Natural capital refers to the components of the natural environment, such as soils, air, water, geology, and all living organisms. It provides valuable goods and services to society and is a key component of economic growth. However, natural capital is experiencing a severe decline, and the world’s stock of natural capital is being used faster than it takes to regenerate. Increasing pressure on natural capital is driven by various factors, including agriculture expansion and deforestation, urbanization, infrastructure development, pollution, and poaching, among many others.

These factors are compounded by climate change's impacts, making it even more critical to stop natural capital degradation and preserve ecosystem services. It is also essential to respond to climate change, as ecosystems regulate the global climate and provide resilience against climate-related adverse events by sequestering and storing greenhouse gases and removing pollutants from the atmosphere. They also regulate water flow and serve as buffers against natural disasters resulting from climate change.

Episode 4 of the Webinar Series on the Economics of Climate Change highlighted the value of nature, which is too often unpriced or undervalued. It also focused on actions policy makers can take to reverse this trend, restore natural capital, and support “nature-positive” investments. Through examples from across the region and beyond, experts explored various economic tools, market-based instruments, and other solutions to stop natural capital degradation.