South Africa convened its third national forum on Natural Capital Accounting (NCA) at Statistics South Africa’s Isibalo House in Pretoria on 7 and 8 August 2024, stressing the growing importance of recognising our reliance on nature and how healthy functioning ecosystems and biodiversity underpin economic growth and job creation. The Statistician General was joined by the Director-General of the Department of Forestry, Fisheries and the Environment and the Chief Executive Office of the South African National Biodiversity Institute (SANBI), in welcoming delegates from government, environmental groups and the financial world. The theme of the forum was ‘NCA Making Waves’, emphasising how NCA is starting to have a real impact on national planning and financial reporting.
Traditionally, a country’s economy is measured using the System of National Accounts (SNA 2008), which gives us well-known figures like Gross Domestic Product (GDP). Such statistics are crucial for understanding the economy, planning investments, and tracking performance. But this form of reporting hugely underestimates the connections between the economy and the environment. A paper in the international journal Nature earlier this year showed that, for 163 countries, the produced capital has doubled since 1990, but natural capital has halved. This is not sustainable.
NCA is a way to bring nature into the same frameworks as other types of national accounting. It is based on the internationally adopted System of Environmental-Economic Accounting. As one of the government officials at the forum said, “Most national planning happens in economic and social terms. There is hardly a word about nature mentioned in that space. Natural Capital Accounting lets us pull a seat up to the table and join the discussion.”
Measured in terms of its natural capital, South Africa is among the richest countries in the world. It has more plants, reptiles, birds, mammals and marine species than its size would suggest. Many found nowhere else. In just one example presented at the forum, the Experimental Biodiversity-Based Tourism Estimates for South Africa, released by Stats SA in July 2024, show that biodiversity directly contributed R27 billion, and more than 90 000 jobs, to South Africa’s tourism sector in 2019. Natural capital is not always measured in monetary terms. Recent accounts produced for South Africa, like the ‘Accounts for Protected Area’ and ‘Accounts for Strategic Water Source Areas’ or ‘Sub-national Water Resource Accounts’, use physical measurements like hectares of land protected, number of people living in strategic water source areas or volume of water available for utilisation. The ‘Protected Area Accounts’ showed that the closing stock of protected areas in 2020 was 11 280 684 ha or 9,2% of South Africa. The ‘Accounts for Strategic Water Source Areas’ revealed how important the provinces of KwaZulu-Natal, Mpumalanga, Eastern and Western Cape are for water security.
Lately, biodiversity loss is being taken more seriously by corporate and financial institutions. An informative panel discussion featuring representatives from the South African Reserve Bank, Nedbank, the Banking Association of South Africa, and the African Natural Capital Alliance highlighted the mounting awareness. The panellists agreed that while climate change has been an earlier focus for business, the next few years will see a major shift as biodiversity is taken into account. Natural Capital Accounting will help to make sure that these efforts are genuine and backed up by evidence to avoid greenwashing.
A recent study by the French Development Agency revealed that 70% of household consumption in South Africa, and 80% of exports, are highly dependent on at least one ecosystem service. What this means, in the words of one of the panellists, is that “biodiversity loss is a potential risk to the financial stability of the country”. In response, companies are increasingly adopting the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD) to assess their reliance on nature and potential risks from biodiversity loss.
South Africa assumes the presidency of the G20 in 2025. According to the Nature paper, G20 countries now hold around 68% of the world’s natural capital, but rapidly increasing wealth in these countries contributes to biodiversity loss and global inequality. Brazil began the Global BioEconomy Initiative during its current presidency of the G20, to increase access to biodiversity and climate funding. South Africa will have the opportunity to build on and expand this work. NCA will also help South Africa to report towards many of the ambitious targets of the Global Biodiversity Framework (GBF).
A shared vision permeated the forum: One day the Statistician General will step up to the podium to announce indicators of NCA with the same prominence as GDP. He says, “Climate change and biodiversity loss are among the most critical issues of our time. If we forget how essential the environment is to the economy, then we will learn the hard way. We need to strengthen measurement of the natural environment, and Natural Capital Accounting gives us that yardstick.”