Nature and the economy*

Abstract

Summary In this lecture I first offer what one could call the World Bank view of the recent macroeconomic history of a number of countries in the poor and rich worlds. Secondly, I demonstrate how our view of macroeconomic history changes if Nature is included as a capital asset in production activities. I conclude that high population growth in the world's poorest regions (South Asia and sub‐Saharan Africa) has been an obstacle to the achievement of sustainable economic development in those areas. It is believed that people in those regions are, on average, less wealthy now than they were 35 years ago. When population growth is taken into account, the accumulation of manufactured capital, knowledge and human capital (health and education) has not compensated for the degradation of natural capital in South Asia and sub‐Saharan Africa and, in all probability, even in the United Kingdom and the United States. It is possible that China is an exception to the economic forces experienced in other areas of the world. Synthesis and applications. The conclusions drawn here are very tentative and there is much further work to be conducted in understanding how ecological concerns can be incorporated into economic theory. It is important, therefore, that growth economists, demographers, governments and international agencies take this approach.