About natural capital: the value of the world around us Partha Dasgupta Witness (2025)
An economist may celebrate a country that achieves record economic growth in one day, but lose sight of the coral reef lies discolored and lifeless on the other. This contradiction needs to be challenged, writes economist Partha Dasgupta in his elegant account of why the global economic system is exploiting rather than supporting life on our planet.
About natural capital summarizes the explosive economic achievements of the past 75 years, including increases in life expectancy and education, and a decrease in the number of people living in poverty. But it also shows how economic progress has benefited from the exploitation of our planet: an environmental debt that traditional accounting does not account for on the balance sheet.
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Dasgupta begins with a powerful depiction of the basic principles of Earth's life support systems and how life processes regulate climate, replenish soils, and maintain food webs. He notes that a third remaining wetlands on the planetwhich are critical for filtering nutrients, providing flood control and storing carbon, were lost between 1970 and 2015 due to infrastructure construction, urban expansion and other human activities. He also describes how deforestation may create savanna-like conditions in parts of the tropics as disruption of moisture recycling processes reduces precipitation and ecological productivity.
Dasgupta next explores why economic principles have long treated nature's functions as background decoration. He explains that this oversight has its roots in the emergence of growth and development economics in the mid-twentieth century, in which economists created models to explain output using only human labor, skills, and physical goods. This was a reasonable assumption back when natural resources seemed abundant, the world did not limit planetary limits, and forests, soils, and fish stocks seemed too abundant to contain growth. What started out as a practical simplification turned into a blind spot.
Difficult compromises
By combining these two narratives together, Dasgupta succeeds in portraying forests, watersheds, and wild species as real assets whose depletion undermines the prosperity statistics that governments use to track and celebrate progress. He reinforces this point by calculating that humanity's collective demand for nature now exceeds the planet's regenerative capacity by about 70%. In effect, this means that since the early 1970s we have been living off the planet's “capital” rather than on accumulated “interest”, jeopardizing the solvency of our biosphere.
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As Dasgupta's works balance natural processes with economic principles, he highlights the difficult trade-offs that society faces on a daily basis. Every ton of fish caught or cubic meter of water taken for irrigation is a use of assets that must remain intact so as not to jeopardize future food yields, incomes and environmental stability.
Dasgupta reminds us that these choices are not just about production, but also about management. Overfishing can boost a country's gross domestic product in one fiscal quarter but deplete the reproductive stocks that support the next year's catch. Likewise, draining wetlands to create agricultural land may produce immediate crops but destroy the flood protection and nutrient cycling processes that make such agriculture possible.
Sustainable forest management preserves biodiversity and allows forests to regenerate.Photo: Alexander Manzyuk/Anadolu Agency/Getty
The constant tension between nature's bounty and the ecological conditions that make that bounty possible is brilliantly exposed by Dasgupta, but is ignored in the accounting practices that currently define progress. As a result, society perceives the transformation of natural resources as a costless profit and rejoices at the growth figures, but the natural systems that made this growth possible gradually decline.
Dasgupta's call to put nature in balance is timely precisely because it points to a rapidly expanding movement in policy that is beginning to give the natural world the accounting treatment it has often lacked.
Problems ahead
Countries such as the Netherlands, Canada, and Colombia are developing or piloting natural capital accounting and statistics systems that treat ecosystems as assets: measuring their stocks (such as wetlands, forests, and soil microorganisms), tracking their depreciation (or appreciation), and identifying the “interest” they generate, such as flood protection and carbon storage.
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In the corporate arena, the Task Force on Nature-related Financial Disclosures is a market-based, government-backed, science-based global initiative that encourages companies to include nature in their financial statements. It provides a framework for companies to uncover nature-related risks, including biodiversity loss, as well as dependencies, such as supply chain access to clean water.
Dasgupta highlights both the promise of natural capital accounting and the areas that need improvement. Markets are finally waking up to the reality that forests, watersheds, wildlife and other aspects of the natural world are not “free” resources but assets, and their degradation undermines prosperity. The gaps, he emphasizes, lie in natural systems valuation (how to reliably value ecosystem services), governance (who owns and manages these assets) and integration (how to incorporate measures of natural capital into macroeconomic indicators).
