Natural Capital

Natural capital forms the essential foundation of economic activity, driving growth and supporting employment across sectors. Defined as the world’s stock of natural resources—including forests, water, soil, minerals, and biodiversity—natural capital is fundamental to job creation, particularly in developing economies. Nearly half of the world’s gross domestic product (GDP) is linked to biodiversity and the broad range of benefits known as ecosystem services.

Key sectors—such as agriculture, forestry, fisheries, aquaculture, utilities, construction, and energy—are highly dependent on ecosystem services. However, critical renewable natural capital, like forests, wetlands, and marine ecosystems, is in decline. This downward trend results from land use changes, overexploitation, pollution, climate change, and other human-driven pressures, leading to a reduction in vital ecosystem services. These services include provisioning resources (timber, fish, clean water, crops), regulating functions (flood control, erosion mitigation, pollination, climate regulation), and cultural benefits (recreation and heritage).

Natural Capital Accounting (NCA) offers a systematic approach to measuring and valuing natural resources alongside traditional economic indicators. NCA compiles objective data on the stocks and flows of natural assets, highlighting both their economic contributions and the impacts of economic activities on these resources over time. By providing detailed sectoral accounts—such as water, energy, and pollution—NCA enables better economic management and scenario planning for sustainable growth. For instance, land and water accounts support assessments of competing land uses, helping to optimize decisions like expanding agricultural production while maintaining ecosystem integrity.

The adoption of the System of Environmental-Economic Accounting (SEEA) by the United Nations Statistical Commission in 2012 marked significant progress, establishing a standardized international framework for accounting for material resources. Through NCA, countries can weigh the value of ecosystem services, such as those provided by forests and wetlands, against infrastructure development, supporting more informed and balanced policy decisions. Integrating natural capital into national accounting systems ensures that the value of nature is visible and considered in economic planning and policy development.

Natural capital is a cornerstone of sustainable development and economic resilience. The World Bank Group works to embed nature in economic systems to safeguard prosperity and resilience.

Recognizing that nature underpins half of global GDP, Bank research shows that a partial ecosystem collapse could cost the global economy $2.7 trillion annually by 2030, with low-income countries facing GDP losses of up to 10% per year. This risk drives the Bank’s commitment to integrate nature into economic decision-making through Natural Capital Accounting (NCA) and the System of Environmental-Economic Accounting (SEEA) framework.

• Integrating Nature into Policy and Finance: The World Bank advances the inclusion of natural capital in national planning and economic models, ensuring that environmental considerations are embedded in fiscal and monetary frameworks through programs like the Global Program on Sustainability
• Robust Data and Analytics for Sustainability: The Bank offers comprehensive datasets and digital tools—such as the Natural Capital Data Hub and Sovereign ESG Data Portal—to enable governments to measure national wealth to complement GDP and evaluate sustainability risks and opportunities.
• Innovative Solutions and Global Partnerships: By financing nature-based solutions and collaborating with international organizations, the Bank promotes ecosystem restoration, disaster risk reduction, and the integration of biodiversity into economic strategies, benefiting both vulnerable communities and the environment.

By using standardized accounting, comprehensive data, and integrated policy support, the Bank is working to shift development strategies so that natural capital is treated as a fundamental asset for inclusive and sustainable growth, and used in key policy and investment decision making.