The paper "Sustainability of Natural Capital" is a worthy example of an essay on finance and accounting. Dixon and Hamilton define natural capital as innately occurring resources on earth, which provide ecological services, goods or flows that are necessary to support life; for example, water, minerals, arable land, biodiversity, and oxygen among others (Dixon & Hamilton 15). Over the years, business practices continue to exploit natural capital to meet their financial targets leading to its degradation. In addition, governmental policies, rapid population growth rates, environmental modifications, and development patterns also contribute to the alarming degradation of natural capital (Dixon & Hamilton 15).
The majority of the examples of natural capital are non-renewable; therefore, environmentalists lobby for their preservation. They infer that adopting sustainable practices endeavor to reduce the rate of degradation. Monetary income derived from natural capital is referred to as natural income. A research done by the World Resources Institute (WRI) revealed that global pharmaceutical companies generated an estimated 75-120 billion dollars (WRI). There are both financial and environmental implications resulting from the depletion of natural capital. Excessive exploitation of natural capital has led to its limited availability; thus increasing market prices.
Businesses have to take into account the high production costs, as they affect their profit margins. Conversely, greenhouse gases emitted destroy ecosystems such as aquatic and terrestrial, increases global temperature, which in turn leads to an increase in sea level and affects weather patterns. Environmental pollutions continue to affect adversely the quality of human life; for example, more people are suffering from chronic lifestyle diseases such as skin cancer because of the destroyed ozone layer. The interplay of factors impedes the sustainability of natural capital.
Firstly, pre-existing economic models do not sufficiently address the problem of unsustainable usage of natural capital. For example, inadequate information pertaining to the duration needed for natural resources to renew themselves is available. In addition, the majority of natural resources are non-renewable. The manual production of these resources is impractical due to inadequate technology and high costs. As such, the only option left to stakeholders of natural capital is to regulate their usage. In conjunction with governments across the globe, organizations are adopting policies aimed at minimizing the degradation of natural capital.
For example, a case study done on the Dutch Wadden sea wetlands estimates that rapid population growth, land reclamation, and pollution contribute to the rapid degradation of the wetlands. However, through the implementation of strict policies and regulations, the government has been able to protect the natural capital provided by the wetlands; therefore, ensure sustainability (Dixon & Hamilton 16-17). In conclusion, natural capital is a concern for individuals in different sectors. As such, it is incumbent upon all stakeholders to work together towards supporting research geared towards examining sustainable practices aimed towards safeguarding natural practices.
In addition, they ought to implement policies that support the sustainability of natural capital.