Natural capital and ecosystem functions: exploring the ecological basis of the economy

Abstract

Natural capital and ecosystem functions: exploring the ecological basis of the economy.

Natural ecosystems provide both resources and act as a sink of wastes generated by the economic system. Other benefits are obtained directly from nature without passing through transformation processes or the mediation of markets, as in the case of clean air. Economic health in the long term thus depends on the maintenance of the integrity and resilience of the natural ecosystems in which it is embedded. The fact that standard economic theory neglects this aspect has been identified as a main cause of the current environmental problems and ecological crises. Approaches such as ecological and environmental economics attempt to deal with these shortcomings of standard economics through the development of concepts and accounting methods that better reflect the role of nature in the economy and the ecological costs derived from economic growth. Concepts such as natural capital, ecosystem functions and ecosystem services are playing a key role in the articulation of a new form of understanding economics. This paper will give a brief overview of these concepts and discuss possible ways to measure their importance (value).