Edited by Giles Atkinson, Simon Dietz, Eric Neumayer and Matthew Agarwala
Chapter 4: Strong sustainability and critical natural capital
The concept of capital derives from economics, whereby capital stocks (assets) provide a flow of goods and services, which contribute to human well-being. An important framing for sustainable development has been to conceive of it in terms of non-declining human welfare (see, for example, Pezzey, 1992, pp. 55ff.), deriving from the delivery of goods and services from a capital stock. In its narrowest interpretation capital is used to mean manufactured goods which themselves produce, or facilitate the production of, other goods and services. This kind of capital is referred to as manufactured or physical capital, and consists largely of machinery, buildings and built infrastructure. However, it is clear that flows of benefits derive from many other sources than manufactured capital. To reflect this the concept of capital has been extended in a number of directions, to take into account the quality (in addition to the quantity) of labour (human capital, reflected in human knowledge, skills, health), the networks, organizations, relationships and institutions through which labour is organized and which create the social context for economic activity (social/organizational capital), and the natural resources and environment which provide inputs into the economic process, provide environmental amenities, absorb pollutants and maintain the existence of life on earth (natural, also called environmental and ecological capital). Ekins (1992, pp. 147–51) has put forward a ‘4-capitals model’, relating manufactured, human, social and natural capital to the process of production and the generation of human welfare.
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