Putting Nature on the National Balance Sheet

Our national accounts count the bauxite we dig up but not the forest we lose to get it. That blind spot shapes bad decisions.

Dr. Peter Edwards
3 min read

Natural capital is the land, water, air and living things that provide the goods and services we depend on: clean water, fertile soil, fish, flood protection and the beauty that draws visitors. It is the foundation of every economy. Yet national accounts have long treated it as free. When a forest is cleared, GDP may record the timber or the minerals beneath it, but not the loss of the water, soil and biodiversity the forest provided.

Why it matters for decisions

Institutions such as the World Bank, the IMF and the United Nations now encourage countries to include natural capital in their national accounts. Doing so lets governments weigh trade-offs honestly. Is Cockpit Country worth more for bauxite, or for the water it recharges, the species it shelters and the tourism it could support? Is a stretch of coastline worth more as a port, or as a nursery for fish and a buffer against storms? Without the numbers, the side that is easiest to count tends to win.

Poverty and the environment

In the debate over a proposed port in the Portland Bight Protected Area, some argued that poverty is the greatest threat to the environment. I agree. But I have argued that Jamaica's poverty owes more to selling non-renewable resources such as bauxite, limestone and river aggregates too cheaply, and to decades of underinvestment in people, than to setting land aside for protection. Accounting for natural capital helps us stop giving away the store.

Doing it properly

Large projects deserve full environmental impact assessments and honest benefit-cost analyses that include ecosystem services, carried out over timelines long enough to do the science. Natural capital accounts turn “the environment” from a slogan into an asset on the national balance sheet. And assets are managed, not given away.

Adapted from “Curry Goat Island: Selling the Country to the Lowest Bidder” (2015).