The balance sheet of nature? On making monetary value of UK ‘natural capital’

… capitalism cannot be fully attained or practiced [sic] until… we have an accurate balance sheet [that places] natural capital on the balance sheets of companies, countries, … [and] the world.1

A global consolidation of ecological accounting, and particularly natural capital accounting, aims to make nature values visible both as stocks of ‘natural capital’ and associated flows of priced ‘ecosystem and/or environmental services’.2 These innovations extend older ‘full cost accounting’ methodologies to cover social and now environmental costs conventionally considered external to financial transactions.3 Through mutually supportive discourses, institutional assemblages and calculative devices, this multiscalar movement towards natural capital accounting is creating conditions in which dimensions of ‘the natural world’ – or, at least, numbers considered to represent these – are further enrolled into a monetised ‘balance sheet of nature’.

In this article4 I primarily consider the presentation of monetary estimates for UK ‘natural capital’ in a November 2016 ‘statistical bulletin’ published by the UK’s Office for National Statistics (ONS) – to which all page numbers below refer – complemented by information in the 2018 publication of ‘Ecosystem Service Accounts’ from 1997-2015. These reports use accounting and valuation methods developed by the Department for Environment, Food and Rural Affairs (DEFRA), as advised by the UK’s Natural Capital Committee, to highlight the value of ‘environmental/ecosystem services’ provided by the UK’s ‘natural assets’.

The resulting balance sheet constitutes a national natural capital account that highlights ‘the relative importance of services provided by the UK’s natural assets’ (p.1, emphasis added). This accounting approach is set within a global context of an invigorated United Nations System of Environmental-Economic Accounting (SEEA). Bolstered by the World Bank’s Wealth Accounting and Valuation of Ecosystem Services (WAVES) programme and the EU and UN’s  Economics of Ecosystems and Biodiversity (TEEB) programme, SEEA provides technical accounting methods for including national environmental assets in national accounts.

‘Natural capital accounts’ allow nature’s values to be presented and compared as statements of assets, liabilities and capital at specific moments in time. This is framed as ‘a consistent way of looking at the significance of nature [contributing non-produced forms of wealth]’ which ‘can help identify drivers of change’ (p.4). Towards the close of the 2016 bulletin, a balance sheet of monetary estimates for UK natural capital is presented (p.21). This balance sheet appears as a table of two columns of figures providing monetised values for the ‘operating stock’ of disaggregated ‘natural capital asset categories’ at ‘year end’ in 2007 (mostly) and 2014. The 2018 ONS report adds a third column of values for ‘natural assets’ for 2018. The table below combines these three years of natural asset accounts.

Drawing on Office of National Statistics reports on UK Natural Capital: Monetary Estimates (2016) and UK Natural Capital: Ecosystem Service Accounts, 1997-2015 (2018).

In this balance sheet a series of dimensions constituting ‘nature’ – water, fish, wind captured in wind energy installations, carbon sequestered in trees, and so on – are represented as single figures in billions of pounds from which losses and gains in economic value between three points in time can be assessed. ‘Natural assets’ are thereby known in terms of arithmetical numbers, their monetised numerical values are counted, their relative importance is clarified, and their quantitative change between three temporal moments is calculated.

These calculated certainties notwithstanding, it seems important to look behind the balance sheet to see how the entered values are derived, whose values they may represent, and what they exclude and may thereby devalue.

Where does ‘value’ comes from?

For the majority of natural capital asset categories the monetised values entered on this balance sheet are based on resource rents to industry owners of ‘natural capital’. These resource rents are calculated as the net income to the owners of a natural capital resource after deduction of production costs, fixed capital maintenance and relevant taxes and subsidies (p.6). Natural capital values are thus computed as income to natural capital owners, i.e. to those able to accumulate surplus value from their ownership of productive ‘natural capital assets’. Value is defined in terms of contribution to income under conditions of private ownership, echoing a situation in which exchange values that can be traded require circumstances of private property5. Such value is thus directed towards the maintenance of a particular system of political economy that rewards the owners of land and natural resources as income-generating assets. In doing so, ‘the forward-driving force of capital’ is replenished, so as to feed ‘the conditions of its own continuing’.6

To put this another way, the value of nature-as-natural-capital is being signaled in these accounts, but only in terms of the value of ‘non-produced assets’ to industry, measured ultimately in terms of ‘rent’ to the owners of productive natural capital assets (combined with a discounting of the future values of flows from these assets) (pp.6, 20). The new information these ‘natural capital accounts’ add to more conventional national accounts seems simply to be a disaggregation of the amount of income that can be attributed solely to elements of ‘environmental service’-producing ‘natural capital’.

In other words, the accounts in the table above demonstrate the market value of ‘natural capital’ to industry, not the value of nature’s materiality in itself, or the non-industrialised or non-commercial values of nature held by people less directly connected with the profit-generating value of ‘natural capital’. The latter point is indicated clearly for the figures reported for environmental services for recreation. The natural capital accounts for ‘opening stock’ values for 2007 and 2014 report a decline in value for ‘recreational services’ based on the monetary value of admission fees, parking and transport tickets, an observation that would suggest a decline in the relative value of these ‘services’ (p.18). In the same period, however, both the number of visits and the amount of time spent ‘in the natural environment’ reportedly increased, suggesting that in actuality the non-economic value of simply being in the natural environment remained highly valued (p.19). The use here of travel-cost valuations to generate proxy values for the ‘recreation services’ provided by the natural environment thus misses the point regarding peoples’ valuing of access to such spaces.7 In the 2018 accounts the value recorded for ‘recreation’ is markedly higher, apparently because of the later decision to simply double the ‘asset life assumption’ of ‘renewable services’ from 50 to 100 years.8

Value derives from broader market contexts rather than materiality of natural capital stocks

Also of interest are the reasons provided in the ONS reports for changes in natural capital asset values. These reasons seem rarely to have anything to do with the ‘stock levels’, i.e. the materiality, of the ‘natural capital stocks’ themselves. Changes in the value of oil and gas, for example, is explained by high volatility in broader market prices for these resources (pp.7-8). A ‘downward trend in ecosystem service values’ for public water supply early in the accounting period is explained as related to higher built capital (physical infrastructure) depreciation costs as well as industry-wide adjustments in taxes and subsidies; a later rise in value was associated with industry-wide price increases (p.11). Similarly, with regard to trees valued in terms of timber, the only source of accounted value is the market price paid for produced timber (i.e. stumpage price) (p.10).

Overall, then, the figures in this balance sheet for UK natural capital say almost nothing about the condition of the natures from which the calculated values are derived. Indeed, the figures seem strangely disconnected from the interconnected materialities of the ‘stocks’ themselves. They are connected instead with the broader volatility of prices on global commodity markets, changing industry costs of production (as, for example, for the service category of ‘fish’), and occasionally with political pressures (as in the case of peat – classed in the accounts as a mined mineral – for which environmental concerns over extraction ‘mean that no new planning permissions for peat are granted’) (p.8). The causes for change in asset values summarised in the balance sheet, then, indicate the significance of broader (market) contexts that care little for the materiality of ‘stocks’ themselves. As such, these ‘natural capital asset values’ appear to provide little indication of the present and future material state of the natures thus valued.

New ‘externalities’, discounting the future and dynamics

The 2016 ONS report explicitly excludes more ‘environmental service’ categories (n=17) than it it includes (n=13) in its list of calculated asset values. Excluded environmental services range from ‘wild animals’ to ‘flood, erosion and landslide protection’ to ‘value placed on nature simply existing’ (p.5). Currently these identified service categories are unvalued, i.e. they remain external to, UK natural capital accounts. The broader point here is that attempts to cost in, i.e. to define and ‘territorialise’, un-costed externalities always create new boundaries beyond which lie unvalued externalities or ‘overflows’.9 This is in the nature of the partitioning, numbering and calculative technologies that accompany economisation practices. It means that new ‘disvalues’ are created, even as previously un-economised natures are brought into the economic fold of value via natural capital accounts.

One aspect of natures-beyond-the-human (captured as ‘natural capital’) which appears consistently undervalued is the dynamism of their future trajectories. As with projections of counterfactual scenarios in carbon offset additionality calculations10, future flows of environmental services from natural capital stocks are unknowable since they are unobserved. Natural capital accounts are built on the assumption ‘that the current [service] flow… is constant over the asset life’, leading to a ‘default assumption… that the value of the services is constant over time’ (p.26). Following ‘extensive review’ the ONS ‘ecosystem service accounts’ published in 2018 doubled the ‘asset life assumption’ for renewable services from 50 to 10011, contributing somewhat arbitrarily to the rise in the 2018 natural capital asset values for those assets providing renewable ecosystem service categories.

This assumption of future constancy seems to disregard multiple sources of potential variability in service flow. Ecosystems giving rise to ‘environmental services’ are complex and metastable: they ‘can undergo rapid transitions’ that may be unpredictable.12 Renewable ‘environmental service categories’are not closed biotic systems, as indeed is indicated by some of the explanations for changes in category values in the above balance sheet. Air pollution removal by vegetation, for example, is explained as due to ‘dry’ and ‘wet’ day conditions (p.16), themselves associated with broader weather conditions and presumably shaped by anthropogenic climate change. This observation becomes critical if we take seriously the present context in which broader climate change may make a fiction of the assumed future constancy of ‘environmental service flow’.

Natural capital fictions?

The published UK natural capital accounts considered here suggest that the ‘value’ of environmental service flows from natural capital assets is derived from broader economic contexts, rather than the material state and visibility of the natures constituting these assets. To return to the opening quote, they constitute a method for enrolling new nature ‘externalities’ into a ‘balance sheet’ coherent to capital(ism), but perhaps obstructive to the system change arguably required for the sustenance of future environmental health and diversity. Given deepening inequalities associated with the late capitalist era13, connections at different scales between deepening societal inequality and environmental damage14, and empirical research demonstrating limited conservation effectiveness of monetary valuation in environmental management15, caution is called for in celebrating the environmental care potential of ‘valuing nature’ in natural capital accounts.

This article was invited for a special section on ‘natural capital and the environment’ of e-law, the membership Newsletter of the UK’s Environmental Law Association (UKELA), Issue 115 (November/December 2019). You can download a pdf of the original here.



  1. Paul Hawken, “Foreword”, in Prugh, T., with Costanza, R., Cumberland, J.H., Daly, H.E., Goodland, R. and Norgaard, R.B. (eds) Natural Capital and Human Survival, 2nd Edition (Lewis, 1999), p. xiii.
  2. Sian Sullivan “Making nature investable: from legibility to leverageability in fabricating ‘nature’ as ‘natural capital’” (2018) Science and Technology Studies 31(3): 47-76, and references therein.
  3. See discussion in Markus J. Milne, “Downsizing Reg (me and you)! Addressing the ‘real’ sustainability agenda at work and home”, in Gray, R.H. and Guthrie, J. (eds) Social Accounting, Mega Accounting and Beyond: Festschrift in Honour of Martin (Reg) Matthews (CESAR 2007); also Rob Gray and J. Bebbington (2001), Accounting for the Environment, 2nd Edition, Sage, London.
  4. I have drawn here on elements of Sian Sullivan and Michael Hannis “‘Mathematics maybe, but not money’: on balance sheets, numbers and nature in ecological accounting” (2017) Accounting, Auditing and Accountability Journal 30(7): 1459-1480. Thank you to Mike Hannis for also commenting on an earlier draft of this blog.
  5. S.C. Farber, R. Costanza and M.A. Wilson “Economic and ecological concepts for valuing ecosystem services” (2002) Ecological Economics 41(3): 375-392, 388; Colin T. Reid “Between priceless and worthless: challenges in using market mechanisms for conserving biodiversity” (2012) Transnational Environmental Law 2(2): 217-233.
  6. Brian Massumi (2015) Ontopower: War, Powers, and the State of Perception. Duke University Press, London, 72.
  7. To be fair, this point is discussed to some extent in ONS, 2016 pp.18-19.
  8. ONS, 2018, p.17.
  9. For fuller discussion of this point see Sarah Bracking, Aurora Fredriksen, Sian Sullivan and Philip Woodhouse, “Value(s) and valuation in development, conservation and environment”, in Sarah Bracking, Aurora Fredriksen, Sian Sullivan and Philip Woodhouse (eds) Valuing Development, Environment and Conservation: Creating Values that Matter (Routledge, 2018).
  10. V. Ehrenstein and Fabian Muniesa “The conditional sink: counterfactual display in the valuation of a carbon offsetting restoration project” (2013) Valuation Studies 1(2): 161-188.
  11. ONS, 2018, p.17
  12. K.E. Limburg, R.V. O’Neill, R. Costanza and S. Farber, “Complex systems and valuation” (2002) Ecological Economics 41(3): 409-420, 411.
  13. Thomas Piketty (2014) Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press
  14. For example, T.G. Holland, G.D. Peterson and A. Gonsalez, “A cross-national analysis of how economic inequality predicts biodiversity loss” (2009) Conservation Biology 23(5): 1304-1313
  15. For example, J. Temel, Aled Jones, N. Jones, et al., “Limits of monetization in protecting ecosystem services” (2018) Conservation Biology 32: 1048–1062.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.