Operationalising the concept of critical natural capital to understand and manage nature dependency risk

• The concept of critical natural capital can be applied to manage nature dependencies. • Existing definitions of critical natural capital conflate identification and protection. • A clarified definition and framework for determining critical natural capital is proposed. • Global and national policy applications are discussed. Human dependency and use of ecosystem services have led to the depletion and degradation of natural capital, putting human wellbeing and economic prosperity at risk. The concept of critical natural capital offers a pathway to better understand and manage dependencies and inform government policy by supplementing existing management of environmental impacts. This paper reviews the existing definitions and frameworks for determining critical natural capital and proposes a new approach, informed by global accounting standards, that can be operationalised in Australia and other country contexts. We propose that the primary concern for identifying critical natural capital is determining what is most important, for whom and for what purpose, at a given point in time. A hierarchical importance framework is suggested to identify critical natural capital and ecosystem services that are essential to human wellbeing. Historically, key vulnerability factors such as substitutability, scarcity and threats were also proposed to identify critical natural capital. We argue that these factors should be omitted from the identification process and instead be included in subsequent risk assessments and associated policy processes. This means that the initial identification of critical natural capital should not automatically lead to conservation or protection. Rather, practical operationalisation necessitates that a range of policy options be considered. The proposed framework enables explicit and proactive management of nature-related dependency risks of interest to governments, complementing evolving efforts in the private sector.