QUALITY OF THE ENVIRONMENT AND VITALITY OF ECOSYSTEMS AS COMPONENTS OF NATURAL CAPITAL

Authors

  • Slobodan Cvetanović Faculty of Business Economics and Finance, Educons University in Sremska Kamenica, Serbia
  • Dragan Turanjanin Faculty of Management in Sremski Karlovci, Union University Nikola Tesla Belgrade, Belgrade, Serbia

Keywords:

natural capital, natural resources, environment, ecological performance index

Abstract

Natural capital, i.e. natural resources and the environment play an important role in increasing the well-being of people in certain countries. Physical, human, natural and social capital are the four forms of capital most talked about in the theory and policy of economic development. In the past, natural capital was treated as an abundant factor of production, so it did not matter, in economic terms, whether it was a supplement or a substitute for man-made capital. However, today the category of natural capital has in the true sense the treatment of a rare factor of production, as a result of which the available natural resources and the absorption capacity of the environment impose practical restrictions on economic activities. The environment represents natural and created values whose complex interrelationships make up the environment. Activities that affect the environment include activities that change the state and conditions in the environment, and relate to: use of resources; production and traffic processes; distribution and use of materials; release (emission) of pollutants into water, air or soil; management of waste and wastewater, chemicals and harmful substances; noise and vibration; ionizing and non-ionizing radiation, etc.
Natural capital is characterised by the facts that distinguish it from all other types of capital. This form of capital provides basic life support functions, which are naturally included in the production process, which refers to the first law of thermodynamics and is often unique in its manifestations of negative results in practice. Uncertainty and aversion to these processes make it difficult to decide which part of natural capital needs to be preserved. A good example of such a claim could be the case of protecting huge biodiversity loss, such as the protection of the ozone layer. Limiting the emission of radioactive radiation caused by global warming, the release of toxic chemical pollutants, deforestation and soil erosion represent the activities that are in the function of sustainable use of natural capital. Because of all this, when considering growth factors, economic theory must take into account the optimal macroeconomic size. The concept of optimal macroeconomic size is particularly important for the global economy, because national economies can partially exceed the limits imposed by the availability of natural resources through international trade. One of the conditions for the long-term economic sustainability of countries is the preservation of total capital stocks, which are seen as drivers of economic growth. This fact makes the issue of substitution of certain forms of capital in the process of production relevant. Natural capital is as important as capital created by people. It should be borne in mind that the laws that determine the use of certain forms of natural capital, such as energy resources, water, chemical elements and living beings, are de facto physical laws described in physics, chemistry, biology. Therefore, without their respect, it is not possible to discuss natural capital, constraints and the quality of growth of the global economy. In short, when considering the interconnectedness of natural capital, physical limits and the quality of growth of the global economy, it is necessary to combine the postulates of economic analysis and the principles of ecology. However, such an approach does not mean marginalization of the importance of certain instruments of economic analysis, but only the determination that the economic approach in studying the category of natural capital, physical limits and quality of growth of the global economy must be supplemented by a number of environmental criteria.

References

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Published

2022-03-30

How to Cite

Cvetanović, S., & Turanjanin, D. (2022). QUALITY OF THE ENVIRONMENT AND VITALITY OF ECOSYSTEMS AS COMPONENTS OF NATURAL CAPITAL. KNOWLEDGE - International Journal , 51(3), 431–436. Retrieved from https://ikm.mk/ojs/index.php/kij/article/view/5125

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