Accounting for the value of natural resources

IIED worked with the World Bank as part of the WAVES partnership to support the inclusion of sustainable use of natural resources in development planning, and make clear the contribution they make to the economy in national accounts.

Article, 20 May 2016
An image of a river splitting the hills of the Chinchiná River Basin in Colombia, one of eight countries in which IIED worked with the World Bank on natural capital accounting (Photo: Rosalind Goodrich/IIED)

The Chinchiná River Basin in Colombia, one of eight countries in which IIED worked with the World Bank on natural capital accounting (Photo: Rosalind Goodrich/IIED)

Wealth Accounting and the Valuation of Ecosystem Services (WAVES) is a World Bank-led global partnership working with countries across the world to account for the contribution made by natural resources to the wealth of the nation.

Accounting for this income – the contribution of natural resources to GDP – is often incomplete. Take forests, for example: timber resources are counted in national accounts but the other services forests provide, such as carbon sequestration and air filtration, are usually left out.

The cost of depleting natural resources to generate income is also not represented in national accounts.

Natural capital accounting (NCA) is a method used to account for income and costs (including the impact on natural resource stocks) associated with natural resource use, based on a framework approved by the United Nations in 2012 called the System of Environmental Economic Accounts (SEEA). SEEA 2012 provides an internationally‐agreed way to account for material natural resources such as minerals, forests, water and fisheries.

Countries are also producing experimental accounts for ecosystems such as watersheds (for example, the Lake Tota watershed in Colombia) and mangroves.

What did IIED do?

IIED researchers and the Communications Group worked with the WAVES Secretariat and with NCA teams in the eight countries – Rwanda, Guatemala, Colombia, Costa Rica, Botswana, the Philippines, Madagascar and Indonesia – to make the connection between data from natural capital accounts and potential demand for the information in light of development policy and planning strategies.

  • Stakeholder mapping: We supported mapping exercises in-country to list and then categorise how much institutions, government departments, civil society organisations and individual posts might be interested and informed about NCA approach
  • Communication strategies: We thought about who would support the initiative, who might want to block it – it could reveal information that they'd rather was not made public – and our priority audiences for engagement through a concerted communication strategy
  • Policy linking: We considered the relevance of the accounts data to specific policy sectors and the added value the data could provide to the development of national strategies such as national development plans and green growth strategies
  • Relevance to global initiatives: We produced briefings on the relevance of natural capital accounting to poverty reduction strategies and implementing the Sustainable Development Goals, and worked on further outputs associated with the relevance of NCA for responding to commitments made in the Paris climate agreement in 2015 and the value of NCA in considering strategies for marine and coastal protection
  • Progress on NCA: We reported on natural capital accounting activities in the UK and supported country-based communication consultants to write about new initiatives, progress and NCA data application in their countries, which would be of interest for global audiences, and
  • NCA in action: We wrote case studies of where the NCA approach had been applied in different contexts and how this has informed specific policy development.

What's next for WAVES?

The first phase of the WAVES programme finished in June 2016. A second phase moved away from a principal focus on the technicalities of producing accounts to place the spotlight on the policy relevance of the data.

WAVES is now part of the broader World Bank umbrella initiative, the Global Program on Sustainability. This programme promotes the use of high quality data and analysis on natural capital, ecosystem services and sustainability to inform decisions made by government, the private sector and financial institutions.