Natural capital accounting
Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Beyond NCERT
Meaning
Natural capital accounting records a country's natural resources and the services nature provides, such as clean water or fertile soil. It records how much of each exists (stocks) and how much is used up or added each year (flows), alongside the national accounts. This shows how much the economy depends on nature and how much of it is being used up, which GDP does not show. It follows the UN's SEEA (System of Environmental-Economic Accounting). SEEA has a Central Framework (2012) and SEEA Ecosystem Accounting (2021).
Example
MoSPI publishes India's natural capital accounts in EnviStats India, every year since 2018, following SEEA. Earlier, an expert group led by Partha Dasgupta gave India a framework for green national accounts in 2013.
Don't confuse with
- Green GDP: this is one adjusted figure, GDP or NDP minus the loss of natural resources and environmental damage. Natural capital accounting is the detailed record of stocks and flows that such figures are built from.
Related concepts
- GDP and welfare
- Non-monetary exchanges
- Green GDP
- System of Environmental-Economic Accounting
- Inclusive wealth
- Genuine Progress Indicator
- Beyond GDP