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Natural capital accounting for the sustainable development goals

Report | 09-04-2018

The World Bank WAVES programme supports several countries with the development of natural capital accounts (NCAs). NCAs link natural capital to a country’s system of national accounts and can also be applied to monitor progress towards achieving the Sustainable Development Goals (SDGs).

At the request of the WAVES programme, PBL has evaluated how NCAs are currently used in SDG monitoring and analysis.

Natural Capital Accounting for Sustainable Development Goals, three lessons learnt

Natural Capital Accounting, or environmental-economic accounting, is a tool that can help public and private actors to gain an understanding of the interaction between the economy and the environment. Natural capital accounting, thus, may provide a practical framework of valuable aspects, lessons learned and practices that can be used in developing and implementing the policies or governance arrangements needed to achieve the SDGs, on a country level. From the literature on SDGs and examples discussed during the 2nd Forum on Natural Capital Accounting for Better Policy, which was held on 22 and 23 November 2017 in The Hague, we distilled three general lessons about how natural capital accounting could help countries address these SDG challenges.

  • We observed how most attention is generally directed to using NCAs in the monitoring of status and trends. Natural capital accounting is seen as a useful integrated information framework for informing the SDG policy process and ensuring integration and consistency between several of the SDG indicators. Costa Rica and Australia are two of the countries where natural capital accounts are used to show the relationship between national sustainability objectives, as well as to identify nature conservation hotspots in locations where economic contributions related to tourism, water and carbon storage far exceed those of native timber production.
  • In addition, natural capital accounts are also helpful for policy preparation. Although there is a growing interest in using them for this purpose, we observed that this potential role of NCAs is only utilised to a limited degree. This despite the fact that NCAs may provide important input for analytical methods in designing, implementing and reviewing evidence-based SDG policies, such as trend analysis, forecasting, footprint analysis, integrated assessment and general equilibrium analysis. Costa Rica, Guatemala, Colombia and Rwanda are currently experimenting with an integrated environmental-economic general equilibrium model that makes use of their natural capital accounts.
  • Furthermore, natural capital accounts can be helpful for building institutional coordination. Natural capital accounting and national SDG processes may also benefit from one another, as both use a systems-based policy framework. Thus, the SDG policy process may boost the creation of NCAs.
Author(s)Arjan Ruijs, Martijn van der Heide and Jolanda van den Berg
Publication date09-04-2018