Natural Capital Important

| December 22, 2014 | 0 Comments

Calculation of the nation’s natural capital could help determine the true value of its economy and assist in making informed policy decisions.

There are a number of items, which the Gross Domestic Product (GDP), did not measure such as wear and tear as well as depreciation resulting from using produced assets like factories, roads and bridges.

“GDP as a measure has been found inadequate by some economists as it does not take into account challenges such as changing climate, depletion of fisheries, degraded soils and overextended water supplies,” stated a press release from the Ministry of Finance and Development Planning.

Natural capital meant the quantification of natural resources and inclusion in measuring national wealth.

According to information from Wealth, Accounting and Valuation of Ecosystem Services (WAVES), assets such as forests and other ecosystems that provided vital goods and services made up a country’s natural capital.

WAVES is a World Bank supported project which includes Botswana, Colombia, Costa Rica, Guatemala, Indonesia, Madagascar, Rwanda and the Philippines that started in March 2012 and ends in June 2016.

It is expected to reform Botswana’s national accounting systems to ensure that GDP goes beyond just measuring the annual output of the country.

The relevance of WAVES to Botswana is premised on the Gaborone Declaration for Sustainability in Africa, which was hosted by the President Lt. General Seretse Khama Ian Khama in May 2012.

WAVES Coordinator for Botswana, Mrs Portia Segomelo said revenues and employment opportunities may be derived from the use of natural capital. “Botswana’s key to economic diversification may lie in nature-based tourism supported by its rich ecosystems,” states WAVES.

Mrs Segomelo said in natural capital, the value of natural resources must be measured, in terms of the physical stocks and flows of resources as they get depleted. She also said the revenues accrued from the use of the resources are also measured as well as employment creation and contribution to social upliftment.

Ms Segomelo said Botswana has set itself to concentrate on four accounts water, minerals, energy and ecosystems. With regard to water, she said Botswana is a drought prone country with seasonal and erratic rainfall, hence the sector is important to the economy.

She further said the water accounts will measure how much water is available and how it is used by different sectors of the economy such as mining, farming, domestic use, manufacturing and how much will be available for future planning activities. The water accounts will measure how much income is derived from the use of water and how much goes to waste.

Through natural capital accounting, she said businesses would be able to know how much water they use and if they get value for the amount of water they use. Water accounting is led by the Department of Water Affairs in the Ministry of Minerals, Energy and Water Resources.

“Another account is minerals we are a mineral-led economy, diamonds in particular,” Ms Segomelo said, adding that it is important to measure the stocks of the diamond reserves, the value of what is extracted and the revenues generated to support economic development

The mineral accounting for Botswana is led by Department of Geological Surveys and Department of Mines. The third component is energy which is critical given the energy crisis the country has been facing.

Botswana has abundant coal reserves and through the accounts, they will be quantified in terms of how they support the energy sector. The accounts will inform the energy efficiency technologies that need to be introduced to improve sustainability of the energy sector.

The other accounts is the ecosystem, which is a more complex accounting exercise since it includes vegetation, land, tourism, agriculture, infrastructural developments and settlements.

Ms Segomelo stressed that once completed, the accounts will help develop a data base that will enable planners and policy makers to make informed decisions and formulation of NDP 11 to enhance sustainability objectives across sectors.

The eight WAVES pilot countries are assisted through methodologies following the UN Statistical System for Environmental and Economic Accounts (SEEA).

Source : MFDPBOPA

Source : Botswana Daily News

Category: Business & Finance

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