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n. an economic theory or practice which assigns a financial cost to the use, maintenance, abuse, or depletion of natural resources and ecosystems. Natural capitalism recognizes the critical interdependence between the production and use of human-made capital and the maintenance and supply of natural capital; natural capital being made up of resources, living systems, and ecosystem services.

Natural capitalism as an alternative to traditional capitalism applies a mind-set of “responsible abundance” to economic production. Although natural capital is the limiting factor to future economic development, particularly life supporting systems for which there are no substitutes, responsible and sustainable practices create significant advantage.

The fundamental assumptions of natural capitalism are:

  • The environment is not a minor factor of production, rather, it is an envelope containing, provisioning and sustaining the entire economy.
  • The limiting factor to future economic development is the availability and functionality of natural capital, in particular, life-supporting services that have no substitutes and have no market value in today’s economy.
  • Misconceived and badly designed business systems, population growth, and wasteful patterns of consumption are the primary causes of the loss of natural capital, all of which must be addressed to achieve a sustainable economy.
  • Future economic progress can best take place in democratic, market-based systems of production and distribution in which all forms of capital (human, manufactured, and natural) are fully valued.
  • A central key to the most beneficial employment of people, money and the environment is a radical increase in resource productivity.
  • Human welfare is best served by improving quality and flow of the desired services, rather than merely increasing the total flow of cash.
  • Economic and environmental sustainability has a cause and effect relationship with global income and material well-being

The four central strategies of natural capitalism include:

  • Radical Resource Productivity. This is the cornerstone of natural capitalism because using resources more responsibly and effectively has a number of significant benefits:

    a. It slows resource depletion at one end of the value chain
    b. It extends the lifetime of resources to ensure longer utility and gainful employment
    c. It lowers pollution
    d. Reduces wasteful expenditure and inefficient production

  • Biomimicry.Reducing the wasteful throughput of materials, resources and energy can be accomplished by redesigning industrial systems on biological lines that will change the nature of industrial processes and materials, enabling constant reuse of materials in continuous closed cycles, often eliminating toxicity.

  • Service and Flow Economy. This calls for a fundamental change in the relationship between producer and consumer, a shift from an economy of goods and purchases to one of service and flow. This entails a new perception of value, a shift from the acquisition of goods as a measure of affluence to an economy where the continuous receipt of quality, utility, and performance promotes general well-being.

  • Investing in Natural Capital. This works toward reversing world-wide planetary destruction through reinvestments in sustaining, restoring, and expanding stocks of natural capital, so that the biosphere can produce more abundant ecosystem services and natural resources.

Historically, performance in the extractive sector has largely been zero-sum in term of natural capital. Resource use inefficiency is masked because growth and progress are measured in money, and money does not give us information about ecological systems, it only gives information about financial systems.

Through the influence that we are able to exert in our work early in the project lifecycle (the creation phase) PPM is ideally positioned to shift the paradigm and to effect changes which will achieve win-win outcomes for both the client and the environment.

The Commencement Address by Paul Hawken to the Class of 2009, University of Portland, May 3, 2009