Natural Capital

Natural capital includes, first of all, the resources that we can easily recognize and measure such as minerals and energy, forest timber, agricultural land, fisheries and water. It also includes ecosystems producing services that are often ‘invisible’ to people such as air and water filtration, flood protection, carbon storage, pollination for crops, and habitat for fisheries and wildlife. – Definition from the Wealth Accounting and the Valuation of Ecosystem Services partnership (WAVES)

Productivity

A key indicator of a firm or nation’s economic strength is its productivity, and the rate of growth/decline in key measures of productivity. Conceptually, productivity describes the relationship between the output of economic activity and the use of inputs in the production process.

Output can be a physical measure (e.g., number of widgets produced) but is commonly measured in dollars. Input is the quantity of a one or more input(s), (e.g., labour or capital, or both) and is also commonly measured in dollar value. The greater the ratio between outputs and inputs, the more productive is the firm, sector or economy.  This is a measure of productivity at a point in time; often productivity growth is measured.

Total factor productivity or multifactor productivity (MFP) refers to measuring productivity based on all inputs, while partial factor productivity (PFF) refers to measuring productivity based on just one input, such as labour.  Countries, firms and sectors that are innovative and invest in more effective use of their capital improve their productivity, grow their economic output, and thus increase their standard of living.