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What is natural capital and how does it influence economic decisions?

What is natural capital and how does it influence economic decisions?

Natural capital is a term that refers to the value of natural resources and ecosystems. It is a concept that is becoming increasingly important in economic decision-making as it recognises the economic value and role of natural resources and ecosystems.

Natural capital includes natural resources such as forests, water resources, soils and biodiversity. It also includes ecosystem services such as water and air purification, carbon sequestration and the provision of natural habitats.

Natural capital plays an important role in economic decisions. Resource depletion and ecosystem degradation can have negative impacts on the economy. For example, if deforestation is excessive, the services provided by forests, such as timber production or carbon sequestration, may be reduced. This can have negative long-term effects on economic growth and sustainability.

Natural capital influences economic decisions by raising awareness of the value of natural resources and ecosystems. This allows decision-makers to integrate natural capital into economic planning and policy decisions. For example, recognising the value of natural capital allows for appropriate pricing and regulation of resource use and the promotion of sustainable economic development.

The link between natural capital and economic decisions is becoming more pronounced due to the recognition of the importance of sustainable development and environmental protection. Preserving and maintaining natural capital is key to long-term economic stability and sustainability.

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