Choices and the value of natural capital

Abstract

Sustainability requires maintaining opportunities for future generations, so they can meet their needs. Opportunities are passed to future generations through a set of capital assets. Nature provides an important class of these assets, but markets seldom reveal the marginal value of natural capital. Rather, the marginal social worth or asset price must be imputed based on intertemporal exchange. In the context of assessing whether intertemporal allocation rules lead to sustainable development, appropriate asset prices must be based on the actual allocations and trade-offs society makes. Therefore, measuring economic programmes that enable the measurement of asset prices is an important empirical task. We review the theory of measuring natural capital asset prices and discuss the key elements of measuring economic programmes that enable the measurement of natural capital asset prices. We place the measurement of economic programmes and natural capital asset prices in the context of wealth-based sustainability metrics.