Ecosystem Services 36 (2019) 100899

Contents lists available at ScienceDirect

Ecosystem Services
journal homepage: www.elsevier.com/locate/ecoser

A common framework of natural capital assets for use in public and private T
sector decision making
Katie Leacha, , Annelisa Grigga, Brian O'Connora, Claire Browna, James Vausea,
⁎

Jonathan Gheyssensb, Lauren Weatherdona, Martin Halleb, Neil D. Burgessa,c, Ruth Fletchera,
Sebastian Bekkera, Steven Kinga, Matt Jonesa
a
UN Environment World Conservation Monitoring Centre (UNEP-WCMC), 219 Huntingdon Road, Cambridge CB3 0DL, United Kingdom
b
UN Environment Finance Initiative, International Environment House, 11-13 Chemin des Anémones, CH-1219 Châtelaine, Geneva, Switzerland
c
Centre for Macroecology, Evolution and Climate, The Natural History Museum, University of Copenhagen, Denmark

ARTICLE INFO ABSTRACT

Keywords: Natural capital assets are currently under pressure globally. This pressure may result in changes in the function
Benefits of ecological systems and associated ecosystem services, resulting in changes in the benefits derived by people.
Classification The loss of natural capital also translates into economic and business risk. While advances have been made to
Ecosystem service understand and classify ecosystem services, the linkages between such services and the natural capital assets that
Flow
combine to enable service provision are less well established. An agreed classification of natural capital assets is
Goods
Hierarchical
required to standardise their identification, description and measurement, and support action to reduce and
mitigate the pressures they are under. Here, we evaluate the main systems classifying the environment into
natural capital assets, against a number of requirements for decision making, showing that to date, we lack a
unified classification encompassing all aspects of the natural environment. We have thus amended and con-
solidated existing classifications and propose a new hierarchical classification, which allows standardisation of
use within public and private sector natural capital assessments. Promoting a common understanding is key in
measuring and monitoring the value of assets and will enable more consistent and holistic decision making in
relation to the management of natural capital.

1. Introduction like nutrient cycling, cannot (Natural Capital Finance Alliance, 2015).
Numerous factors are leading to the depletion of natural capital
Natural capital is the “stock of renewable and non-renewable re- assets, including unsustainable use of resources by humans, pollution,
sources that combine to yield a flow of benefits to people” (Natural land use change, and habitat fragmentation. If these assets decline
Capital Coalition, 2016). As such, it can be helpful in drawing con- below a threshold, the natural function of ecological systems and the
nections between the natural world, sustainable development and associated ecosystem service flows will change to a less favourable or
human wellbeing and/or livelihoods (Guerry et al., 2015). Natural ca- non-functional state (Mace et al., 2015). Such changes may be severe,
pital assets support the ecosystem services that underpin our economy unpredictable or irreversible for some assets, and may lead to risk ex-
and thus deliver inputs or indirect benefits to business (Guerry et al., posure for businesses and the broader economy. Risk exposure could be
2015). As in economics, asset simply describes something that gen- associated with, for example, loss of access to raw materials or in-
erates value (Bishop, 2004). For example, forests are natural capital creased costs associated with shifting supply chains to different loca-
assets which support ecosystem services including climate regulation tions (ACCA, Fauna & Flora International and KPMG, 2012; UN
and timber, and are an important component of the world's natural Environment Finance Initiative, 2008).
capital stocks (TEEB, 2010). Globally, more than 1.6 billion people Currently the role of natural capital assets in supporting ecosystem
depend on forests for their livelihoods (Chao, 2012) and it is estimated service benefits is invisible to many key decision makers in business and
that forests are worth $4.7 trillion per year (Costanza et al., 1997). governments. However, to enable the consistent monitoring and as-
While some of the benefits that natural capital provides can be sub- sessment needed for the management of natural capital, for example via
stituted by technology, such as synthetic foods, many essential ones, the Natural Capital Protocol (Natural Capital Coalition, 2016), it is

⁎
Corresponding author.
E-mail address: katie.leach@unep-wcmc.org (K. Leach).

https://doi.org/10.1016/j.ecoser.2019.100899
Received 21 December 2017; Received in revised form 25 January 2019; Accepted 14 February 2019
2212-0416/ © 2019 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license
(http://creativecommons.org/licenses/BY/4.0/).
K. Leach, et al. Ecosystem Services 36 (2019) 100899

important to achieve a common understanding of what constitutes only the Natural Capital Protocol has attempted to list natural capital
natural capital assets and how these relate to ecosystem services. assets for private sector decision making – and in this case it is not a
Without such an understanding, the risk exists that ecosystem services formal classification but a summary of known assets (Natural Capital
are managed without maintaining the stock of natural capital assets. Coalition, 2016).
Managing the stock of natural capital assets is key to sustaining eco-
system service flows, for example, by managing stocks of wild polli-
nators, farmers are able to maintain pollination services more effec- 2.1. The System of Environmental-Economic Accounting Central
tively (Garibaldi et al., 2013). Framework
A common classification of natural capital assets is a first step in
being better able to measure and monitor assets, and in better under- The System of Environmental-Economic Accounting (SEEA) Central
standing their link to ecosystem services for consistent decision making. Framework (2014) is a statistical framework for understanding inter-
Understanding the link between natural capital assets and ecosystem actions between the economy and the environment, and describes
services enables the loss and/or variation of ecosystem service provi- stocks of environmental assets. It was developed for use by public sector
sion to become more apparent to decision makers and can contribute to decision makers as it provides a readily accessible, common framework
preventing the depletion of natural capital assets. The Natural Capital which can be adapted to countries’ priorities and policy needs. En-
Protocol (Natural Capital Coalition, 2016) and Smith et al. (2017) vironmental assets are defined as the “naturally occurring living and
provide a summary of known natural capital assets and how they non-living components of Earth which may provide benefits to
support ecosystem services, but no formal classification or explanation humanity”, and often provide resources for use in economic activity.
of how combinations of natural capital assets support services In the Central Framework, seven individual components of the en-
(Costanza et al., 1997). Existing formal classifications group natural vironment are considered as assets: mineral and energy resources, land,
capital assets in varying ways (for example SEEA Central Framework soil resources, timber resources, aquatic resources, other biological
(2014a–c); Natural Capital Committee (2014), Shepherd et al. (2016) resources and water resources. The land component denotes the pro-
and OECD Green Growth Indicators (2017)). However, their utility in vision of space and defines the locations in which economic activity and
public and private sector decision making is yet to be explicitly eval- assets are situated. It also includes marine areas over which a country
uated. A standardised classification of natural capital assets also needs has a recognised claim, including its Exclusive Economic Zone (EEZ),
to go beyond a breakdown into solely abiotic and biotic components and inland water bodies. Within this framework, forests, for example,
(for example, classifications developed by the Department for the are considered a type of land cover, whereas forestry is considered a
Economics, Assessment and Integration of Sustainable Development in land use. This example is useful for illustrating why integration of such
France (2015) and European Environment Agency (2015)) to levels that data is important for natural capital assessments as forestry harvesting
are appropriate for decision makers within public and private sectors. cycles will, temporally, strip areas of tree cover. This should be re-
For example, company risk assessments and siting decisions will be very corded as a reduction in the stock of forests and should not be indicative
different in wetlands compared to deserts so any classification of nat- of a reduction in the extent of land employed for forestry activity. Some
ural capital assets would need to breakdown habitats into this level of of the components in this framework are broken down into a further
detail to ensure suitability for decision making. level of detail, for example water resources as surface water, ground
water and soil water, but others are not, for example soil resources.
Although simple and understandable, the categories are not compre-
2. Evaluation of existing natural capital asset classifications hensive, for example the volume of water in the sea and the volume of
air in the atmosphere was not included as these were considered too
In this section we evaluate the main existing systems for classifying large to be meaningful for analytical purposes.
natural capital against a number of requirements for public and private The Central Framework is extended by the Experimental Ecosystem
sector decision making, with the aim to understand (a) if they are Accounting framework (SEEA-EEA, 2014), which explicitly considers
currently able to standardise the identification and description of nat- ecosystems as natural capital assets delivering service flows. However,
ural capital assets for decision making, (b) whether they require minor the SEEA-EEA does not provide a typology for these ecosystem assets.
amendments or consolidation, or (c) whether an entirely new classifi- There have since been attempts to classify ecosystems (such as Maes
cation is needed to standardise assets. Requirements were identified et al. (2014)), but they do not characterise all aspects of natural capital.
based on available literature on ecosystem services classifications (for The Central Framework, for example, considers natural capital assets
example La Notte et al. (2017)) – Table 1. Although developed with that cut across multiple aspects of ecosystems (such as soils, freshwater
different objectives in mind, the systems evaluated here mostly aim to etc.), as do the Natural Capital Committee (2014), but additional con-
inform public sector decision making. To the best of our knowledge ceptualisation and consideration of the hierarchical organisation of

Table 1
Identified requirements for a natural capital asset classification to support public and private sector decision making. The requirements are based on previous
research on the use of ecosystem service classifications in decision making.
Requirement References

1. Few, understandable categories La Notte et al. (2017), Maes et al. (2012) and Wallace (2007)

2. Readily accessible, i.e. users can access the classification when needed, not that it is only available on request or La Notte et al. (2017)
subject to subscription

3. Distinct boundaries to avoid double-counting Haines-Young and Potschin (2009) and La Notte et al. (2017)

4. Comprehensive Fisher et al. (2007), Haines-Young et al. (2012) and Mace

et al. (2015),

5. Appropriate scale(s) for decision making Fisher et al. (2007)

2
K. Leach, et al. Ecosystem Services 36 (2019) 100899

ecosystems (La Notte et al., 2017) are needed to understand ecosystems classification proposed by Shepherd et al. (2016) also does not have
as assets. In particular the capacity to supply services (Hein et al., 2016) distinct boundaries and is not comprehensive. Non-renewable re-
may often be related to particular features of ecosystems (for example, sources, minerals and sub-soil assets, were excluded from Shepherd
hedgerows for pollinators) or the interaction of ecosystems in multi- et al. (2016) because the study set out to assess progress towards Aichi
functional landscapes (such as the role of different ecosystems in Biodiversity Target 14, where non-renewables are not the focus. In
mountainous and upland areas in water provision). addition, while the authors recognised that fertilisers and raw materials
were sources of energy, this tends to be after extensive processing by
human capital and in combination with other natural capital assets,
2.2. Natural Capital Committee – Towards a framework for defining and which was another reason for their exclusion.
measuring changes in natural capital (and subsequently adapted by
Shepherd et al. (2016))
2.3. Organisation for Economic Cooperation and Development Green
The Natural Capital Committee is an independent advisory com- Growth Indicators
mittee which provides advice to the UK government on the sustainable
use of natural capital. A report by the Natural Capital Committee in The OECD Green Growth Indicators (2017) were designed to help
2014 sets out to clarify the meaning of natural capital for use in the countries assess and compare their progress on green growth. These
Natural Capital Committee’s work. In this framework natural capital indicators consist of four data groups, one of which one group is
assets are grouped into ten understandable and readily accessible ca- “natural asset bases”, defined as “data that characterize the availability,
tegories in order to ensure the flow of benefits: species, ecological accessibility and quality of the natural assets (natural capital) that form
communities, soils, freshwater, land, atmosphere, minerals, sub-soil the basis of economic activity”. The other groups are “resource effi-
assets, coasts and oceans. However, it is noted that these categories are ciency”, “exposure to pollution and environmental risks” and “policies
not mutually exclusive and there is overlap between some, for example and economic opportunities”.
soils include species, minerals, and water. The “natural asset bases” data group is comprised of renewable
In this assessment of benefits derived from natural capital, Mace resources (endowments in freshwater resources, abstraction and in-
et al. (2015) use eight broad habitat types identified and mapped under tensity of use; endowments in forest resources; endowments in renew-
the UK National Ecosystem Assessment as proxies for natural capital able energy resources and agricultural and fishery resources), non-re-
assets (UK NEA, 2011). This provides a classification of land uses with newable resources (endowments in subsoil assets (energy and mineral
similar configurations to the natural capital assets described by the resources) and depletion/discovery rates), and biodiversity and eco-
Natural Capital Committee, allowing the spatial distribution of areas systems (land and soil resources, ecosystem services, priority areas for
with broadly consistent biophysical processes to be established. These biodiversity conservation, and level of threat to species). Although the
are, in turn, expected to yield a flow of broadly commensurate benefits classification is readily accessible and has few, understandable cate-
from each habitat type. However, these habitat types provide a poor gories, there is overlap between renewable resources and biodiversity
representation of marine areas, overemphasise the differences between and ecosystems, and the classification is not comprehensive. Marine
habitats and obscure the direct linkage between the broad range of habitats, atmosphere and carbon are not considered, even though the
natural capital assets, such as soils, species and ecological communities, latter are important in, for example greenhouse gas accounting, and
the atmosphere, and the benefits they provide. geomorphology is not included which can provide important informa-
Mace et al. (2015) suggest there are a number of other possibilities tion for corporate planning and siting decisions (for example, it is im-
for classifying natural capital assets, for example frameworks distin- portant to consider the extent of the sea shelf when deciding where to
guishing ecocentric and anthropocentric types (De Groot et al., 2003), site an oil drilling platform).
which may be more inclusive than classifications used in environmental In summary, while the existing classification systems have few,
economic accounting. The authors also suggest that more needs to be understandable categories and are readily accessible for decision ma-
done to include all natural resources, renewables and non-renewables, kers, neither are comprehensive or available at multiple scales for de-
within risk registers for public and private sector use, and within nat- cision making (Table 2). The ability to aggregate or disaggregate to
ural capital asset classifications. varying levels of detail is important to ensure that natural capital as-
The Natural Capital Committee classification was subsequently sessments both capture the complexity of the natural environment and
adapted in Shepherd et al. (2016). “Species” and “ecological commu- are communicable to non-expert decision makers. For example, a gov-
nities” were combined to form biodiversity, “coasts” were included ernment using a natural capital asset classification to catalogue the
within oceans, and “carbon” was explicitly classified. However the stocks of natural capital assets within its country should be able to

Table 2
Evaluation of the main systems for classifying natural capital assets against identified requirements for public and private sector decision making. Tick marks (✓)
indicate that the system meets the requirement, tildes (∼) indicate that the system partially meets the requirement, and crosses (✗) indicate that the system does not
meet the requirement. Justifications for these evaluations are provided in the text.
Existing natural capital asset classifications

Identified requirements SEEA Central Framework Natural Capital Committee Shepherd et al. (2016) OECD Green Growth Indicators
(2014) (2014) (2017)

Few, understandable categories ✓ ✓ ✓ ✓

Readily accessible ✓ ✓ ✓ ✓

Distinct boundaries to avoid double-counting ✓ (where possible) ✗ ✗ ✗

Comprehensive ✗ ✗ ✗ ✗

Appropriate scale(s) for decision making ∼ (available at a single scale) ∼ (available at a single scale) ∼ (available at a single ∼ (available at a single scale)
scale)

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K. Leach, et al. Ecosystem Services 36 (2019) 100899

discriminate between habitats, like grasslands and forests, but would abiotic aspect of ecosystems. Consumptive use of non-renewable re-
also need to aggregate as habitats or biodiversity for communications sources like minerals, soils and sediments which make up these physical
with senior government officials. assets is important in many industries, but the non-consumptive com-
Classifications also need to be both collectively exhaustive and bination of these assets defining the shape and structure of terrestrial
ideally mutually exclusive, meaning that no natural capital asset can and marine environments also influences the provision of ecosystem
occur more than once and that the classification encompasses the total services, such as erosion control. Land is classified into the four major
possible assets of terrestrial, marine and freshwater ecosystems and the landforms: mountains, plains, plateaus and valleys (Gutierrez and
natural environment (lithosphere, biosphere, and atmosphere). Gutierrez, 2016)), and ocean is classified into shelf, slope, abyssal and
Although the SEEA Central Framework classifies the majority of natural hadal as per the geomorphology of the ocean described in Harris et al.
resources and ecosystems as natural capital assets, it does not consider (2014).
the volume of water in the sea or air in the atmosphere, and only Water and non-renewable assets are classified as per the SEEA
considers carbon within timber resources. In comparison, the Natural Central Framework, with the inclusion of ocean water. Atmosphere is
Capital Committee (2014) includes atmosphere, but does not explicitly included as per the Natural Capital Committee (2014) and Shepherd
include carbon or timber resources. Shepherd et al. (2016), likewise, do et al. (2016) frameworks, but is here further broken down as atmo-
not include timber resources, but this framework does classify atmo- spheric gases and atmospheric processes. Soil resources are included in
sphere and carbon. The OECD Green Growth Indicators, on the other all of the reviewed classifications, but here are further broken down as
hand, do not include atmosphere or carbon as natural capital assets. top-soil, sub-soil and ocean sediments. It should be noted that soil
Due to essential relationships in the natural environment, there are, carbon is captured within top-soil and sub-soil in this classification
however, inevitably, inherent linkages in the system that are difficult to (Level 4 - Table 3), and ocean carbon within ocean water (Level 4 -
decouple, particularly with respect to species and habitats. This may Table 3).
mean that mutual exclusivity is not possible to achieve while being The biotic component in the classification is based on the biodi-
collectively exhaustive. versity and ecosystems class within the OECD Green Growth Indicators.
Our evaluation of existing classification systems suggests there is Biodiversity at Level 2 is broken down into habitats and species at Level
currently no single typology for classifying all aspects of natural re- 3 - Table 3. Marine and terrestrial habitats are based on the European
sources and ecosystems as natural capital and existing systems are not Environment Agency’s European Nature Information Service (EUNIS)
able to aggregate or disaggregate natural capital to varying levels of habitat types and the UN SEEA Central Framework land cover classes
detail. Yet minor amendments and the consolidation of existing systems (see Table 5.12 in the Central Framework), from the FAO Land Cover
could produce a classification which is able to standardise the identi- Classification System, version 3 (FAO, 2009). Genetic resources, and
fication and description of natural capital assets for use in public and plant, animal, fungal, and algal species are further broken down as wild
private sector decision making. and domestic/commercial species to capture both commercial species
assets, such as timber plantations, and wild species assets, such as wild
3. A hierarchical natural capital asset classification tree species.

Based on the above appraisal, the existing classifications were 4. Discussion

amended and consolidated to produce a hierarchical natural capital
asset classification that standardises the identification and description Natural capital assets support the ecosystem services that underpin
of all natural capital assets that combine to support ecosystem services our economy and provide inputs or indirect benefits to business. Assets
(Table 3). A further hierarchical level was added, where necessary, to are likely to be depleted and degraded due to rates of regeneration and
capture, for example, different types of aquatic or terrestrial habitats. restoration being slower than the rate of consumption. Standardising
The resulting hierarchical classification has four levels to allow the identification and description of natural capital assets will ulti-
aggregation or disaggregation depending on the level of complexity mately allow identification of the potential drivers of change in eco-
required in decision making. It covers all aspects of natural capital, in system service provision. But standardisation is also challenging as the
marine, terrestrial and freshwater systems and all abiotic and biotic way in which natural capital assets combine to support services and
components. Where possible, the classification has distinct boundaries, benefits is complex, and the data available for reporting on assets is
noting that inherent linkages in natural systems may mean that some often incomplete and may only provide a partial picture of overall
aspects are difficult to decouple, particularly with respect to species and status and trends.
habitats. For the purposes of this classification, we follow the Natural The hierarchical nature of the proposed classification allows users to
Capital Coalition’s definition of natural capital: “the stock of renewable aggregate or disaggregate natural capital assets to varying levels of
and non-renewable natural resources (for example, plants, animals, air, detail depending on the level of complexity required to discriminate
water, soils, minerals) that combine to yield a flow of benefits to between the natural capital assets. This is an important feature for non-
people” (Natural Capital Coalition, 2016). However, the classification expert decision makers within public and private sectors, and sets this
can easily be adapted for use with other definitions of natural capital, classification apart from existing systems. Although public and private
which exclude non-renewables by omitting the “Non-renewable” assets sector decision makers are likely to use the classification in a similar
in Level 2 (see Table 3). way, the motives for identifying and describing natural capital assets
The first level is broken down into abiotic and biotic natural capital are likely to differ. Financial institutions, for example, may use the
assets as per a breakdown of natural capital proposed by the European classification to assess the disruption risk to their potential investments
Environment Agency (2015), the Department for the Economics, (see Box 1), whereas governments may use it to catalogue the stocks of
Assessment and Integration of Sustainable Development in France natural capital assets within countries.
(2015) and Van der Meulen et al. (2016). The abiotic component is split The classification proposed here is an essential first step in creating
into non-renewable (i.e. assets that can be depleted and not replaced – a common understanding of the relationship between natural capital
referred to in the OECD Green Growth Indicators), functional (i.e. assets assets and ecosystem service flows to enable a consistent approach to
that can be influenced, impacted and potentially degraded to a point at natural capital assessments within public and private sectors. By in-
which they stop functioning), and physical natural capital assets (i.e. cluding all aspects of natural systems the classification is able to be
static assets referring to the land and ocean). Physical natural capital comprehensively exhaustive. This is important because service provi-
assets do not appear in the existing classifications but have been in- sion may be different for different combinations of assets, for example
cluded here as land and ocean geomorphology to capture an important grassland plains versus grassland plateaus, and also because some plant

4
K. Leach, et al. Ecosystem Services 36 (2019) 100899

Table 3
Hierarchical classification of natural capital assets, including examples of the natural capital assets found within each level. The proposed natural capital asset
classification includes four levels, initially split into abiotic and biotic components and then further broken down at each subsequent level to classify the natural
capital assets in more detail.
Level 1 Level 2 Level 3 Level 4 Examples

Natural Capital Assets Abiotic Functional Atmosphere Atmospheric gases Oxygen

Atmospheric processes Climate, weather and temperature regulation

Water Surface Water resources provided by lakes

Ocean Water resources provided by oceans

Ground Water resources provided from aquifers

Fossil Water resources provided by glaciers

Soil Water resources provided by soil

Non-renewable Energy Oil resources Oil reserves

Gas resources Natural gas reserves

Coal and peat resources Coal reserves

Minerals Metallic mineral resources Copper reserves

Non-metallic mineral resources Limestone or rock

Soils and sediments Top-soil Top-soil composition

Sub-soil Sub-soil structure

Ocean sediments Ocean sediment composition

Physical Land geomorphology Mountains Height of peak

Plains Extent of plain

Plateaus Extent of plateau

Valleys Depth of valley

Ocean geomorphology Shelf Extent of shelf

Slope Number of seamounts

Abyssal Number of canyons

Hadal Number of trenches

Biotic Biodiversity Habitats Littoral Littoral sand

Sub-littoral Sub-littoral sediment

Deep-sea Deep sea mud

Coastal Coastal dunes

Inland surface waters Riparian habitat

Grasslands Alpine grassland

Heathland and scrub Arctic scrub

Woodland and forests Evergreen woodland

Unvegetated or sparsely Tundra

vegetated

Agriculture and croplands Arable mixed crops

Urban and developed areas Opencast mines

Habitat complexes Wooded tundra

Genetic resources, and plant, animal, fungal, and algal species Wild Number of threatened species

Domestic, commercial Livestock density

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K. Leach, et al. Ecosystem Services 36 (2019) 100899

species, such as canopy tree species for shade or shelter provision, Capital Finance Alliance (a collaboration between UN Environment
which are found in multiple habitats, provide a service regardless of the Finance Initiative and Global Canopy). The project was funded by the
habitat in which they are found. However, further research will be Swiss State Secretariat for Economic Affairs (SECO) and the MAVA
necessary to understand the mutual exclusivity of species and habitats foundation. We thank the anonymous reviewers and Editor for com-
in the classification and to identify how the classification links with ments that greatly improved the manuscript.
existing ecosystem service classifications.
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