Natural Capital Platform of Viet Nam
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The Viet Nam Natural Capital Platform is a national network of policy-makers, scientists, relevant development partners, NGOs/Civil Society and private sectors convened by the Institute of Strategy and Policy on Natural Resources and Environment (ISPONRE) to exchange knowledge and raise awareness for the importance of natural capital for green growth among relevant stakeholders, and to contribute to increased investments in natural capital and advance sustainable development in Viet Nam.
Events and ongoing activities
What is natural capital?
Natural capital refers to the goods and services provided by nature and is one of numerous commonly recognized forms of capital. The term is increasingly used to denote the parts of the natural environment that produce value to people and society. There is a wide diversity of definitions of the term natural capital. In essence, natural capital is considered to comprise the entirety of natural assets in their role of providing natural resource inputs and environmental services for economic production, human well-being and social development. Natural capital embraces three principal categories:
(1) natural resource stocks such as water, air or species, (2) land, and (3) ecosystems and ecosystem services.
Natural capital is considered to be most vital because it underpins all other types of capital such as manufactured, human and social capital, and therefore is the foundation on which our economy, society and prosperity is built.
The figure below depicts natural capital and its relation to other forms of ‘capital’, and to the generation of ecosystem services. Ecosystem services encompass very straightforward supplies such as water, food or plant materials, yet the term also describes less visible and tangible services like flood regulation, carbon sequestration or crop pollination.
Natural capital constitutes an irreplaceable provider of prosperity. This is particularly true for developing countries, where some 30% of the total wealth are derived from such capital (see also the figure below, which depicts a highly summarized list of natural capital, e.g. not mentioning biodiversity water resources and marine resources).
Why is natural capital important?
In many parts of the world economic development has advanced at the expenses of nature. More often than not, we have depleted our natural resources base and ecosystems faster than earth can replenish them, and at an accelerating rate. Human activity has eroded natural capital, especially in the past 50 years. These long-standing patterns of overuse, overexploitation and degradation have undermined much of our natural capital stock on a global scale and to an alarming extent. In response to rapidly dwindling natural capital, there is urgent need for us to take action to conserve and enhance our natural endowments on the pathway towards more sustainability in development and growth.
One of the principle reasons why the loss of natural capital continues to accelerate is because the value of environmental goods and services is routinely taken for granted as something infinitely available. Natural capital hence does not appear on traditional balance sheets, in the calculation of income accounts and national GDPs, and can therefore be invisible in local, national and regional economic decision-making. As a result, more often than not, we are drawing down too much stock from our natural endowments, while investing too little in its preservation and restoration.
It is for these reasons that bringing natural capital into policy processes, as well as raising awareness within the corporate sector and society as a whole are pivotal to achieving better economic and environmental outcomes. On a macro level, policies and legal frameworks need to take natural capital duly into account in decision making. In the same vein, large planning processes, such as for roads, industrial estate or water control infrastructure, need to incorporate impact assessments on the environment, both looking at positive and negative effects of human interventions. On the macro level, it is critical to make business understand its dependency on natural assets and to develop policies, tools and metrics to integrate natural capital into private sector accounting, business structures and corporate decision-making. This requires the integration of natural capital considerations into manufacturing processes, service provision as well as financial products. In doing so, mainstreaming natural capital contributes to the promotion of green growth and sustainability.
Natural Capital in Viet Nam
It is fair to say that natural capital is an invaluable asset for Viet Nam and plays an important role in the strategy of socio-economic development and environmental protection. Natural capital includes geological elements, soils, air, water and all living organisms that provide people with a wide range of free goods and ecosystem services, which underpin Viet Nam’s economy and society. Natural capital is considered a firm foundation for the development of a sustainable green economy/green growth in Viet Nam. Values of ecosystem services, national parks, nature reserves, natural heritages, biosphere reserves, Ramsar sites or ASEAN heritage parks are the basis for developing green economic sectors such as eco- and spiritual tourism. Moreover, they are carbon sinks and water storage tanks and create renewable and clean energy. Functions and values of Viet Nam’s natural capital are huge, and therefore constitute a central theme in Viet Nam’s strategy on sustainable development. The country’s economic development cannot function in a long-term perspective if it does not manage to preserve Viet Nam’s natural assets.
Formerly a poor country severely damaged by wars, Viet Nam has made significant socio-economic progress in recent decades and is on the path to becoming a middle income country (nominal per capita GDP was around US$1,900 in 2014). Viet Nam’s economic growth rate is one of the fastest in the Asia Pacific region and is associated with substantial improvements in poverty reduction, social equity, healthcare and sanitation. Viet Nam is recognized as one of the early achievers of the Millennium Development Goals on poverty reduction. Viet Nam scored well in the health component, which is proxied by life expectancy, compared to its Asian peers.
In addition to macroeconomic and microeconomic competitiveness factors, Viet Nam’s natural capital, one of the key endowments of the country including its water, forests, minerals, marine resources, and biodiversity, has played a crucial role in the country’s social and economic development. Along with capital, natural resources have been identified as the main factors contributing to the country’s economic growth, accounting for more than 50% of GDP. The natural resources account for almost a third of total wealth. Almost half of the country’s labor force is currently employed in the agriculture, forestry and fishing sector, which contribute 17.7% to the national GDP. Natural capital also supports many fast-growing manufacturing and service sectors, and according to the Asian Development Bank, a large percentage of the value of Viet Nam’s exports is based on natural resources, notably rice, seafood, crude oil, timber, coffee and rubber. The tourism sector, based largely on Viet Nam’s natural scenic beauty, contributes 3.8 % to the GDP.
The intensity of use of some basic natural resources such as land, water, and energy to produce one unit of economic output in Viet Nam tended to decrease during the time period 1990–2007. In other words, the country tended to use fewer resources to generate $1 million of GDP. Although these figures demonstrate an increase in efficiency in resource use, the World Bank confirms that the absolute level of resource use has continued to increase. The rapid growth of the economy implies that the absolute levels of pollution are rapidly increasing. Taken together, population growth, urbanization, and industrialization have had significant impacts on Viet Nam’s natural capital. For instance, the most serious water pollution emanates from the production of textiles and food. This development is also threatening biodiversity in a country with globally significant amounts of it, as nearly 10 percent of the world’s mammal and bird species are found in Viet Nam.
In fact, natural capital and environmental externalities have not been fully accounted for in Viet Nam’s economic development. The Government has realized the challenges in providing inclusive, sustainable growth and has developed several policies, programmes and targets in this line:
- Socio-Economic Development Strategy (2010 – 2020) and Plan (2011-2016)
- Viet Nam Green Growth Strategy and Action Plan
- National Strategy for Environmental Protection to 2020 with Vision Towards 2030
- Strategy for Sustainable Development in Vietnam for the period 2011-2020
- National Strategy and Action Plan on Climate Change
- National Statistics Indicator System (NSIS)
- Viet Nam Statistical Development Strategy 2011-2020
- Party Resolution 24
Furthermore, a report on ‘Adopting a Natural Capital Approach to Integrate Natural Resources Management, Environmental Protection and Response to Climate Change in a time of International Economic Integration’ has been produced.
However, planned major investments are not yet “green”, and natural capital and ecosystem use are still not explicitly accounted for. It has become clear that some form of natural capital and environmental accounting is needed to ensure future sustainable development.
Vision and Mission
Understanding of our relationship with natural capital leads to action to protect and rebuild it.
Leadership to galvanize action both within and beyond Viet Nam’s borders.
Calculate the monetary value of Viet Nam’s natural capital and the cost of depleting it. This will involve coordinating experts including accountants, people from business, academics and policymakers.
Communicate the risk of depleting Viet Nam’s natural capital and the huge economic value from protecting and enhancing it to a broad range of businesses and other stakeholders.
Set up collaborative projects to deliver tangible actions to protect and enhance Viet Nam’s natural capital.
The goals of the Natural Capital Platform are:
to promote the development of a network across government agencies, the business communities, trade unions, conservation NGOs and other stakeholders that will work to inform and assist in the adoption of natural capital as a core component of public policies and corporate and organizational strategies
to support the development and adoption of a natural capital accounting standard across both public and private sectors of the Viet Nam economy with reference to international best practice and guidelines
to ensure that Viet Nam achieves international recognition as a thought leader and exemplar implementer of the natural capital principles and practices, leading to the timely and effective conservation, sustainable management and restoration of the country’s natural capital and ecosystem goods and services for the benefit of Viet Nam’s society