Table of Contents

Handbook of Sustainable Development

Handbook of Sustainable Development

Second Edition

Edited by Giles Atkinson, Simon Dietz, Eric Neumayer and Matthew Agarwala

This timely and important Handbook takes stock of progress made in our understanding of what sustainable development actually is and how it can be measured and achieved.

Chapter 5: Ecosystems as assets

Edward B. Barbier

Subjects: economics and finance, environmental economics, environment, environmental economics, environmental geography, valuation


A key contribution of natural resource economics has been to establish that the natural environment can be considered as a form of capital asset, or natural capital (for example, see Clark, 1976; Dasgupta and Heal, 1979; Freeman et al., 1973; Herfindahl and Kneese, 1974). But it has been long argued that the concept of natural capital should not be restricted just to resources such as minerals, fossil fuels, forests, agricultural land and fisheries that supply the raw material and energy inputs to our economies (Freeman et al., 1973; Howe, 1979; Krutilla, 1967; Krutilla and Fisher, 1975; Pearce et al., 1989). Nor should we consider the capacity of the natural environment to assimilate waste and pollution the only valuable ‘service’ that it performs. Instead, natural capital is much broader, encompassing the whole range of goods and services that the environment provides. Many have long been considered beneficial to humans, such as nature-based recreation, eco-tourism, fishing and hunting, wildlife viewing, and enjoyment of nature’s beauty. However, there is also an emerging consensus that ecosystems should also be viewed as economic assets, as through their natural functioning and habitats provide important goods and services to the economy. Such ecological capital is a unique and important component of the entire natural capital endowment that supports, protects and is used by economic systems (Barbier, 2011a; Daily et al., 2000).

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