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InvisibleSilversoul
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Natural Capitalism
    #4022114 - 04/06/05 05:29 PM (11 years, 7 months ago)

link

What is Natural Capitalism?

The Industrial Revolution made people vastly more productive when low per-capita output and a relative scarcity of people were limiting progress in exploiting a seemingly boundless natural world. Today we face a different pattern of scarcity: abundant people and labor-saving machines, but diminishing natural capital.

Natural capital refers to the earth's natural resources and the ecological systems that provide vital life-support services to society and all living things. These services are of immense economic value; many are literally priceless, since they have no known substitutes. Yet current business practices and public policies typically ignore their value. As a result, natural capital is being degraded and liquidated by the wasteful use of energy, materials, water, fiber, topsoil, and ecosystems.

The next Industrial Revolution, already emerging, is a response to the changing pattern of scarcity. It will transform industrial processes and business practices to economize on what is now the limiting factor of production: natural capital. Our experience shows that firms typically enjoy increased profit and distinct competitive advantages by doing business as if natural capital were properly valued, even when (as now) it is valued at zero.

The Four Principles of Natural Capitalism
Natural Capitalism is a new business model that synergizes four major elements:
  • Radically increase the productivity of resource use. Through fundamental changes in production design and technology, leading organizations are making natural resources stretch five, ten, even 100 times further than before. The resulting savings in operational costs, capital, and time quickly pay for themselves, and in many cases initial capital investments actually decrease.
  • Shift to biologically inspired production (Biomimicry) with closed loops, no waste, and no toxicity. Natural Capitalism seeks not merely to reduce waste but also to eliminate the concept altogether. Closed-loop production systems, modeled on nature's designs, return every output harmlessly to the ecosystem or create valuable inputs for other manufacturing processes. Industrial processes that emulate nature's benign chemistry reduce dependence on nonrenewable inputs, eliminate waste and toxicity, and often allow more efficient production.
  • Shift the business model away from the making and selling of "things" to providing the service that the "thing" delivers. The business model of traditional manufacturing rests on the sporadic sale of goods. The Natural Capitalism model delivers value as a continuous flow of services?leasing an illumination service, for example, rather than selling light bulbs. This shift rewards both provider and consumer for delivering the desired service in ever cheaper, more efficient, and more durable ways. It also reduces inventory and revenue fluctuations and other risks.
  • Reinvest in natural and human capital. Any good capitalist reinvests in productive capital. Businesses are finding an exciting range of new cost-effective ways to restore and expand the natural capital directly required for operations and indirectly required to sustain the supply system and customer base.



Innovative organizations are already prospering from these four principles. Their leaders and employees are also feeling better about what they do: eliminating unproductive tons, gallons, and kilowatt-hours makes it possible to invest in human capital?the people who foster the innovation that drives future success.

This thesis is fully developed in Natural Capitalism: Creating the Next Industrial Revolution, co-authored (with Paul Hawken and Hunter Lovins) by Rocky Mountain Institute CEO Amory B. Lovins.



"Natural Capital" refers to the natural resources and ecosystem services?air and water purification, climatic stabilization, waste detoxification, and so on?that make possible all economic activity, and indeed all life. Ecosystem services are of immense economic value; some are literally priceless, since they have no known substitutes. Case in point: in 1991?92, the $200-million Biosphere II project in Arizona was unable to sustain breathable air for eight people. Biosphere I?Earth?performs this task daily at no charge for six billion people.



"Human Capital" refers to the monetized "human resources" of educated minds and skilled hands and the far more valuable but unmonetized "social system services"?culture, wisdom, honor, love, and a whole range of values, attributes, and behaviors that define our humanity and make our lives worth living. Just as unsound ways of extracting wood fiber can destroy the ecological integrity of a forest until it can no longer regulate watersheds, atmosphere, climate, nutrient flows, and habitats, unsound methods of exploiting human resources can destroy the social integrity of a culture so it can no longer support the happiness and development of its members. An overworked but undervalued workforce, outsourced parenting, the unremitting insecurity that threatens even the most valued knowledge workers with fear of layoffs?these all corrode community and undermine civil society. The health of societies depends not only on choosing the right means to satisfy human needs but also on understanding the interlinked pattern of those means.


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Offlinecb9fl
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Re: Natural Capitalism [Re: Silversoul]
    #4022152 - 04/06/05 05:41 PM (11 years, 7 months ago)

Sounds like a lot of rhetoric with no solid implementation examples.


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It is better to be hated for what you are than to be loved for what you are not. -Andre Gide

"Generosity is nothing else than a craze to possess. All which I abandon, all which I give, I enjoy in a higher manner through the fact that I give it away. To give is to enjoy possessively the object which one gives."


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InvisibleSilversoul
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Re: Natural Capitalism [Re: cb9fl]
    #4022178 - 04/06/05 05:52 PM (11 years, 7 months ago)

First off, it's just supposed to be a summary of the idea, so it's not going to have a lot of examples of implementation. Second, it's a relatively new concept, so it still hasn't caught on very much. If you'd like to know more about it, you can look here or here. The article I posted was chosen because it was the shortest, and got right to the point.


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InvisibleSilversoul
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Re: Natural Capitalism [Re: cb9fl]
    #4022331 - 04/06/05 06:35 PM (11 years, 7 months ago)

Also, while this is just a business model, I've become particularly interested in the prospect of a "biosecurity standard" to replace our current system fiat currency, which is based on debt, with a new monetary system which ties currency to natural capital. That way, not only would it be beneficial for a company to follow the Natural Capitalism business model, but it would actually be financially harmful for them to not take better care of the earth. Current environmental regulations fine companies for polluting, which requires government bureaucracy to monitor. But if the currency itself is tied to the ecological health and sustainability, then they will regulate themselves, because it is financially beneficial for them to do so.


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InvisiblePsychoactive1984
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Re: Natural Capitalism [Re: cb9fl]
    #4022693 - 04/06/05 08:00 PM (11 years, 7 months ago)

Quote:

cb9fl said:
Sounds like a lot of rhetoric with no solid implementation examples.




:thumbup:

~Fluff.

Would love to read the book, but not shelling any $$ out for something that doesn't go so far as to at least generalize it's plan beyond some very vague premises. Nice idea nonetheless, would like to read more without paying for it.


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"Their is one overriding question that concerns us all: How can we get out of the fatal groove we are in, the one that is leading towards the brink?" Albert Szent-Gyorgyi
"We may not be capable of eradicating the corruption of reason, but we must nevertheless counter it at every instance and with every means." Dan Agin
"Politics is the best religion and politicians are the worst followers."
-It's ok to trip as long as you don't fall.
-Substance over Style.
-Common sense is uncommon.


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Offlinesnoopaloop53
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Re: Natural Capitalism [Re: Psychoactive1984]
    #4023024 - 04/06/05 09:04 PM (11 years, 7 months ago)

It kind of sounds like a bunch of hippy "why can't we all just get along man and live nature" BS to me. It doesn't sound like it takes into account the human drive of competition. Remember at some point everyone wants to beat someone at something and for some it's in the business world.


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InvisibleRandalFlagg
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Re: Natural Capitalism [Re: Silversoul]
    #4023153 - 04/06/05 09:25 PM (11 years, 7 months ago)

Quote:

Paradigm said:
Natural Capitalism is a new business model that synergizes four major elements:




Isn't synergize a word that stupid people use in order to sound smart?  :smirk:

But seriously, I think the market will drive this kind of stuff.  The market makes demands and the businesses comply.  If people start demanding bio-ethical behavior in companies, these companies will comply.  I think most economic purchases and choices come down to quality and price.  Is the thing in question good and is it a reasonable price?  That's what people care about and that is what drives the market.


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InvisibleSilversoul
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Re: Natural Capitalism [Re: RandalFlagg]
    #4024731 - 04/07/05 04:05 AM (11 years, 7 months ago)

Quote:

RandalFlagg said:
But seriously, I think the market will drive this kind of stuff. The market makes demands and the businesses comply. If people start demanding bio-ethical behavior in companies, these companies will comply. I think most economic purchases and choices come down to quality and price. Is the thing in question good and is it a reasonable price? That's what people care about and that is what drives the market.



Do you not accept that market paradigms change, and can become more efficient? Do you believe the market to be omnipotent? I don't think you'll find anyone who doesn't want us to attain ecological sustainability, so why hasn't the market responded to that? It's because the market has thus far failed to assign financial value to it. We need to understand that nature is not free. We end up paying for it one way or another, even though it's not calculated in accounting. If we can assign value to something like gold, and even have a currency based on that value for most of our existence, why can't the same be true for sustainable development? Is that not something that people value highly?

Since our very existence depends upon it, sustainability is extremely valuable. Some would say priceless, but we must realize that economists currently can and do calculate and assign value to human life. The reason that we do not assign monetary value to the ecosystem is that for so much of our existence we were able to take it for granted. Not so anymore. Our unsustainable development does have a social cost, which can be quantified with the proper calculations. Similarly, the services nature provides us can be quantified the way human services are.

One economist, Robert Castanza, ran the numbers and came up with a value of $33 trillion, as opposed to the $25 trillion total yield of human economic activity. That means that there simply is not enough money in the world to replace these services, so sustainability is an economic imperative. Even though we probably won't ever deplete all the earth's natural capital, the more we deplete, the more we raise the cost of living by shifting the burden of providing these services onto ourselves.

The author of that website is not just some hippy who wrote a book. He has been a consultant for several major clients, including Interface, STMicroelectronics, the World Bank, Dow Chemical, Monsanto, H.P. Bulmer, LucasFilm, the White House, and many others, as well as starting several businesses himself.

Simply put, using natural resources efficiently and sustainably reduces costs and improves long-term gains. The main problem is that most business don't know how to do this, because they don't know how to quantify nature's value. By learning to do this, and how to create close-loop systems which maximize the efficiency of this value, they stand to gain a lot.

And as I said, the best way to make nature's value apparent would be to tie our currency to natural capital, the same way we once did with gold, and the way we currently do with credit expansion. That would make the plunder of natural resources a direct cause of inflation, and thus inherently unprofitable. It's already less profitable than a closed-loop system, but most aren't able to see that.


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Edited by Paradigm (04/07/05 04:19 AM)


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InvisibleSilversoul
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Re: Natural Capitalism [Re: snoopaloop53]
    #4025067 - 04/07/05 08:03 AM (11 years, 7 months ago)

Quote:

snoopaloop53 said:
It kind of sounds like a bunch of hippy "why can't we all just get along man and live nature" BS to me. It doesn't sound like it takes into account the human drive of competition. Remember at some point everyone wants to beat someone at something and for some it's in the business world.



He most definitely takes competition into account. He expects it and relies on it. His point is not just that sustainability is desirable or necessary(everyone, even the ones doing the most polluting, knows that), but that it is profitable, and gives businesses a competitive advantage. The reason so many businesses fail to realize this is the accounting oversight of failing to account for natural capital. He knows how business works. He's run several companies himself, and has been a consultant for many major corporations as well as small businesses.


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Offlinecb9fl
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Re: Natural Capitalism [Re: Silversoul]
    #4025101 - 04/07/05 08:27 AM (11 years, 7 months ago)

I started a thread a while ago that I believe pertains to the problem with companies and the environment.

Quote:

If distortions are eliminated, the market should respond perfectly to their "votes," expressed in dollars or some counterpart. The value of a person's interests is measured the same way. In particular, the interests of those with no votes are valued at zero: future generations, for example.




If a company finds it has enough natural resources to sustain itself why should it care about future generations. As has been stated on here by many people a company is legally obliged to make a profit and has none of the moral commitments a person might have.


--------------------
It is better to be hated for what you are than to be loved for what you are not. -Andre Gide

"Generosity is nothing else than a craze to possess. All which I abandon, all which I give, I enjoy in a higher manner through the fact that I give it away. To give is to enjoy possessively the object which one gives."


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InvisibleSilversoul
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Re: Natural Capitalism [Re: Psychoactive1984]
    #4025174 - 04/07/05 09:36 AM (11 years, 7 months ago)

Quote:

Psychoactive1984 said:
Quote:

cb9fl said:
Sounds like a lot of rhetoric with no solid implementation examples.




:thumbup:

~Fluff.

Would love to read the book, but not shelling any $$ out for something that doesn't go so far as to at least generalize it's plan beyond some very vague premises. Nice idea nonetheless, would like to read more without paying for it. 



I already posted a couple.  Here they are again, plus more:


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Edited by Paradigm (04/07/05 10:54 AM)


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InvisibleSilversoul
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Re: Natural Capitalism [Re: cb9fl]
    #4025429 - 04/07/05 10:53 AM (11 years, 7 months ago)

Quote:

cb9fl said:
I started a thread a while ago that I believe pertains to the problem with companies and the environment.

Quote:

If distortions are eliminated, the market should respond perfectly to their "votes," expressed in dollars or some counterpart. The value of a person's interests is measured the same way. In particular, the interests of those with no votes are valued at zero: future generations, for example.




If a company finds it has enough natural resources to sustain itself why should it care about future generations. As has been stated on here by many people a company is legally obliged to make a profit and has none of the moral commitments a person might have.



This isn't about future generations. It's more profitable right now to have a closed-loop system of sustainable natural capital. The demand for a clean, stable environment is already here. The problem is that right now no one puts a price tag on it, so companies don't see it as something they can invest in. But nature does produce value. The services it provides are estimated to be worth about $36 trillion annually in human labor, which is what has to replace those services if they are depleted. If that were a stock which yielded that amount of interest annually, that would make the world's natural capital worth anywhere between $400-500 trillion. This value is depleted when these resources are wasted. Natural Capitalism teaches companies to invest in this asset by maximizing their productive output and efficiency, and eliminating waste. How could maximum efficiency not be profitable, especially with something so valuable?


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