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.

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