BASIN Field Manual
Natural Capital Investments
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    • Glossary
    • Land Cover Classification & Ecosystem Typologies
      • Ecosystem Classification Frameworks
        • IUCN Global Ecosystem Typology 2.0 (IUCN GET 2.0)
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    • Ecosystem Services Classification
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        • System of Environmental-Economic Accounting - Ecosystem Accounting (SEEA EA)
        • Common International Classification of Ecosystem Services(CICES) V5.1
        • Ecosystem Services Valuation Database (ESVD)
        • FEMA Ecosystem Service Value Updates
        • IPBES Global Assessment of Biodiversity and Ecosystem Services (NCP)
        • Exploring Natural Capital Opportunities, Risks and Exposure (ENCORE)
        • TNFD Environmental Assets & Ecosystem Services
        • Integrated Valuation of Ecosystem Services and Tradeoffs (InVEST)
        • Swiss Re Biodiversity and Ecosystem Services Index (BES)
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        • Existence
    • Real Asset Classification & Real Property Considerations
    • Value Types & Valuation Methods
      • Types of Value
        • Values Across Cultures
      • Valuation Methods
    • Selected Value Types & Valuation Methods
      • Fundamentals of RealValue
      • Real Asset Values
        • Cap Rate Overview
      • Ecosystem Service Values
    • Ecological Indicators & Metrics
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  • Natural Capitalization Rate
  • Formula
  • Use Cases
  • Relational Value

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  1. RealValue
  2. The RealValue of Natural Capital

Natural Cap Rate

PreviousFLOWS ValuesNextRealValue Use Cases

Last updated 1 year ago

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Capitalization Rates, or Cap Rates, serve as a fundamental tool in real estate investment for valuation and comparison. Their simplicity and efficiency make them popular for quickly assessing relational value. The Natural Cap Rate works the same way as a Cap Rate but instead of focusing just on financial income it incorporates holistic ecological value.

Natural Capitalization Rate

A Natural Capitalization Rate expresses the relationship between the stocks and flows of ecological value. This indicator allows for comparison across polygons and ecosystems based on condition, intervention, and underlying real asset market values.

Formula

Use Cases

  • compare ecosystem values

  • compare polygons

  • compare existing conditions to proforma conditions

  • compare markets

  • prescribe value to a property via cap rate

  • calculate uplift and value change

Relational Value

A Natural Cap Rate is a quick expression of the relational value of natural asset stocks and ecosystem flows. For example, the following can be expressed as:

a) a natural cap rate of 493%

OR

b) using $ values:

FLOWS: $1,449,703

STOCKS: $294,250

GAP: $1,155,453

They both say the same thing about this: