Natural Capitalism
Resource productivity framed as an unpriced balance-sheet asset.
Summary
Hawken, Amory Lovins and Hunter Lovins argue that the next industrial revolution will come from treating natural resources and ecosystem services as capital that must be maintained rather than as free inputs, and that doing so is profitable rather than costly.
They propose four principles. Radically increase resource productivity, which they argue can be achieved by factors of four to ten through design rather than through new technology, and they give worked examples in buildings, vehicles and industrial processes. Shift to biologically inspired production with closed material loops, so that waste from one process is input to another and nothing is disposed of. Move to a service and flow business model in which manufacturers retain ownership of products and sell their use, which aligns the producer's incentive with durability and recovery rather than with replacement. And reinvest in natural capital, meaning the ecosystem services that no market prices.
The resource productivity material is the strongest part. Lovins' argument that whole-system design produces savings that component-by-component optimisation cannot, because savings compound across a system, is well demonstrated with engineering examples including the hypercar concept and building retrofits.
The book is from 1999 and is advocacy. Its central claim that resource efficiency is generally profitable has been partly borne out and partly not, since many of the efficiency opportunities identified have not been taken up, which suggests barriers the analysis underweights. The service model has been adopted in some industries and not others.
Key takeaways 7
- Resource productivity can be raised by factors of four to ten through whole-system design rather than through new technology.
- Whole-system design produces savings that component-by-component optimisation cannot, because efficiency gains compound across the system.
- Selling the use of a product while retaining ownership aligns the manufacturer's incentive with durability and material recovery rather than with replacement.
- Waste is a design failure rather than an inevitable output, and closed material loops eliminate the category.
- Ecosystem services have enormous economic value and no price, which is why they are depleted despite being more valuable than what replaces them.
- Efficiency opportunities that are profitable frequently go untaken, which indicates institutional and incentive barriers rather than technical ones.
- Treating natural resources as capital to be maintained rather than as income to be spent changes what counts as a return on investment.
Who should read it
Operators in resource-intensive industries interested in whole-system efficiency design and product-as-service business models.
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