What Are Natural Assets and Why Are They Important?

Natural assets represent the Earth’s natural resources and ecological systems providing benefits to humanity. These assets form the bedrock for all life on the planet, underpinning environmental stability and economic activities. They are the natural capital from which societies derive goods and services, making their understanding highly significant for human well-being and prosperity.

Understanding Natural Assets

Natural assets encompass renewable and non-renewable resources that generate benefits. These are part of Earth’s systems, distinct from human-made or financial assets. Unlike manufactured infrastructure, many natural assets can self-renew if managed sustainably, delivering services beyond tangible goods.

Examples include forests, oceans, freshwater systems, and fertile soil. Clean air, biodiversity, and mineral resources constitute natural assets. These assets provide raw materials and environmental conditions for life, often reducing the need for costly human-engineered solutions.

Essential Contributions to Life

Natural assets provide benefits, often categorized as ecosystem services, important for human well-being.

Provisioning services are products obtained from ecosystems: food, fresh water, timber, and genetic resources. Agricultural lands provide crops, and forests supply wood.

Regulating services maintain environmental conditions, including climate regulation, flood control, and water purification. Wetlands, for instance, filter water and mitigate flood impacts. Pollination, often by insects, supports reproduction of nearly 90% of flowering plants and 75% of crops globally.

Cultural services offer non-material benefits: recreation, spiritual experiences, and aesthetic appreciation. They include nature-based tourism, educational engagement, and fostering a sense of place. These values, while abstract, contribute significantly to quality of life and community resilience.

Supporting services are foundational processes enabling other ecosystem services to function effectively. These include nutrient cycling, recycling elements like nitrogen and phosphorus, and soil formation, creating the substrate for plant growth. Primary production, where plants convert sunlight into energy, sustains entire food webs.

Valuing and Managing Natural Assets

Recognizing the multifaceted value of natural assets beyond raw material worth is important for sustainable development. Economic valuation assigns monetary values to ecosystem services, estimating cost savings from natural flood protection compared to engineered solutions. Natural capital accounting integrates environmental data into economic reporting, helping decision-makers understand costs and benefits.

Ecological valuation considers the intrinsic worth and functional integrity of ecosystems. Social and cultural valuation acknowledges non-monetary benefits related to human well-being and cultural identity. Globally, natural assets contribute benefits worth at least $125 trillion annually, highlighting their substantial economic impact. Without proper valuation, these assets can be exploited for short-term gains, leading to long-term environmental degradation and economic losses.

Sustainable management practices and conservation efforts ensure the long-term health and continued provision of services from natural assets. This involves implementing policies that align development with natural systems, such as reducing groundwater allocation to protect wetlands. Governments, businesses, and communities incorporate natural asset considerations into decision-making, moving towards nature-based solutions for climate change adaptation and infrastructure development.

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