IPSAS 51: A New Chapter for Natural Resource Accounting in the Public Sector

In recent years, natural resources have come to be viewed not only as environmental assets but also as strategic public assets that shape a nation’s long-term ecological, cultural, and economic trajectory. Yet despite their importance, these resources have been historically excluded from government financial statements and a clear reporting framework. The International Public Sector Accounting Standards Board (IPSASB) has developed IPSAS 51, Tangible Natural Resources Held for Conservation, to begin addressing this long-standing reporting gap. 

How does IPSAS 51 reframe the treatment of natural resources within public financial reporting and what does this shift mean for governments in practice? This blog highlights three essential aspects of the new standard: its targeted and pragmatic approach, which limits asset recognition to only naturally occurring tangible resources held for conservation; its measurement approach centered on current operational value and service potential; and the practical considerations governments will face when adopting or adapting this standard.

A targeted and pragmatic approach

The IPSASB has worked steadily since 2020 to advance a dedicated standard on natural resources. The Exposure Draft of IPSAS 51 was formally approved at the IPSASB Meeting held on December 2-5, 2025 and was officially released on January 22, 2026, becoming a new IPSAS. This development has the potential to reshape how governments conceptualize and manage public wealth.

One feature of IPSASB’s approach is its pragmatism. Rather than attempting to capture all forms of natural resources, IPSASB intentionally limited the scope of IPSAS 51 to tangible natural resources that are naturally occurring and held for conservation. In our view, this focus is both strategic and necessary. Under the standard, a natural resource must meet two essential characteristics: it should be a naturally occurring tangible item, whose existence does not depend on human activity, and it should be held for conservation, evidenced through activities such as restricting access, ecological restoration, or environmental monitoring. 

Measuring natural resources under IPSAS 51

The standard highlights that the value of natural resources lies in their service potential. Under IPSAS 51, current operational value is used as the basis for initial measurement when a natural resource is acquired through a non-exchange transaction. This value represents the current value of the resource’s service potential in its existing use, based on the cost the entity would incur to replace that service potential. Natural resources acquired through exchange transactions are measured at cost. For subsequent measurement, entities may select either the historical cost model or the current operational value model, depending on the nature of the resource and the availability of reliable information. 

It is also worth mentioning that land, which primary purpose is to provide services, such as areas open to the public for camping or hiking, falls under IPSAS 45 as property, plant, and equipment, and not under IPSAS 51. Similarly, unextracted subsoil resources, such as mineral or petroleum deposits, are generally outside the scope of IPSAS 51 because they are typically held for the generation of future economic benefits rather than for conservation, and because their existence, quantity, and quality cannot be reliably measured prior to extraction. 

Practical implications

In practice, it seems that there is no widely used approach in countries for the accounting recognition of subsoil resources either. Only a very limited number of countries have adopted practices that address subsoil resources in financial reporting. For example, in Estonia, the value of the State’s subsoil assets is disclosed in the notes to the financial statements, based on the present value of future fiscal revenues arising from the extraction of these natural resource reserves. 

As IPSAS 51 moves toward implementation, its implications for governments and public sector standard setters are likely to be both promising and challenging. The standard offers an opportunity for countries to begin recognizing natural resources as part of public wealth rather than considering them solely as environmental features. At the same time, the standard raises practical questions: how asset boundaries in complex ecosystems should be defined, when conservation as primary purpose should be determined, and how the measurement requirements could be operationalized, especially the current operational value, in a consistent and practicable way. 

Addressing these issues will require collaboration across disciplines, strengthened data systems, and enhanced institutional capacity. Moreover, at a time of accelerating climate and biodiversity pressures, IPSAS 51 provides governments with a structured and adaptable way to rethink how natural resources are identified, valued, and reported in the public sector.

Ultimately, while the effort involved should not be underestimated, the potential benefits are significant: a more complete portrayal and greater accountability of national wealth.