perhaps you could tell me about what that is a give a brief definition natural capital like other forms of capital such as machinery used in production or human capital that provides innovation and labor to production natural capital ruppert is both a natural stock of resources such as timber and also flows of benefits that come from functioning ecosystems such as nutrient filtration by vegetation is near rivers that keeps the water a certain quality so it's sufficiently high quality for consumption or other downstream uses so it's both a stock and flow of different processes in ecosystems and it can be organic or inorganic yeah that's right so it can be either typically we're thinking about biopic activity in the ecosystem but we we can think of natural resources such as fossil fuels you know petroleum and coal and things like that more as natural as resources as opposed to natural capital this might be how we would think about it because generally i think natural resources were doing a pretty good job of incorporating the markets and putting a price on and recognizing their value whereas natural capital might be less less well capture the values less all captured in the market so far you have schumacher the first pointed out that you know it's amazing that we have an economic system where a large part of what goes into creating the goods and services is not accounted for so i think he was the first one to speak at length about the need to to the t erm itself natural capital and the need to account for there is a long history going back to even even at and adam smith and david ricardo realizing how important natural resources were for the growth of the economy and then the neo classical group of economists it kind of fell out of our calculations so macro economists started to think just about what we talked about as other inputs to production labor and machinery and left out the resources that had been the focus of work by david ricardo and malthus who had talked about concerns about the growth of the population versus the growth of our agricultural productivity so there's definitely has been a shift to the neo classical paradigm which really informs a lot of economics that goes on today has kind of dropped out the importance of those natural resources and so we see their value that is really we take it for granted and don't place enough value on it and that's led us to maybe inefficient use of the resources and why we're in this condition thinking about climate change and carbon and things of that nature of course the obvious problem is that companies are allowed to external of the products production that's exactly right and the efficiency of markets that economists is often they idea that's often attributed to economists that we think markets are efficient is somewhat correct there are conditions under which markets are efficient and as he said when the extra costs when they're actions that take place in the market whose costs aren't taking to account by the actors in gauging those actions then we know that the market won't be efficient and in those cases economists favor government intervention so some form of regulation can be imposed to account to write those extra calories and internalize them that's typically the preferred method when there's an extra nonny between firms a production and consumption extra now anywhere firms behavior affects the welfare of consumers now you recently spent four years with the natural capital project do you want to talk about that perhaps you've started with was formed in two thousand and six and it was key individuals in putting together the natural capital project were gretchen daley who's an ecologist at stanford university who's done a lot of work very valuable work in ecology but also very valuable work in thinking about ecosystem services which is another piece of jargon that people may or may not have heard of that really refers to the benefits from the natural world that accrue to society so some of them we might be familiar with thinking about the sa in bristol bay alaska that we're able to eat and the timber that comes from forest around the world but other people people might be less familiar with other types of services such as carbon sequestration and storage that occurs in lots of different vegetation specifically in the rain forests of the tropics in the boreal forest and also nutrient retention by some vegetation near waterways that collect some of the extra train yes nutrient fertilizer that's been applied by farmers in the region and prevents that from getting to the water and creating the hypoxic conditions that we've seen in the gulf of mexico so that's kind of the term ecosystem services which gretchen daly had really done a lot of work in that area from the ecology side steve powell asked is an economist at the university of minnesota who's kind of one of the world's leaders in thinking about conservation in land use decisions so he came from the university of minnesota and knew gretchen daily professionally and they were both involved with the nature conservancy where they knew peter curry of a quite well he was the lead scientist there and taylor ricketts who was the lead scientist at the world wildlife fund who had gotten his ph d from stanford so from these four individuals and of course supporting people at each of these institutions they've kind of led to the foundation of the natural capital project which really tries to promote provide information to decision makers either at n g o s like the nature conservancy in the world wildlife fund or government agencies and even third parties like the world bank who are making resource used to citizens without necessarily having the full information to do as you mentioned earlier this accounting of the natural capital so understanding the benefits and costs of placing a hydropower facilities someplace or clearing the forest for agricultural production the intention was to kind of the tagline was aligning economic forces with conservation so to understand what the implications of our actions were to make sure that we were using resources efficiently and there's been a big addition recently to the group i should say from the university of minnesota john foley has come into play a major role he's done a lot of work thinking about land use in agricultural production around the world and how we can used inputs more sparingly in places where the condition our right and kind of change input application to increase the yield to close the yield gap between what the capacity of the land is and what we've actually seen so that's kind of the leadership of the group and the project has grown substantially now  the managing director of the group is mary ruckelshaus who has a background in marine biology and ecology and has had bennett know a very successful career know it for many years now she's leading the group and we've expanded from an initial focus on terrestrial systems to thinking about marine ecosystems as well so fisheries in the near shore environment so there i don't know the exact count because i as you said i moved to fordham this fall but there are dozens of people associate with the project making and making things happen in the major contribution of the group is a software package that can be accessed it's an open source software package called been invest that's right and it's been applied all over the globe by members natural capital project who have been approached for help in making decisions but also has been used independently by different groups to help make these resources decisions so the software is out there it's available yup you can go to the natural capital project website natural capital project dot org and there's a whole description of how to download the tool box it's open source it is it is yes so the idea is of course there are very very smart people working on the project but there are very smart people all over the globe who are more familiar with local issues so the idea was to build models that could function but that were flexible enough could be manipulated and updated to reflect current conditions to provide more valuable outputs well dr country do you want to talk about your work specifically for the natural capital project sure as an economist one of the roles that i was playing was thinking about how to value these ecosystem services and the relationship between economics and conservation has been a little contentious through the years often times non economists think of economics as finance and business and less about you know the allocation of scarce resources and how to achieve a fission use of those resources one example i'll start with is thinking about efficient conservation and development of land in the u s the endangered species act which was passed in  eighty three unanimously in the senate which today you know of course would not happen had the goal of providing habitat for species whose populations had reached low levels where extinction was a concern and that act specifically for bade the use of economic arguments to prevent certain landowners from being subject to the restrictions of the act so they didn't want someone whose property was extremely valuable to say oh i purchased this with the intention of subdividing as a developer or building a beautiful mansion on the hills in malibu so i shouldn't be subject to the land let the person is property is less valuable the subject from that we had kind of a situation where there were no incentives for compliance with the act and in fact it led to this phrase the shoot shovel and shut up strategy because the regulators didn't have information about where the species were if you were a land owner and found that the animal  existed on your property you had an incentive to dispose of it so you wouldn't be subject to those restrictions and so now in reflection of some of the perverse incentives that have been raised by the act we've seen a move to incorporate some of the mechanisms from economics that can be used to provide incentives for conservation and that's something that i think the mindset that was somewhat behind the formation of the natural capital project and the idea of assigning value to these things so that we could incorporate them in our economic system and while there is i mentioned earlier there is a little controversy about putting a dollar value on things well that's the deep ecology fear you know i mean the market is very efficient but capitalism is famous for its ability to commodify everything and so yes there is a great potential upside for allowing corporations to well allowing the governments and others to police corporations and you know real cost accounting and bring those externalities into the cost accounting system but you know is it going to lead to well what's going to happen to the commons you know is this going to increase the commons is going to decrease the commons is it going to lead to a situation we have now where if you have a billion dollars to spend on a gold toilet you can have it to someone who has no money for dinner they have no dinner so will the people with the most money have the most access to our natural capital i think the most challenging aspects in terms of the ecosystem services placing a value on them certainly has to do with cultural services and this can relate to you know first nations people which is how these indigenous people are referred to in canada but it can also refer to the benefits of an experience of visits to the grand canyon and things of that assigning that value to those experiences the feelings that you get from being in these places is very difficult and certainly you could argue that any dollar value you put on it might be a lower bound in insufficient to represent the values so in that case i think there is a conservative that on the other side the benefits of converting to development for development purposes might trump the dollar value that you come up with there so i understand that concern  that maybe people with a lot of money get to do what they want if the market bears it and yet that is that's how markets work so there is a problem there but i will say that a congress don't uniformly think that markets are efficient there are certain conditions under which they are efficient and for a lot of environmental goods i think there is a need for some type of intervention either from the government or from some type of communication between the parties affected to ensure that the resources are used efficiently so i think there is a role for government intervention to ensure that even though wealth will drive outcomes we can still achieve more desirable use of these resources do you have any idea how that sort of mechanism might work if you elaborate on the welsh sure there are examples i mean you mention the commons and i could talk about fisheries a little bit there but i think what i'll choose to talk about are some mechanisms that we've seen for the provision of these ecosystem services where we have an all refer to some of the water funds that have been developed in around the globe it became out of south america in ecuador  colombia in the is situations water quality in the downstream urbin wealthy areas is affected by behavior and actions and decisions of the upstream less well off rural population so you've got farmers and ranchers who are applying fertiliser or pesticides or allowing the cattle to input nutrients into the system by not fencing off streams and what that is that affects the quality of the water for consumptive use downstream or for use in agricultural production downstream and so here you have the wealthy people who want clean water and you're right that they're going to get what they want but the way they get it is by pooling their money together and providing compensation to the upstream rural farm population so that they are paying an amount that has to be greater than the willingness to accept of those farmers right that's how these market transactions work and because you have greater wealth downstream they are able to come up with sufficient funds to change this behavior so that you have better while the water quality in downstream areas while in theory and i think in practice from some of the existing water funds you have higher quality of life upstream as well what if it's the poor people that need water to drink and the ranchers  the rich people you know how would that play out well so so in that case i mean and water is not not my specialty but but certainly in these cases where you've got these external costs right the ranchers are engaged in some behavior that impose a cost which is that the change in the water quality for the downstream population one opportunity this is that you know kind of a classic example from ronald coasts who talked about an opportunity to bargain between the people and using the use of property rights to define the outcome and so you can achieve in a fish an outcome where people are happy with the level of water quality but it doesn't necessarily mean that it's going to be an equitable outcome depending on who has the property r so in this case you could have a bargain in which requires a well defined property rights system and legal institutions but you can also have government intervention of course and you could think about some system of taxation for excess nutrient runoff to kind of provide incentives for the ranchers to change their behavior put up fencing around the water the exposure above ground water bodies to prevent the degradation to happen so i don't think i share entirely your skepticism of the mark market framework but certainly it's not appropriate for every solution we can always rely on the mark and so we do have to have some type of intervention under these conditions so if you want to talk a bit more about what you're doing for forward sure i mean gaijin i'm still quite interested in the provision of these environmental public goods so i'm looking at a couple of different research projects one i mentioned briefly that came out of my work with the natural capital project we were approached by some of the governments in on the island of sumatra in indonesia which is home to many and demick charismatic species of the  the elephant the rhinoceros and these governments of some of the provinces were thinking about how to design a conservation corridor or that could help improve the population and maintain the long term viability of the population for the tiger and we were approached to say what hat what would happen how would we change the spatial layout of this conservation area if we took into account some of these others ecosystem services such as you might your audience might be familiar with the impact that indonesian deforestation has on carbon emissions released because there's a lot of carbon in the above ground biomass of the forest but also some of these forests arm are in peat soils which stores even an order of magnitude more carbon per the forest itself so when we convert that to oil palm production we lose a lot of carbon so if we thought about how we could use these conservation corridors to save some of those forests we used the tool invest to provide different alternatives spatial configurations of the park and from that work i became very interested in this idea of forced conversion and how we could engage in more efficient use of the resource there are basically two different types of deforestation forces are forced conversion forces in indonesia the large plantations which are generally well funded multinational corporations and the rural populations  small holders engaged in sometimes subsistence but also sometimes production for sale in markets and this is an interesting topic when we think about the idea of where we're getting our food from how you know we've got this population that's growing with increasing wealth so there's more demand for more resource intensive production and one of the things that's very popular is thinking about where do we locate our agricultural lands that had been under production or were currently under production but just didn't have the capital to be reaching their potential yield then maybe we could use we could meet our caloric goals without losing the forest and so my research looked at the interplay looks at the interplay between small holders and plantations and when you have this idea that maybe we should just have the plantations use the land that the smallholders are currently using if there were markets for land if the property rights were well defined that would seem ok because the value of the land to the multinational industrial agricultural producers is greater than it is to small holders so they could pay the small holders for their and use the land and the small holders will be fairly compensated because property rights are well defined when you shift the plantations from converting forest to plantations to using the graded lands essential to small holders get kicked off their land and now because they weren't fairly compensated they're looking for someplace to go and they go into the forest so the potential efficiency gains that are available in theory actually aren't realized in practice because the legal institutions aren't in place to achieve those goals so unfortunately as with many of these stories about the environment these days it's somewhat of a depressing or disappointing outcome but that's that's some of the research that i'm i'm currently focusing on that i think is a political to many other systems where you have the interplay between small holder populations and the well capitalized corporations who are getting lease leasing rights from government's interest and the national capital project  it's got to work for years left it's a ten year project as i understand it yeah i think it will continue going i don't know so much about the time horizon but they are doing still great work pushing the boundaries on developing these complex natural science models to describe the natural processes behind these ecosystem services and then linking those to economic models that provide value for the services so that we can engage in prioritization of both resource use on terrestrial systems in resource use in marine systems so i think that it's an exciting time there i and we're looking at kind of  n anticipated partners supporting this this interest we when i was there i had secured some funding from the department of defense actually to look at how ecosystem service his could be affected by on base management on the different military installations throughout the u s and we partnered with three different military and solution installations in the continental u s and we're looking at how they could meet the you know they're subject to the same restrictions as other land owners of the endangered species act and other types of regulation how they could meet those goals more efficiently balancing the needs of training and of course one of the reasons the department of defense is interested in this they were very strategic when they located their bases they tried to have an installation a base in each of the different ecosystems represented in the u s because they wanted to be prepared to engage in combat in all the different systems around the world and so one of the kiko system services for them is training so they need to have these natural systems that are sufficiently robust to allow the troops to engage in the activities on them on the landscape but then to grow back and let the next rotation come through so that's one of these partnerships that you might not have thought of initially but in the absence of you know kind of regulation to ensure that these services are being provided we're seeing a lot of interest in private you for watching good night