Natural Capital

In the current Inclusive Wealth methodology, the components of natural capital include renewable resources (agricultural land, forests, and fisheries) and nonrenewable resources (fossil fuels and minerals).

The inclusion of fossil fuels within an indicator that tracks sustainability may appear counterintuitive because fossil fuels are often considered liabilities or stranded assets. The mechanism assumed in the IWI framework is the business-as-usual scenario currently pursued by the imperfect economies that form the basis of our societies. The shadow price of any type of natural capital represents the marginal contribution towards social wellbeing. In this context, the prevailing discourse is that the potential benefit of fossil fuels for driving investment in other types of capital, outweighs the drawbacks in terms of social costs of carbon.
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