Natural Capital

If planet earth was a company, it would be doing very badly.

Natural Capital

If planet earth was a company, it would be doing very badly.

Every businessman understands the concept of capital — the amount of money and resources necessary to start a business. For instance, a small shop would require money for a space, inventory, and maybe advertisement.

But where does the capital come from? Say someone has an idea for a company, but not enough money to fund it. He gets people to invest in him — they give him money to start off, and get a share of the profits in return.

Sometimes, it works the other way round — the person decides to start a company because he has enough money to do so.

If business goes well, the company will ‘break even’ with what they initially invested. That means they’ll earn back the money and resources that they used to get started and then begin making profits. If business goes badly, on the other hand, then the company ends up with less than they started out with.

If planet earth was a company, it would be doing very badly.

Right now, our planet has a very long list of resources that are in shortage. Oil, coal, and even clean water. And then are the shortages that no one is very concerned about yet: the tree shortage, or the uranium shortage.

People don’t talk much about these because, while they will run out, they won’t run out anytime soon. At all. In fact, trees and water probably won’t ever run out, because it’s possible to regenerate both within a single lifetime. But while they may not run out, they certainly will become scarcer, and that will make life difficult for everyone involved.

Including the companies.

Even the largest corporations that exist today are going to be affected when things like coal and oil run low. Prices will go up and profits will come down. Their graphs are all going to at least plateau, if not nosedive.

So how come they aren’t doing anything about it?

Companies measure their progress based on profit — that is, how much has been added to their capital. Capital usually means money, but can also include land, factories, and machinery.

But there is also another kind of capital that never finds its way onto an accounting book: natural capital.

When companies and businesses were small, and the earth’s resources plenty, they could be treated as endless — and they were. With time, we’ve gotten used to that level of consumption, but the resources themselves are ever-dwindling.

Natural capital is not endless.

So while we speak of economic growth and increased profit, what we don’t realize, is that planet earth is actually functioning at a loss. A large one.

An earlier version of this article was published in Sirius #219 15–28 May 2016 “The Fall of the Star”.

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