Natural Capitalism

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Natural Capitalism
By Jennifer ITO 18 April 2002 Room 224,
Engineering Building 2, The University of Tokyo,
Hongo
Capital Gains
By Paul Hawken
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Our EARTH
6 billion people
36 billion ha of ocean and coastal habitats
15 billion ha of terrestrial habitats
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The Earth Cycles Resources and Energy
Life
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Life Human Activity
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TREND
Increasing affluence of all societies
x
Increasing human population
Further sequestration of Earths energy and
resources
Encounter limiting factors
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Limiting Factors

• prevent growth and/or survival of a system
• historically, when shortages or limiting
  factors were encountered, countries responded
  with large-scale restructuring of their economies
  (slavery in response to labour shortages,
  industrial revolution in late 1800s, discovery of
  new energy sources, etc.)

Natural resources and energy reserves are
becoming new limiting factors.
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Capital Stock
1. Manufactured Capital 2. Human Capital 3.
Knowledge and Information Capital
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Some Major Ecosystem Services
Gas and Climate Regulation Water
Regulation Nutrient Cycling Habitats Food
Production Genetic Resources Aesthetics etc...
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Value of Earths Ecosystems
Marine Systems 20.9 trillion USD/yr (oceans,
coastal systems) (avg. 577/ha/yr) -
coastal estuaries 22,823/ha/yr Terrestrial
Systems 12.3 trillion USD/yr (forest,
grasslands, wetlands, lakes, deserts, tundra,
etc.) (avg. 804/ha/yr) - wetlands and
floodplains 7,924/ha/yr
Estimated Price of the Planet
33 trillion USD/yr
Costanza et al. (1997), Nature, 387253-260
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Biosphere 1
Cost 200 million (USD)
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Need for a New Outlook

Income
The maximum amount that a community can consume
over some time period and still be as well off at
the end of the period as at the beginning.
(J.R. Hicks, 1946)
Assumption natural capital was unlimited,
therefore only the human-made capital that went
towards income generation was considered.
We must value both human-made AND natural capital.
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Investing in Natural Capital

• to maintain living standards for current and
  future generations
• must change incentives for business to bring
  about behavioural change in favour of maintaining
  or augmenting stocks of natural capital.

HOW?
Restructure tax and subsidy systems
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Current Tax/Subsidy System
products
Consumers
Industry
Government
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Perverse Subsidies
Subsidies that result in a negative outcome by
acting as disinvestments, leaving the environment
and the economy worse off than if the subsidy had
never been granted.
Examples 1. German coal mining subsidies 2.
American auto industry subsidies 3. Worldwide
use of agricultural subsidies
Taxes
Most tax revenue comes from personal income tax,
social security levies, and corporate income tax.
Result businesses stop hiring.
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Tax Waste, Not Work
Hammond, J., 1997
Production of waste, toxins and use of primary
resources
Work and income
Businesses become more efficient, produce less
waste and harmful byproducts, increase material
and energy recycling, and use fewer primary
resources.
Reduced payroll taxes, encourage hiring by
businesses.
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New Tax/Subsidy System
products
Consumers
Industry
subsidies
- community development, social programs, etc.
Government
taxes
- fossil fuels, harmful chemicals, etc.
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Paul Hawken
Paul Hawken is co-founder of The Natural
Step-International, a non-profit educational
foundation whose purpose is to develop and share
a common framework comprised of easily
understood, scientifically based principles that
can serve as a basis to move society toward
sustainability As a consultant, Mr. Hawken is
currently working with companies, island nations,
and educational institutions.. and ..serves on
the board of many environmental and nonprofit
organizations.
Natural Capitalism Website www.natcap.org