Water samples from the Penobscot River (photographed at Maine's Department of Natural Resources laboratory) glow under infared light indicating the presence of fecal ecoli. Each cell represents a water sample from a different place in river or one of its tributary's. An unprecedented array of partners, known as the Penobscot River Restoration Trust, a nonprofit organization made up of the Penobscot Indian Nation and six environmental groups including The Nature Conservancy, have come together to restore the river.

Working Group:
Natural Capital Accounting

Natural capital is defined as assets that provide natural resource inputs and environmental services for economic production. Nations rely on natural capital for their economic growth, typically measured as gross domestic product (GDP). Traditionally, GDP does not explicitly and fully account for the non-marketed goods and services provided by natural capital. As such it is conceivable to realize an increase in GDP in spite of a significant depletion in a nation’s natural capital. Many groups, including United Nations, NGOs, research institutions, the World Bank and governments are calling for a new system of natural capital accounting that will standardize methodology to measure the value of healthy habitats to a country’s true wealth.

Photo: © Bridget Besaw | More Info
Photo: © Devan King/The Nature Conservancy

Working Group Summary

Measuring the Economic Value of Natural Capital in Rwanda

This Working Group will focus on helping Rwanda, one of the World Bank’s core implementing countries for natural capital accounting, determine the value of non-market services in two priority landscapes – the Rugezi wetland and Nyungwe National Park. The results of this work will directly support Rwanda’s development planning process, as well as underpin the central role of natural capital in economic output. Beyond Rwanda, the results will give impetus to efforts by global initiatives, such as the UN’s Green Economy, and provide a pathway for other governments committed to including natural capital accounting in their goals for, and measures of, economic growth.

Learn about the Challenge

Photo: NASA

The Challenge

The Value of Natural Capital is Missing from Economic Wealth Indicators

GDP, the most commonly used indicator of economic performance, is derived from the System of National Accounts (SNA), which focuses only on market, and near-market, goods and services but does not include many non-marketed services. The SNA therefore fails to fully account for the contribution of much of the environment/natural capital to a country’s economy.

Additionally, the SNA does not provide comprehensive indicators for measuring human well-being and the sustainability of economies and the environment because it does not internalize societal costs such as natural resource degradation, cost of pollution, loss of water quality, and other problems.

Initial estimates show that natural capital contributes almost 40 percent of Rwanda’s total wealth. The forest resources and wetland ecosystems of Rwanda provide a wealth of ecosystem services that benefit humans. Ecosystem services in this context include both the market goods (such as food, timber and nature-based tourism) and non-market goods and services (such as flood protection and soil retention) that benefit society.

However, there is limited information to support sustainable landscape management by decision-makers. Additionally, there is land use pressure from urban and energy infrastructure, increasing water and agricultural demands, complex impacts of climate change, forest product use and buffer zone utilization, tourism and biodiversity conservation.

Read about this Inquiry

Dawn over the Bangweulu swamps. The Bangweulu Wetlands ecosystem covers a large area exhibiting great biodiversity which is under environmental stress and in need of conservation.[1] It comprises the Bangweulu Swamps and associated grassy floodplain in northern Zambia, surrounding most of Lake Bangweulu except to the west.

The Inquiry

Quantifying the Direct Relationship Between the Economy and the Environment

Recognizing the importance of services provided by natural capital such as forests and wetlands and their role in fostering sustainable economic growth, global initiatives such as the World Bank’s Partnership for Wealth Accounting and Valuation of Ecosystem Services (WAVES) and UNEP Green Economy have been initiated in recent years.

The country is committed to move forward to implement natural capital accounting as one of the tools to boost the country’s sustainable development. Through direct engagements with the WAVES secretariat, the government of Rwanda has shown its interest in natural capital accounting and “readiness” to implement WAVES. Rwanda is one of the latest three countries (including Guatemala, and Indonesia) to join WAVES as a core implementing country.

The main objectives of this proposed study are to:

1) quantify the economic values of the Rugezi wetland and Nyungwe National Park as examples that can facilitate the integration of natural capital in System of National Accounts;

2) explore and identify economic tradeoffs associated with alternative natural resource management and policy options to support landscape-level conservation and development planning; and

3) identify innovative financing mechanisms that encourage investment in natural capital.

Implementing this natural capital accounting project in Rwanda will directly inform the natural resource management policy agenda in Rwanda by quantifying and illustrating direct relationships between the economy and the environment. This will further support the work of Rwanda’s newly established national steering committee on natural capital accounting.

Additionally, it will link with and strengthen the World Bank’s WAVES initiative both in Rwanda and other partner countries in Africa (such as Madagascar and Botswana). Results from this study will guide natural resource management policy agenda by establishing the direct relationship between the economy and natural capital. It will provide a practical field-tested country case study of regional communities of practice (CoPs) for natural capital accounting that can be adopted by other regions/countries.

Meet the Team

Photo: ©Tim Boucher | More Info

The Team

The Natural Capital Accounting Team