Glossary term

Natural Capital

Last Updated:

Number of definitions:

3

Definition 1

Natural Capital means the stock of elements of the natural environment [relevant to the Company OR Project OR Property] that (directly or indirectly) provides goods and services to [the Company OR Project OR residents OR community].

Definition 2

Natural Capital Asset means an individual or set of elements of the natural environment that (directly or indirectly) provides goods and services to [the Company OR Project OR Property] from time to time. [The relevant assets are listed in Annex [][, which will be updated [every year OR from time to time].]

Definition 3

Natural Capital Valuation means [insert method of valuation] used to measure the benefits derived from [Natural Capital OR Natural Capital Asset] relevant to [the Company OR Project OR Property].

Drafting notes and guidance

What is natural capital?

In general, natural capital refers to the world’s stock of natural assets, which does either of the following:

  • directly provide goods and services to humans; or
  • indirectly support the wider economy and society.

Natural capital is one of the five types of capital:

  1. natural capital;
  2. manufactured capital (such as machinery and buildings);
  3. financial capital (such as shares and banknotes);
  4. human capital (such as knowledge and skills); or
  5. social capital (such as levels of trust and connections among people).

If option 3 is used, the specific valuation method used to measure the benefits derived from Natural Capital will need to be determined by the contracting parties. However, examples of available methodologies which could be considered include:

  • the replacement cost method (based on the cost of replacing a natural benefit with a man-made replacement);
  • the travel cost method (based on the cost of visiting a natural benefit);
  • using a contingent valuation (based on individuals’ willingness to pay for a natural benefit); or
  • the Natural Capital Protocol framework (a standardised decision-making framework for carrying out natural capital assessments).
Is this page useful?

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply

This field is for validation purposes and should be left unchanged.