP.

According to Professor Shi Han, Deputy Director of Environmental Policy, Department of Public Policy, City University of Hong Kong, the Natural Resources Balance Sheet divides Sanya's investable natural resources projects into three categories: the first category is economic growth and negative natural capital growth projects, such as some damage Natural environment real estate projects; the second category is the coordinated growth of economic and natural capital projects, such as the Nanshan Scenic Spot project in Sanya; the third category is a large increase in natural capital, but a small economic growth, such as drinking water protection projects.

Li Baiqing, deputy mayor of Sanya City, said in his speech that the balance sheet of natural resources in Sanya prepared through comprehensive research and demonstration is a profound and comprehensive physical examination of Sanya's natural environment. It is necessary to prevent possible risks of urban development, Exploiting the potential of urban sustainable development has positive significance. ^[2]

"Shanghai Declaration on the Future of the New Economy of Natural Capital" Published

In order to promote the cooperation between financial capital and natural capital, the German-Institute of Environmental Finance and Finance (IGI) and a number of top experts issued the Shanghai Declaration on the Future of the New Economy of Natural Capital, calling on all localities to design natural capital The new economic system of the future. Focus on selecting regions and sectors where natural capital is scarce and restricting economic growth, and guide financial capital to invest in key natural capital by compiling and publishing natural resource balance sheets.

"In the past, everyone thought that natural capital was purely a public good, owned by the government and hoped that the government would pay for the return on investment in natural capital. In fact, the government's money comes from the people." Director of the Institute of Sustainable Development and Management, Tongji University Professor Zhu Dajian said, "The economy always grows through the consumption of nature. Is there a red line for this consumption? What parts of natural capital can be marketed? What parts are to be adhered to? Pure public goods are to be adhered to by the government. What parts can be used as market transactions? These require in-depth research and discussion. "

He believes that the Shanghai Declaration on the Future of the New Economy of Natural Capital proposes green finance and green investment to promote the cooperation between financial capital and natural capital, explore a new economic model for sustainable development, and build a new natural capital economic system with investment value. The framework of action and basic propositions have important reference value for developing China's new normal economy. ^[2]

The new economy or green economy of natural capital includes two aspects: increasing resource productivity and investing in natural capital. China, through ecological civilization, needs to improve resource productivity and invest in natural capital in four development areas:

The first area is new-type urbanization: now that new-type urbanization is being carried out, paying attention to natural capital is the proper meaning in the title. On the one hand, it is necessary to increase the productivity of resources such as water, land, energy, and materials; on the other hand, it is necessary to invest in natural capital or green infrastructure. From a spatial perspective, China's urbanization natural capital thinking must have three dimensions. At the macro level, most of China s urbanization is concentrated east of the Hu Huanyong Line, so there is a problem of natural capital investment in the whole country. At the meso level, China s urbanization mainly adopts the city-region model of large, medium and small city clusters. Regional significance of natural capital investment issues;

At the micro level, China's urbanization should pay attention to the coordination of production, life, and ecology, so there is a problem of natural capital investment of urban significance. Especially for cities with rapid economic growth and great environmental damage in the eastern coastal regions, investing in natural capital is to reverse the economic growth and sacrificing the ecological environment. For cities with slow economic growth and environmental advantages in the central and western regions, investing in natural capital must have ecological and environmental advantages The issue of economic and social advantages. In general, the goal of China's new urbanization is to enable the two different regions of low economic growth, high natural capital, high economic growth, and low natural capital to eventually enter a state of sustainable development with high economic levels and high natural capital. .

The second area is the circular economy with Chinese characteristics: the circular economy is to turn the original one-way process of material consumption into a circular process. Since natural capital is so scarce, can it go from import to export and all of it become a circuit? the process of? This is a strategic thinking with transformative significance. It includes replacing environmentally unfriendly materials with environmentally optimized materials, improving material resource productivity, and so on. During the "Twelfth Five-Year Plan" period, China's regard of the circular economy as an important part of ecological civilization has received widespread attention from the international community. The World Economic Forum established a global agenda council on circular economy in 2014, and is also organizing global experts to study China's practices, policies and cases.

The third area is low-carbon development: new energy replaces traditional carbon-based energy, in a way it invests in natural capital; and improving the energy efficiency of the three sectors of industry, transportation, and construction, that is, increasing energy productivity and carbon productivity .

The fourth area is that Chinese people s consumption patterns are going green: with the decline in the supply of natural capital, such as the deterioration of resources and the environment, people s demand for ecosystem services is increasing; as incomes and living standards improve, people s The ability to pay is also increasing.

The fifth area is investment in natural capital that requires governance capacity change: investing in natural capital requires research and promotion of PPP models, namely public-private-partnership and public-private-people. This is not simply a matter of Instead of repeating the single path of government regulation or market mechanism, it is about the modernization of government, enterprise, and social cooperation regarding governance of natural capital.

Between natural capital and economic development, China will also form a "dual growth model" in the future, emphasizing the coordinated development of economic growth and natural capital. Increase investment in natural capital, governance and restoration of the environment, and give full play to the role of natural capital investment in promoting GDP and social welfare. Inject green power into regional economic growth and sustainable development. Eventually achieve double growth of natural capital and GDP.

However, not all natural capital is worth investing in. On the basis of natural capital accounting, the German Rice Environmental Finance Institute (IGI) tried to use the value matrix analysis method to find the most important and most sensitive to sustainable development in various places, the key to promoting GDP and the high marginal effect Natural capital is used as a priority investment object to maximize the overall potential of local economy, society, and the environment. ^[3]