Natural Assets

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How do you measure a natural asset?

“Accounting for Environmental Assets,”

Robert Repetto

Scientific American, June 1992, pp. 94 - 100.


Keynesian analysis | Table of assets and debits | Costa Rican case | summary | Siry commentary


“Impoverishment is taken for progress.”

Problem with the UN System of National Accounts (SNA)

[There is also a problem with measuring gross Domestic Products or GDP]

“completely ignores the crucial environmental changes of our times: the marked degradation of natural resources in much of the the developing world and the growing pressures on global life support systems such as climate and biological diversity.

“By failing to recognize the asset value of natural resources, the accounting framework that underlies the principle tools of economic analysis misrepresents the policy choices nations face.”

Costs benefits asset class
debit credit earth capital
< genetic variety
soil erosion
> nutrients
aquifer pollution
wetland creation
> wildlife
surface pollution
sewage treatment
> fish
wildlife extinction
hunting reserves
fisheries depletion
< genetic variety
air pollution
respiratory health

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Keynesian analysis for the most part ignored the productive role of natural resources, so does the current system of national accounts.” (94)

“there is a dangerous asymmetry in the way economists measure, and hence the way they think about the value of natural resources.”

“Buildings, equipment and other manufactured assets are valued as income producing capital, and their depreciation is written off as a charge against the value of production. This practice recognizes that consumption cannot be maintained indefinitely simply by drawing down the stock of capital without replenishing it. Natural resource assets, however, are not so valued. Their loss, even though it may lead to a significant decrease in future production, entails no charge against current income.” (96)

“Although the model balance sheet in the U.N. SNA recognizes land, minerals, and timber as economic assets to be included in a nation’s capital stock, the SNA income and product accounts do not.” (96)

“Ironically, low-income countries, which are typically most dependent on natural resources for employment, revenues and foreign exchange earnings, are instructed to use a national accounting system that almost completely ignores their principle assets.”

“Behind this anomaly is the mistaken assumption that natural resources are so abundant that they have no marginal value.”

“Another misunderstanding is that natural resources are ‘free gifts of nature,’ so that there are no investment costs to be written off per se. The value of an asset, however, is not its investment cost but the present value of its income potential.”

“The true measure of depreciation is the capitalized present value of the reduction in future income from the asset because of its decay or obsolescence.

In the same way that a machine depreciates as it wears out, soils depreciate as their fertility is diminished, since they can produce the same crop yield only at higher cost.” (96)

“One of the hemisphere’s highest rates of deforestation (Costa Rica) has led to the loss of 30% of the country’s forests. Furthermore, most of the forest was simply burned to clear land for relatively unproductive pastures and hill farms, sacrificing both valuable tropical timber and myriad plant, animal and insect species. Because most of the area converted from forest was unusable for agriculture, its soil eroded in torrents. Losses averaged more than 300 tons per hectare from land use to grow annual crops and nearly 50 tons per hectare from pastures.” (96-97)

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“Because forests, fisheries, farming and mining directly account for 17 percent of Costa Rica’s national income, 25 percent of its employment and 55% of its export earnings, this destruction caused severe economic losses....Yet nothing in Costa Rica’s national economic accounts records these economic losses.” (97)

“The experience of other developing countries for which natural resource accounts have been compiled parallels that of Costa Rica. In the Philippines, for example, annual losses resulting from deforestation averaged 3.3 percent of the GDP between 1970 and 1987....This pollution, together with over fishing, wiped out all profits by 1984. Although the nation’s accounts showed a mounting external debt, they gave no sign of destruction in productive capacity that made paying back that debt more unlikely.” (98)

“Indonesia’s natural resource accounts show that between 1977 and 1984 the depletion of natural resources totaled 19 percent of GDP.... Once again, conventional accounting methods show no sign of this impending danger.” (100)

In subsequent studies, Repetto and his colleagues have estimated the value of natural functions or ecosystem services to be somewhere in the realm of $33 trillion per year in terms of what the human economy would have to spend to replace natural systems in order to sustain our population's demand for comfort, cleanliness and conveniences.

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More sources. redshift

Another story about how we don't get it concerning nature

by Joseph Siry

We are not the sentient creatures that we think we are, because we were programmed to survive, but to comprehend the natural system of which we are part. But now the question arises can we transcend our ancestry and embrace a more selfless vision of the world. A vision that is beyond the apparent.


This question tests how we symbolically represent our experiences of the world to ourselves. We do this so that we survive when we compare our impressions with competing observers' perceptions. All human creatures symbolically represent the world to themselves and others if they are taught how to portray what they sense about the world to others. We do this so that we convey information about our surroundings to the people we need to jointly subdue the world.

Our development of language occurred with great risk. To just speak we risk choking to death because our wind pipe and our gullet share the same space at the backs of our throats. Dolphins do not breathe through the same space in which they ingest food, but we alas do. Our speech requires us to think and our thoughts are adorned with a rich symbolic imagery of the world we sense. But how much of the world that we inhabit do we sense? How sensible is the imagery we create from these sensations?

We cannot fully express the depth of our encounter with the world and its various living things, But we still hope tell one another stories about nature. Yet we are wise to be very careful to use terms, stories and symbols that fully reflect the contradictory interpretations of nature which people, families and social groups are prone to imagine and reinforce in their sharing of their stories about nature.

Our journey is fraught with difficulty because of the unseen and unanticipated facets of natural conditions which escape the attention of the less attentive observers. Most people fear the natural conditions into which we are born, fewer still understand the dependence we have inherited from our ancestors on the germs, the bugs and the slime we often overlook. Blue green bacteria for example are among the few creatures that can acquire nitrogen from the air and use it to create and sustain life. We cannot, nor can plants and animals, obtain nitrogen from the atmosphere where it exists in abundance. But do our stories explain this adequately to those who think that success rests on conquest and control of nature?

We are trapped in our delusions if we think the world needs us. Rachel Carson said as much, but not enough people have learned the lessons of ecological adaptive behavior. Blue green bacteria have survived for three billion years and we have for a mere 300,000, so who knows more? Aldo Leopold suggested that mountains, because of their age, know things we can merely imagine we understand. So can we appreciate what the bacteria know of the world, can we attain the awareness of a virus?

Most people disdain the insignificant forms of life that people the earth. But why? Are we so dominant and powerful that we may ignore the creatures who made this world when humanity was still emergent in the loin, genes and mind of a lemur or gibbon's ancestor? We have not recognized our vulnerability because humans lack the humility necessary to fathom the mysteries of our creation.

Herman Hesse once suggested that reality is a game and we the mere comedic relief in the cosmic joke the gods tell one another. This neither means that a game is less important than reality, nor that a joke is less important than a serious observation -- truth may inhabit both the comedic and the tragic views of life.

The world is a gift to us since fortunate are we to find ourselves in the midst of a water cooled and gas heated planet that harbors more life in a few meters of earth, air and water than we could possibly account for, let alone explain. In this unwelcoming cosmos there is more here in heaven and earth than anywhere else in the gravitational immensity of the solar system. This is because the molten interior of nickel and iron surfacing as magma in volcanoes is so dense that it can assist in holding the world we need steady enough for us to inhabit a fair province we call "terra firma."

Life proliferates here because it is maintained by creatures that have descended from ancient lines that have absorbed the difficulties and regurgitated a breathable atmosphere simultaneously. While the oceans have tempered the heat and cold to which the earth is prone, life has made a habitable place out of an otherwise highly risky planet. If only the extinct trilobites and dinosaurs could speak to us we might understand how much we owe to the slime molds, the scum and the fungus that absorbs the world and spits out nutrients used by the green vegetation to convert sunlight and water into sugar. Indeed the insects made the flowers in this land the Bible calls filled with "milk and honey." We are indebted more than we can ever know, let alone repay or explain to those who think we dominate life on earth.

Life has grabbed a stubborn and uncommonly tenacious hold on the character and descendants of this planet's myriad assembly of living creatures. We owe our survival, our comforts, and our challenges to this life from single cells, to flowering plants and the unfathomable variety of natural living things.

If we are able to explain the subtle dependencies that exist on Earth and allow us to persist, humans may yet become responsible caretakers of the planet. But now we are in a race between delusions and understanding because our powers are more far more destructive than our mental and emotional ability to reasonably comprehend our actual condition.

What is natural capital?

Natural assets as valued lands.

Value of forests and water to cities.

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