In 1969, Norway discovered oil beneath the North Sea. Oil is a non-renewable resource: once it is extracted and burned, it is gone for good.
So how has Norway turned a resource that will eventually run out into a fund that is designed to pay out forever?
- Oil discovered: the Ekofisk field, North Sea, announced just before Christmas Eve 1969, the largest field ever found at sea at the time
- Fund created 1990 (the Government Pension Fund Global); first capital transfer 1996
- Fund value, 2026: over US$2 trillion, about 1.5% of all the world's listed shares
- Roughly $390,000 per citizen on paper, for a population of about 5.5 million
- Fiscal rule: government may spend up to 3% of the fund's expected real return per year (reduced from 4% in 2017)
Figures: Norges Bank Investment Management (NBIM); Norwegian Ministry of Finance; Norwegian Petroleum (Norskpetroleum.no), 2026.
Natural resources, natural capital, natural income
Natural resources are the raw materials and sources of energy used and consumed by society: sunlight, air, water, land, rocks, ecosystems and living things all count. Natural capital is the stock of natural resources available on Earth, the asset itself, not what it produces. Natural income is what that stock provides in terms of goods and services: natural income goods include fish or timber; natural income services include climate regulation and flood prevention.
Norway's oil reserves are natural capital, a fixed stock beneath the North Sea. The fund's annual investment returns, paid out under the fiscal rule, function as a form of natural income built on top of that capital.
A forest, considered as the standing stock of trees and land it sits on. Is this natural capital or natural income?
Timber harvested from that forest each year. Natural capital or natural income?
Norway's oil reserves, still beneath the North Sea. Natural capital or natural income?
The annual returns Norway's fiscal rule allows the government to spend. Natural capital or natural income?
A loaded metaphor
The terms "natural capital" and "natural income" imply a particular perspective on nature: they treat ecosystems as an economic asset with a balance sheet. That framing is itself associated with a contentious philosophical stance, the more extreme end of anthropocentrism, that nature exists to be exploited for human benefit. At the same time, the same framing serves very effectively as a model for sustainable use: putting a value on natural capital makes it much easier to argue for protecting it.
This is the same territory as 1.1's environmental value systems (EVS) spectrum: an ecocentrist might reject "natural capital" language outright, arguing it reduces nature to its usefulness for humans, while a technocentrist finds the framing useful precisely because it lets markets and policy price sustainability. Neither reaction is a factual disagreement about the resource itself, it is a disagreement about which worldview the language quietly assumes.
Which worldview is the "natural capital" and "natural income" framing most closely associated with?
Anthropocentric, and specifically toward its more extreme end: valuing nature primarily by what it provides for humans. That said, the model is still widely used across worldviews precisely because it is practically useful for sustainability arguments, not because everyone accepts its implied perspective.
Ecosystems provide life-supporting services
Beyond the goods they produce, ecosystems provide life-supporting ecosystem services that benefit all living things, including humans. These operate quietly in the background until they fail.
Renewable and non-renewable resources
All resources are finite, but they can be classified as either renewable or non-renewable. Renewable resources can be regenerated or replaced as fast as they are used, either through natural growth or reproduction (food, crops, timber) or through other recurring processes (freshwater, ozone). If a renewable resource is used beyond its regeneration rate, its use becomes unsustainable and it starts to behave like a non-renewable resource.
"Renewable" does not mean "cannot run out." A renewable resource stays renewable only while its rate of use does not exceed its rate of regeneration. Push withdrawal past that point, a fish stock harvested faster than it can reproduce, an aquifer pumped faster than rainfall recharges it, and the resource behaves exactly like a non-renewable one: it depletes. Renewable status describes how a resource can behave under sustainable management, not a guarantee that it always will.
Solar energy reaching Earth's surface.
Norway's North Sea oil reserves.
The Newfoundland (Grand Banks) cod fishery, fished well beyond its regeneration rate until it collapsed in 1992.
A timber plantation, harvested at the same rate new trees are planted and mature.
The same renewable resource, three different extraction rates. Only the top two lines stay sustainable; the bottom line is the shape of the Grand Banks cod stock through the 1980s, extraction consistently ahead of regeneration, ending in the 1992 collapse.
"Renewable" is not a fixed label attached to a resource type, it depends on the rate of use. A textbook-renewable resource (fish, forests, freshwater) becomes effectively non-renewable the moment extraction outpaces regeneration. Always answer in terms of the rate of use, not just the resource's category.
The value of natural capital, and how it changes
Natural capital has several distinct types of value, and the value placed on any resource is influenced by which of these apply and how strongly.
Create a survey to investigate the value that members of the school community place on different ecosystem services. Walk through a worked version of this skill in the Skills tab.
The value placed on natural capital is also dynamic: it changes over time, for a variety of reasons, and not always in the direction you might expect.
Managing use, and resource security
The use of natural capital needs to be managed for sustainability: resources should not be used more rapidly than they can regenerate, and waste should not be released more rapidly than it can be transformed. Norway's fiscal rule is a working example of exactly this principle, applied to a non-renewable resource.
Extract
Non-renewable oil is pumped from the North Sea and sold; the physical stock of natural capital shrinks with every barrel.Cap the draw
The fiscal rule limits annual government spending to 3% of the fund's expected real return, treating that capped draw as a sustainable, renewable-like income.Resource security depends on a society's ability to ensure the long-term availability of enough natural resources to meet demand. Two contrasting approaches to water security show how differently this can play out.
Singapore: proactive diversification
- Historically dependent on water imported from Malaysia
- Built the "Four National Taps": local catchment, imported water, reclaimed NEWater, and desalination
- NEWater is targeted to meet up to 55% of demand by 2060; desalination up to 30%
- Security built decades ahead of any crisis, through sustained infrastructure investment
Cape Town: reactive crisis management
- Three consecutive years of low rainfall pushed reservoirs toward empty by 2017–2018
- Officials set a "Day Zero" date (12 April 2018) when municipal taps would be shut off
- Day Zero was avoided through aggressive conservation, steep restrictions on household and agricultural use, and rainfall returning
- Security achieved through emergency demand management, not pre-built supply diversification
Which city's approach to water security relied mainly on reducing demand during a crisis, rather than diversifying supply in advance?
Cape Town. Its security in 2018 came from emergency conservation and steep restrictions once the crisis was already underway, not from decades of infrastructure diversification the way Singapore's Four National Taps were built.
Factors affecting resource-use choices
The choices a society makes in using given natural resources are affected by many factors and reflect diverse perspectives: economic, sociocultural, political, environmental, geographical, technological and historical factors can all play a role. International agreements aimed at cutting greenhouse gas emissions and reaching net zero are increasingly reshaping the priority given to each.
The Ekofisk field was discovered inside Norwegian waters in 1969, which is why Norway, not a neighboring country, controls it.
International net-zero commitments are pushing Norway to plan for an economy less dependent on oil revenue.
Norway's Council on Ethics excludes the fund from investing in companies linked to severe human rights violations or environmental damage.
Advances in offshore drilling technology made deepwater North Sea extraction possible in the first place.
Transfer challenge: cobalt in the Democratic Republic of Congo
A new case you have not seen yet. Apply the vocabulary from this whole subtopic, not just the Norway example.
The Democratic Republic of Congo (DRC) produces the large majority of the world's cobalt, a mineral critical to electric-vehicle and grid batteries; some recent estimates put its share of global output at well over two-thirds. In a few sentences: describe DRC's cobalt as natural capital and as natural income, state whether it is renewable or non-renewable, name at least one type of value it holds, and identify one factor shaping how it is used.
Self-check against these points:
- Identifies the cobalt deposits themselves as natural capital (the stock)
- Identifies mined, sold cobalt as natural income (the flow drawn from that stock)
- Correctly classifies cobalt as non-renewable (minerals do not regenerate on human timescales)
- Names at least one value type: economic (battery demand) and/or technological (essential battery input) are the strongest fits, though environmental or social value (concerns over artisanal mining conditions) is also defensible
- Names at least one plausible factor: economic (battery demand), geographical (concentrated in the DRC), or sociocultural/political (labor and human-rights concerns shaping how it is sourced)
- Norway's Government Pension Fund Global: value, ownership share and per-citizen figures (2026), Ekofisk discovery (1969): Norges Bank Investment Management (NBIM); Norwegian Petroleum (Norskpetroleum.no).
- Norway's fiscal rule (handlingsregelen), including the 2017 reduction from 4% to 3%: Norwegian Ministry of Finance (Regjeringen.no); NHH Norwegian School of Economics research.
- Norway's Council on Ethics and ethical investment exclusions: Norges Bank Investment Management; Council on Ethics for the Government Pension Fund Global.
- Newfoundland (Grand Banks) cod fishery collapse, 1992: cited directly in the IB Environmental Systems and Societies Guide as a worked example of overfishing beyond regeneration rate.
- Singapore's Four National Taps and NEWater/desalination targets: Singapore national water agency (PUB) and Ministry of Sustainability and the Environment.
- Cape Town's 2018 "Day Zero" water crisis: widely reported contemporary coverage, including Bloomberg and National Geographic retrospectives.
- Democratic Republic of Congo cobalt production share: mining-market analyses, African Mining Market and Investing News Network, 2025–2026.
- IB Environmental Systems and Societies Guide, first assessment 2026, Topic 7, Subtopic 7.1, statements 7.1.1-7.1.11.
Skill: designing a survey on ecosystem-service value
The named skill for this subtopic: design and carry out a survey to investigate the value that members of a community place on different ecosystem services, and select a suitable statistical tool to analyze the results.
1. Write questions that measure value without leading the respondent
A survey question should let respondents report their own view, not nudge them toward one. Sort each question below.
"Given how important pollution mitigation is for our health, how highly do you value it?"
"On a scale of 1 (not at all important) to 5 (extremely important), how important is flood protection from local wetlands to you?"
Only surveying students enrolled in an environmental science elective about how much they value local ecosystem services.
2. Use a consistent rating scale (a Likert scale) across services
Asking the same 1-to-5 importance question for each named ecosystem service (water replenishment, flood protection, pollution mitigation, carbon sequestration) lets you compare their relative value directly, and lets you repeat the survey later or in another school to check for consistency.
A 1-to-5 importance rating is ordinal data: ranked, but not truly numerical (the gap between "4" and "5" is not a fixed, measurable quantity the way it is between 4 kg and 5 kg). Summarize it with the median or mode, not the mean, and compare two groups (for example, staff versus students) with a rank-based test rather than one built for continuous data. If you instead want to test whether two categorical variables are associated, for example age group and preferred ecosystem service, a chi-squared test is the appropriate tool, the same logic used in 1.1's EVS/age-group survey example.
Glossary
Vocabulary for this subtopic only.
- Natural resource
- A raw material or source of energy used and consumed by society, including sunlight, air, water, land, rocks, ecosystems and living things.
- Natural capital
- The stock of natural resources available on Earth, the asset itself rather than what it produces.
- Natural income
- The goods and services provided by natural capital, such as fish or timber (goods) or climate regulation and flood prevention (services).
- Ecosystem service
- A life-supporting benefit an ecosystem provides, such as water replenishment, flood and erosion protection, pollution mitigation or carbon sequestration.
- Renewable resource
- A resource that can be regenerated or replaced as fast as it is used, through natural growth, reproduction or another recurring process.
- Non-renewable resource
- A resource that cannot be regenerated or replaced within a useful human timescale; also describes a renewable resource used faster than it can regenerate.
- Resource security
- The ability of a society to ensure the long-term availability of enough natural resources to meet demand.
- Environmental impact assessment (EIA)
- An assessment of the environmental, social and economic impacts and sustainability of a development project, carried out through independent, detailed surveys, followed by audits and continued monitoring after completion.
- Baseline study
- A study used to predict and evaluate the possible impacts of a project before it begins, and to suggest mitigation strategies to alleviate or avoid environmental harm.
- Sustainable Development Goals (SDGs)
- A United Nations framework of global goals guiding action by all countries in partnership, including on natural resource use and management.
Test Yourself is coming soon for this subtopic
Practice questions and markschemes for this page are still being written. Check back once they have been added.
Managing and intervening in resource use
A range of management and intervention strategies can directly influence how a society uses its natural capital. Government management can set national action plans, for example toward the SDGs. Government intervention can discourage certain uses through taxes, fines and legislation, such as raising fossil fuel prices or restricting carbon emissions, or encourage other uses through subsidies, legislation, publicity campaigns, research and education, such as manufacturing carbon-storing concrete or funding recyclable wind turbines. NGOs, local communities and social movements can also influence use directly, through campaigns, social media and action such as recycling.
A government publishes a national action plan with targets aligned to the SDGs for sustainable resource use.
A government introduces a tax that raises the price of fossil fuels to discourage their use.
A government offers subsidies for manufacturing concrete that stores carbon dioxide.
A local community group runs a recycling campaign through social media.
The SDGs as a management framework
The Sustainable Development Goals provide a framework for action by all countries, in global partnership, on natural resource use and management. Detailed knowledge of every goal is not required, but two are directly relevant here.
SDG 12: Responsible Consumption and Production
Targets sustainable management and efficient use of natural resources directly, the closest SDG match to this subtopic's core content.
SDG 14 & 15: Life Below Water, Life on Land
Target sustainable use of marine and terrestrial natural capital specifically, relevant to renewable-resource cases like fisheries and forests.
Environmental impact assessments
Sustainable resource management in development projects is addressed through an environmental impact assessment (EIA): an assessment of the environmental, social and economic impacts and sustainability of a project, carried out through independent, detailed surveys, followed by audits and continued monitoring after completion. Countries and regions have different guidance on how EIAs are used. Baseline studies generally predict and evaluate a project's possible impacts and suggest mitigation strategies, though exploring one specific EIA in depth is not required here.
Would an EIA for a new mine reasonably assess: the effect on local biodiversity?
Would an EIA for a new mine reasonably assess: the effect on employment and possible displacement of nearby communities?
Would an EIA for a new mine reasonably assess: how politically popular the project is with voters?
Making EIAs public allows local citizens to act as stakeholders in decision-making, echoing 1.1's theme of competing perspectives on the same project. Public access lets affected communities raise concerns before construction, not after. But publication alone does not guarantee those concerns change the outcome, and technical EIA documents can be difficult for the public to interpret without support.
HL practice
Running total: 0 / 12
Outline one way a government can directly intervene to reduce the use of a named natural capital resource.
Check your answer against this markscheme:
Score: 0 / 2
Justify why making environmental impact assessments public benefits decision-making, referring to at least one limitation.
Check your answer against this markscheme:
Score: 0 / 4
Discuss the extent to which international frameworks like the SDGs can effectively drive sustainable resource management.
Check your answer against this markscheme. Each side is capped at 3 marks.
For (effective)
Against (limited)
Score: 0 / 6
There is no single correct side. A strong answer weighs real evidence on both sides before reaching a stated judgement.
- Government management/intervention examples (carbon-storing concrete, recyclable wind turbines, biological ammonia production): IB Environmental Systems and Societies Guide, statement 7.1.12.
- UN Sustainable Development Goals framework: United Nations Department of Economic and Social Affairs.
- IB Environmental Systems and Societies Guide, first assessment 2026, Topic 7, Subtopic 7.1, statements 7.1.12-7.1.16.