Valuing Natural Capital in the Urban Environment

Posted by | May 25, 2012

We here in Portland, Oregon have a reputation for being a little different.  Maybe not quite as different as we’re depicted in “Portlandia,” but we do tend to think “green” a bit more than the mainstream.  However, you may be surprised how many cities are considering natural capital investments as part of their long term infrastructure planning.  Natural capital is a term that describes the benefits that we receive from our environment.  These benefits include resources like air, food, water, minerals, and energy, and they also include services, such as water purification, climate regulation, waste decomposition, and crop pollination.  Natural processes like this are happening all around us, visibly and invisibly, in a scope that’s almost too vast to comprehend.  The value that these ecosystem services deliver to the economy is just as immense, and their complexity is irreplaceable by human technology.

Human impacts can damage the health of ecosystem function, which, over time, can degrade their abilities to provide necessary services.  This is particularly evident in urban areas—their environments are dominated by human technology and their infrastructure must operate on a large scale in order to offer transportation, food, housing, and recreation to a dense population.  When confronted with environmental challenges, such as clean drinking water, wastewater treatment, or air filtration, some municipalities are identifying that their highest value investment is to take a Green Infrastructure approach to invest in their natural capital.  Supporting the natural processes of ecosystems turns out to be less capital intensive than trying to build and maintain systems to provide the same services.

A prominent example is from New York City in the 1990s, when the city’s drinking water quality had fallen below standards required by the Environmental Protection Agency.  Water quality in the city had historically been very high, but its source in the rural Catskill-Delaware watershed had undergone several decades of increasingly intensive agriculture, and was rapidly transitioning to higher population suburban developments.  The city estimated the costs to build and operate a water filtration plant at $6-8 billion, with an annual cost of $300-400 million.  But rather than pursue this route, it opted to spend approximately $1 billion to restore the watershed so that it was once again able to purify water through its diverse ecosystem services.

Some examples from our home region of the Pacific Northwest include retrofitting Portland, Oregon neighborhood streets with bioswales and tree planting projects that capture 80-95% of stormwater runoff and filter its pollutants onsite.  This practice has reduced sewer overflows and the need to upsize existing infrastructure pipes, which avoids considerable expense.  In Seattle, Washington, replacing streets with permeable pavement and other green infrastructure has cut paving costs almost in half.

Many more pilot projects, and studies to quantify their impacts, are currently underway around the world.  The majority of projects are not made more expensive by their environmental investments, in fact, they are of equal or lesser expense.  It is encouraging to see this trend in cities embracing the vision of an ecosystem services approach and linking it to long term economic value.


Amanda is Portfolio 21 Investments' Communications Manager.  She has more than 10 years of research, communications, and interactive media experience in the financial industry.

Post categories: ecosystem services, environmental health

Add your comment:

Thanks very much for leaving a comment.


I understand and would like to proceed. »