I see Dead Capital

In the 1999 film, Sixth Sense, a young boy tells his psychologist, “I see dead people”. Of course, many think the boy is mistaken, even delusional, because they cannot see what he sees. The boy explains that the people are unaware they are dead because they only see what they want to see.

Airbnb

In 2007, Brian Chesky and Joe Gebbia saw that their living room could function as a bed and breakfast and came up with the idea of putting an air mattress in their living room. This idea turned into Airbnb, a company that recognizes vacant rooms as underutilized assets. In other words, they saw dead capital or saw property capital that acted like it was dead. The odd thing is that they were the only ones that were aware of this value even though most everyone has seen a vacant room that could be used by a guest. Since they pointed this out and created a means for exchange, millions of people have become aware of their underutilized room assets and it has brought billions of dollars into the economy.

Dead Capital

Dead capital is an economic term related to property, that for a variety of reasons cannot be exchanged for financial capital. Of course, a vacant room is not completely dead, but rooms act like dead capital when they could be used, but there is no way to for owners and potential guests to connect and transact.

Uber

In 2008, Travis Kalanick and Garret Camp couldn’t get a ride on a cold December night and recognized idle cars were also an underutilized asset. They, too, saw dead capital and founded Uber. One could imagine how a conversation would have gone if Travis and Garret were to explain to someone in 2008 that a parked car on the street could be capitalized by the owner and anyone walking down the street that needed a ride. They might as well have told them they saw dead people. For presumably many reasons, they were the only ones that could see idle cars as dead capital. Once they pointed this out and provided the means for owners and riders to connect, millions of people have recognized their idle cars as underutilized assets and brought billions of dollars into the economy — that was already there.

Ever since Uber and Airbnb began connecting underutilized assets with owners and users, 2-sided platforms have brought billions of dollars' worth of dead, sort of dead, or idle capital back to economic life.

Dead Natural Capital

In 2009, I saw dead capital, too. I was managing a farm operation and I was well aware of the emerging ecosystem service markets such as carbon, water quality, biodiversity, etc. and how natural capital was the source of those values. Relative to its ecological function our farm’s natural capital was alive, but relative to the economic system it was dead. Without recognized property rights of ecosystem services or an efficient means to account for and transact, and without convenient access to markets, these natural capital assets are essentially dead capital unable to generate returns that represent their full value.

EcoCommerce and the NCU

In 2011, I published EcoCommerce 101: Adding an ecological dimension to the economy to describe the how a portion of the Earth’s natural capital — the portion that the ecosystem service markets were based on — functioned economically as dead capital. I had hundreds of conversations about the variety of metrics that bring this dead natural capital into economic life. Many of those conversations were discounted as perhaps me being an environmental zealot or economically naive — mistaken for sure, perhaps delusional. By the looks on some of people’s faces, I might as well have told them, “I see dead people”.

In 2016, I published Shared Governance for Sustainable Working Landscapes to introduce the NCU (natural capital unit). The NCU is the accounting unit to bring the economically dead natural capital alive. The NCU identifies four functioning layers of natural capital. Three of four layers are quite alive economically today— that is they are readily valued and transacted. These include the top, third and fourth layers that provide provisional ecosystem services that are generally quite easy to measure, own, and sell.

The third layer is the economically dead layer; the Biotic — Conditionally Renewable Bio-Processes layer. That is somewhat ironic, because it is the layer that is most ecologically alive, literally. This layer is the foundation for life on the planet, including ours. The outputs and outcomes of this layer include the less tangible economic values and include carbon sequestration, water cleansing, biodiversity, pollination, and even the creation of ecosystems themselves. This dead capital layer is estimated to have an economic value into the trillions of dollars.

Convert Dead Natural Capital to Living Economic Capital

Bringing this layer of dead capital into the economy is a bit more challenging than bringing the underutilized tangible assets of idle cars and vacant rooms into the economy. The Biotic-Conditionally Renewable Bio-Processes layer is underutilized, but it can also be described as an unaccounted-for intangible asset.

To bring the Biotic — Conditionally Renewable Bio-Processes layer economically alive, the EcoCommerce Marketplace uses the NCU to convert these less tangible or intangible ecosystem services that are categorized as public or common goods into tangible private or club goods.

We All See Dead Capital

The NCU generates enough physicality of these ecosystem services to create excludability for this economic conversion to occur. When that occurs, millions of people will become aware of how their dead natural capital can become economically alive. They can then say they see dead capital, too and begin to bring their portion of the unaccounted-for intangible assets worth trillions of dollars into the living economic system.

Tim Gieseke manages natural capital and is the author of three books that outline the environmental, socio-economics, and governance of instituting a natural capital accounting system and employing EcoCommerce.

Collaborative Environmental Governance Frameworks: A Practical Guide (2019)

Shared Governance for Sustainable Working Landscapes (2016)

EcoCommerce 101: Adding an ecological dimension to the economy (2011)