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Earlier this year, the Biden-Harris administration released an ambitious strategy to better understand nature’s contributions to the economy and therefore guide decision-making on land-use issues.

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As economist Dieter Helm explains, natural capital, a way of folding natural resources into the mainstream economy, puts natureon the balance sheet” by assigning a monetary value to ecosystem services. These services are some of nature’s best gifts to humanity, including carbon sequestration, natural hazard defense, and water and air quality regulation. Beyond ecosystem services, nature provides provisioning services (such as timber, foodstuffs, and fuel) as well as cultural and spiritual value for local communities.

Before the integration of natural capital accounting frameworks, nature was understood in economic terms as having no value, which incentivized the development of industry and society on all plots of land, with little to no resistance from government. Natural capital accounting mechanisms push developers, financiers, and investors to consider the potential monetary loss that comes with the destruction of nature, rather than just purposefully setting aside nature in conservation areas.

Ecological economists Robert Costanza and Herman Daly, in their seminal work “Natural Capital and Sustainable Development,” argue that this concept of natural capital is a pragmatic conservation tool—especially for a society that responds best to markets and profit primacy. In theory, the framework of natural capital allows for nature to actually compete in markets against the possible profits from development and extractive industry—but at what cost?

There are clear metrics to determine the profitability of development and agriculture, such as calories, nutrients, and property value. For nature and biodiversity, developing metrics to determine the monetary value of ecosystem services are more complex. Nature is inherently incompatible with fungibility, as ecosystems are incommensurable, are place-based, and have invaluable personal and communal attachments. Oftentimes, these relationships are not—cannot—be captured adequately in monetary terms; natural spaces are sold off when they are deemed less profitable than a proposed development, regardless of cultural attachments.

Furthermore, attempts to place monetary value on ecosystem services, such as more recent schemes of carbon accreditation on Indigenous land in the US, have distorted how local communities interact with their environment. While natural capital schemes have offered economic opportunities for vulnerable communities to accrue wealth via land stewardship, they have simultaneously created a perverse incentive to care for the environment. The monetary valuation of nature is inherently antithetical to how many communities, especially Indigenous communities, relate to their environment. While a community may have previously held cultural or spiritual ties to their environment, the commodification of nature turns the environment into an economic opportunity through the exploitation of natural resources. Examples from around the world, especially in Latin America, show that the neoliberalizing of nature has led to the assimilation of local communities into the global economy.

Attempts to integrate nature into the US economy may have offered an opportunity for nature recovery and economic opportunity for local communities, but it has also fundamentally changed how these communities steward their environment. While we search for solutions to land-use challenges, we must think critically about the implications of implementing natural capital schemes, especially when they’re incompatible with the ways local communities interact with nature.

Editor’s Note: This story has been amended to clarify that Robert Costanza and Herman E. Daly are ecological economists.

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Oxford Review of Economic Policy, Vol. 30, No. 1, WEALTH (Spring 2014), pp. 109–125
Oxford University Press
Conservation Biology, Vol. 6, No. 1 (March 1992), pp. 37–46
Wiley for Society for Conservation Biology
infobrief, August 1, 2010
Center for International Forestry Research