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Alan Holland asks whether ‘sustainability’ will deliver the protection of nature. As long as it is taken to mean the extending of human welfare into the future, it may not, he argues, since this does not necessarily entail protecting nature. Holland argues against using ‘critical natural capital’ as a measure of sustainability since criticality is often regarded in anthropocentric terms. He argues instead for the protection of nature as ‘natural items themselves’, but recognizes that this objective may sometimes clash with satisfying human needs. Environmental sustainability and social justice, in other words, will not always pull in the same direction.

This chapter outlines the early use of the concept of natural capital to describe the environment through to its more recent extension to include ecosystems. The concept has proved useful, and controversial, in both the economics of sustainable development and wealth accounting. Regarding sustainable development, the differing perceptions of “weak” versus “strong” sustainability hinge on the critical distinction between forms of natural capital that is substitutable and irreversibly depleted. As long as one is careful to account for the direct and indirect contributions of ecological capital to human welfare, then it is possible to extend adjusted net domestic product (NDP) to include changes in ecological capital. The example of the US is used to illustrate the more conventional extension of NDP to include basic changes in human and natural capital. Mangrove ecosystems in Thailand are employed to show the additional extension of adjusting NDP for loss of ecological capital.

This chapter proposes a framework that makes it possible to consider future generations explicitly and presents two future-directed obligations of justice. It argues for a principle of intergenerational equality: each generation can be reasonably expected to leave a nondeclining stock of natural capital behind. It introduces an additional principle of justice relating to the distribution of the original resources and spaces of the earth across different generations of human beings. The chapter first examines Rahul Kumar's view that wronging consists of violations of legitimate expectations in relationships before discussing ways of characterizing our relationship with future generations that have nothing to do with the ownership approach. It then looks at the debate about sustainability and concludes with some reflections on what we can say about duties to future generations that share membership in a state.

Can we place an economic value on natural capital, and if so, is this a useful exercise? We can value many aspects of natural capital, though this raises complex technical issues and also deep philosophical questions. In some cases natural capital is bought and sold on markets, so we can look to these for prices: in other cases we have to put in some detective work to track down a measure of value. The values that we find are large, consistent with the idea that natural capital is of great importance.

Marine science is now moving quickly to reveal the biophysical, geochemical, and ecological properties of the deep sea. As this understanding grows, deep-sea resources will begin to be exploited more extensively, embodying the hopes of many for a Blue Economy. Institutions to govern this exploitation are only just finding their strides or even just emerging, but there are many cases already of resource overuse and degradation, including overfishing and the impacts beginning to be wrought by a changing climate. Progress towards the sustainable development of the deep sea requires useful indicators that point to changes in human well-being as the deep sea is exploited, such as measures of inclusive wealth. Accounting prices for the natural capital of the deep sea would be useful indicators, and several examples are explored to illustrate current understanding and research gaps. A future economic research agenda would involve refining estimates of accounting prices for the most important types of deep-sea natural capital, locating these within linked classifications of ecosystem services and natural capital, and the design and implementation of a system of economic and environmental accounts for the deep sea comprising the high seas, which lies beyond the purview of individual states.

Biodiversity is complex, difficult to define, difficult to measure, and often involves international and intergenerational considerations. Biodiversity loss presents significant and complex economic challenges. A simple and important observation however is that most species and ecosystems are not traded in markets, so prices are often absent and biodiversity is under-provided. Economic valuation techniques can be employed to estimate the value of the benefits provided by biodiversity and ecosystems. Assessing the “optimum” amount of biodiversity involves recognizing that the conversion of natural capital into manufactured and human capital has so far generated vast wealth. While there may have been “too much biodiversity” in the past, economic analysis suggests that this is a difficult position to hold now. Econometric techniques and carefully designed policy studies help determine what policies are most suited to cost-effectively reduce biodiversity loss. Political economy is helpful because international coordination is often required.

This chapter examines environmental injustice in Tajikistan in the form of limited access to and control of natural capital. It describes the rural vulnerability context and highlights the unsustainable livelihood strategies such as child labor, the drug trade, and militant fundamentalism. It discusses the limited influence of civil society and the absence of public participation in decision-making processes. This chapter also explains that shortcomings of environmental governance at the national level and offers some possible steps forward for the environmental justice movement in Tajikistan.

Natural capital – the complex of objects and systems that constitutes the natural environment or the biosphere - plays a fundamental and irreplaceable role in human life, as stories as diverse as the evolution of Earth and its neighboring planets, or of Biosphere 2, clearly illustrate. In addition to being essential to humanity’s existence, it provides on a daily basis services of great but more quotidian importance, such as pollination, insurance against diseases, and drinking water. Yet many of these services go unnoticed and taken for granted, which is one reason why humanity permits the rampant destruction of natural capital, an asset class of great value.

This chapter examines the efficiency with which the aggregate labor input and, respectively, the aggregate capital input are used in production. To this end, it uses an equation that takes into account coefficients that operate as augmentation coefficients for “natural capital equivalents,” that is, the capital input expressed in efficiency units of natural capital, and “unskilled-labor equivalents,” or the labor input in efficiency units of unskilled labor. After inferring augmentation coefficients for labor and capital, the chapter estimates variable capital shares and introduces a broader measure of labor inputs. The results reveal an imperfect elasticity of substitution between natural and reproducible capital.

This chapter examines possible factor biases in the way different countries use reproducible and natural capital, using an equation that also takes into account the bundle of capital goods which, combined with labor, is used to produce GDP. The goal of the chapter is to determine how the factor bias varies across countries, and in particular how it varies with income per worker. The factor bias requires three ingredients: relative supply, relative marginal products, and elasticity of substitution. After estimating the relative supply of reproducible capital and relative marginal productivities, the chapter infers the bias toward reproducible capital. The results reveal a negative relation between income and relative marginal products.

This final chapter asks: what are Israel's forests worth? This is a very difficult question to address. Most economists have little grasp of the many ways that forests contribute to human well-being or the quality of daily life. Forests contain “natural capital”; intuitively, people sense the manifold contributions of forests to society, even if they personally are not direct consumers of its many products and services. Recently, efforts have begun to characterize better precisely what these are, so that they won't be overlooked when the value of Israel's forests is decided.

This chapter concludes that the book has presented evidence showing that technology and technical change are more flexible than generally allowed. The efficiency of different factors changes across countries and over time at different rates. Indeed, in some instances the efficiency with which one factor is used can decline while the efficiency of others increases. Since the 1990s, it has been increasingly clear that technical change tends to have a skill bias, but this book's findings reveal that nonneutralities are much more pervasive than that. They also occur across countries, and not just over time. Furthermore, they invest a broader set of inputs: not only skilled and unskilled labor, but also experienced and inexperienced workers, natural and reproducible capital, and a broad labor aggregate and a broad capital aggregate. The book has merely scratched the surface of the likely patterns of nonneutrality that exist across countries and over time.

The conventional economic approaches to economic growth have focused on macroeconomic aggregates and on neoclassical microeconomic foundations; on flows rather than stocks; and on utility rather than capabilities. This chapter presents an alternative asset-based approach, focused on balance sheets and capital maintenance. The starting point is the assets necessary to provide the capability for consumers and businesses to participate in the economy. Many of these are infrastructures and public goods, and among these natural capital plays a central role. The depletion of natural capital in the twentieth century, notably the atmosphere and biodiversity, has overstated economic growth and left a legacy of capital maintenance and enhancement. The chapter defines the rules for a sustainable economic growth path, incorporating natural capital.

Chapter 6 examines the value of environmental assets, which lies in the discounted stream of services they offer. Their conservation depends on the expected rate of change in their value, if conserved, relative to the rate of return on alternative assets. This chapter considers how the portfolio of environmental assets—natural capital—has been valued at the national scale. The two main approaches adopted are the United Nations’ System of Environmental-Economic Accounts (SEEA), and the World Bank’s (Inclusive) Wealth Accounts. The authors consider both approaches, and what they mean for the sustainability and the efficiency of natural resource use. Particular attention is paid to the residual left over after taking account of all marketed inputs in production: total factor productivity.