The adoption of natural capital accounting: Lessons from the Tasmanian forest management system

Natural capital accounting (NCA) provides a systematic framework to integrate broader economic and environmental data in a way that aligns with traditional financial accounting. This fuller set of information allows organisations to better manage their environmental risks and dependencies. However, NCA adoption remains limited and fragmented in the forestry sector. We utilise semi-structured interviews as part of an Institutional Analysis and Development (IAD) framework to examine the incentives and barriers faced by public and private forestry organisations in adopting NCA. This paper contributes to forestry management by querying the reasons for these gaps in adoption, as well as the barriers preventing adoption and utilisation of NCA at the organisational scale. We base our study in Tasmania, Australia, using its forest management system as a case study. We find that a wide range of Tasmanian organisations perceive clear incentives for adoption. Among them, recognised reporting approaches, access to financial markets and investment opportunities, additional data to inform decision-making, as well as new evidence to support social licence to operate. However, significant barriers exist, such as lack of baseline data, limited internal capacity and often ambiguous guidance on account compilation. These barriers could be addressed through greater standardisation of existing NCA frameworks, establishing accounting standards for natural capital, and increased private-public sector collaboration. Addressing these barriers could enable the adoption of NCA at scale, enhancing the management of natural resources.