Natural Capital

Natural capital - the stock of forests, soils, water, biodiversity and other natural assets that underpin economic activity and human wellbeing - is increasingly recognised as central to both addressing climate change and building resilient economies.

Protecting, restoring and using natural capital sustainably is therefore an essential part of the transition to a low-carbon and climate-resilient economy, particularly where livelihoods and development depend most directly on natural resources.

Environmental economics can help in understanding the value of these assets - and the often hidden costs of their loss - and ensuring that this is reflected in public and private decision-making. It can also help in designing effective incentives, institutions and financing mechanisms that align economic development with the protection and restoration of nature. Research under this theme includes work on deforestation, biodiversity, agricultural land use, ecosystem services, pollution and the economics of natural resource management.