Natural capital includes means of production that come naturally from the land, such as plants, animals, soil, minerals, water, and air. It can be divided into renewable and non-renewable capital, with sustainability being a concern when using natural means of production in business. Bioeconomics focuses on studying how much natural capital is needed to sustain a specific standard of living and finding ways to replace depleted natural resources.
Within the framework of capitalism, capital is the manufactured means of production. At a broad level, natural capital includes means of production that come naturally from the land. Plants, animals, soil, minerals, water and air are examples. At a time when sustainability and the preservation of the environment are important global issues, a complete understanding of natural capital requires an explanation of its role as critical capital and a division of renewable and non-renewable capital.
Critical natural capital refers to capital harvested from the natural environment necessary for life to persist. Sustainability becomes the main concern when natural means of production are used in a business. When depletion or overuse of natural sources of capital occurs or nearly occurs, essential life support systems and ecosystem functions can be endangered. Awareness of the level of sustainability of different sources of capital in the environment leads to the division of renewable natural capital and non-renewable natural capital.
Renewable natural capital can be described as capital that provides a continuous flow of goods and services. For example, when a forest is harvested, its trees can be used to produce paper, housing, or a variety of other wood products. Trees can be replanted or the same land can be used as a park or as a building site for businesses and homes. It is important to note that if the usage rate is greater than the replenishment rate, sustainability will not be achieved and it is likely to run out.
In contrast to renewable capital, non-renewable natural capital is extracted without a continuous flow of goods and services. Fossil fuels and minerals are the most common examples of this type of non-renewable capital. For example, when crude oil is harvested from the earth, it is used to make products like gasoline and other petroleum-based products. These products are consumed and there is no way to refill or continue using the crude oil.
Scientific awareness of the effects of using renewable and non-renewable resources, coupled with the desire for sustainability, caused the emergence of bioeconomy, also called environmental economics. Bioeconomics focuses on studying how much natural capital is needed to sustain a specific standard of living. Additionally, bioeconomists focus on ways in which human-made capital can replace natural capital in an effort to replace depleted natural resources and conserve the environment.
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