Natural Capital

DEFINITION of 'Natural Capital '

A reference to the stock of natural resources, such as water and oil. Unlike other forms of equity (such as machines and buildings), which can be created on a regular basis, many natural resources are nonrenewable. Natural capital includes many resources that humans and other animals depend on to live and function, which leads to a dilemma between depleting and preserving those resources.

BREAKING DOWN 'Natural Capital '

In economics, depletion of natural resources is a consequence that needs to be accounted for when looking at a company's effect on total welfare. A company might be making big profits, but if it is doing a lot of damage to the natural capital of an economy, it may actually have a negative effect on total welfare.

RELATED TERMS
  1. Nonrenewable Resource

    A resource of economic value that cannot be readily replaced ...
  2. Reserves to Production Ratio

    A ratio indicating the remaining lifespan of a natural resource. ...
  3. Depletion

    An accrual accounting method that companies use to allocate the ...
  4. Percentage Depletion

    A taxable deduction that assigns a set percentage of depletion ...
  5. Common Resource

    A resource, such as water or pasture, that provides users with ...
  6. Resource Curse

    A paradoxical situation in which countries with an abundance ...
Related Articles
  1. ETFs & Mutual Funds

    Natural Resource Investing

    ETFs and futures are just some of the various investment options available to natural resource investors.
  2. Markets

    What is a Nonrenewable Resource?

    A nonrenewable resource is a natural resource that once consumed cannot be readily replaced.
  3. ETFs & Mutual Funds

    Natural Resources ETF: IGE or GNR?

    Explore a comparison between IGE and GNR, and learn about the differences between the two ETFs, and their top holdings and sector allocations.
  4. ETFs & Mutual Funds

    Mine For Profits With Natural Resource Sector Funds

    These funds allow everyday investors to get in on the action in this promising sector.
  5. ETFs & Mutual Funds

    Top 5 Natural Resources Mutual Funds (FSCHX, AWTAX)

    Discover which mutual funds in the natural resources category are top-rated funds, and understand why these funds may be suitable as part of a portfolio.
  6. Markets

    Is Infinite Economic Growth on a Finite Planet Possible?

    While the finite nature of Earth's resources limits the direction of economic growth, it does not mean that infinite economic growth is impossible.
  7. Markets

    A Natural Gas Primer

    Learn why natural gas is playing a larger role in the energy industry.
  8. Trading

    Natural Gas Industry: An Investment Guide

    Investors looking into this industry are faced with a confusing amount of information. We explain the important concepts and terms.
  9. ETFs & Mutual Funds

    Top 3 Natural Gas ETFs (UNG, FCG)

    Explore the variety of options that are available through exchange-traded funds for investors looking to obtain exposure to the natural gas market.
  10. Trading

    Oil As An Asset: Hotelling's Theory On Price

    Not sure where oil prices are headed? This theory provides some insight.
RELATED FAQS
  1. How does horizontal integration allow companies to share resources?

    Learn how horizontal integrations allows companies to share resources. Understand specific examples of horizontal integrations ... Read Answer >>
  2. What inputs are considered to be factors of production?

    Learn what the economic term "factors of production" means, what the four categories of factors of production are and what ... Read Answer >>
  3. How can particular scarcities benefit specific stocks?

    Learn about scarce resources, such as crude oil and water. Explore how companies that produce these resources have benefited ... Read Answer >>
  4. At what stage of business should human resources planning occur?

    See why strategic human resources planning is an ongoing process, and learn how an HR department plays a crucial role in ... Read Answer >>
  5. What are the main goals of human resources planning?

    Learn about human resource planning, a business strategy that heavily incorporates workforce considerations into long-term ... Read Answer >>
  6. How are labor demand forecasts made in human resources planning?

    Discover how human resource planning might be used to estimate the correct demand for labor in a given market, both qualitatively ... Read Answer >>
Hot Definitions
  1. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  2. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  3. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  4. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  5. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  6. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
Trading Center