Natural capital is defined as the world’s stocks of natural assets which include soil, air, water and all living things. It is from this natural capital that humans derive a wide range of services, often referred to as ecosystem services, which make human life possible.

The most obvious ecosystem services include food, water and the plant materials we use for fuel, building materials and medicines. On top of this, there are many other less visible ecosystem services that we rely on to survive, including natural flood defences and climate regulation provided by forests; the billions of tonnes of carbon stored by peatlands; or the pollination of crops by insects.

The natural world underpins and sustains every single aspect of life – from the air we breathe, to the water we drink and the food we eat. The natural world is also the cornerstone of the world economy, with more than half of the world’s total gross domestic product, equivalent to $44 trillion, involving activities that are highly dependent on nature, according to the World Economic Forum.

However, nature’s worth to society is not reflected in market prices as it has been freely available to all with no monetary charge. As a result, we have witnessed the steady decline of our natural environment – from the polluting of waterways to deforestation and the building on vital wetlands – as pricing distortions have led us to invest more in other assets, such as produced capital, and underinvest in our natural assets.

Unfortunately, if stocks of the world’s natural capital continue to be depleted, we run the risk of an ecosystem collapse. As a result, investors, governments and businesses are starting to realise the importance of the natural world. By placing an economic value on these natural capital assets, we can ensure that they do not continue to be exploited by providing nature-based solutions that help restore and mitigate our impact’s on the environment.

By considering the value of nature in both economic and social terms, we can better understand the full implications of the choices we make. Short-term economic gains that exploit stocks of natural capital can be disastrous – leading to biodiversity loss, food scarcity, a lack of clean water and/or disease. By placing a value on the services that nature provides, and considering the longer-term impact on people, the economy and nature itself, we can ensure that we are not leaving the planet with a deficit, so that it can continue to sustain us all into the future.