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SECTION 2 THE NATURAL CAPITAL STOCK APPROACH |
| 2.1 |
The
Natural Capital Stock Concept |
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| 2.1.1.1
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This
section addresses the key concept of capital
stock which is critical to the concept of
sustainable development. After a brief discussion
of the four principal types of capital stock
and their inter-relationship, further analysis
of the 'natural capital stock' in the context
of sustainability is presented followed
by a comment on the use of the natural capital
stock concept as a basis for this environmental
baseline report. This section is not intended
to provide a full discussion or literature
review with regard to natural capital, but
rather an overview of the concept in order
to set the context for the report's approach.
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| Introduction
to Capital Stock |
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| 2.1.1.2 |
The
identification and definition of capital stock
provides us with a means to better understand
the relationship between human activity and
industry and natural systems. The term 'capital'
can be defined broadly as a stock of something
which yields a flow of useful goods or services
(Costanza et al 1997), and definitions of
sustainability often refer to the need to
live from that flow, or 'income', rather than
eroding the capital resource base which provides
that income, for example through over production
and consumption. |
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| 2.1.1.3
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Four
distinct types of capital stock can be identified
which together help to characterise the range
of anthropogenic and natural factors which
contribute to general well-being (or 'development'),
and whose interaction influences the level
of sustainability. The four types of stock
are man-made capital, human capital, social
capital and natural capital, and expanded
definitions are provided in Box 2.1a overleaf.
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| 2.1.1.4 |
A
key concept for sustainable development
is the degree to which natural and human
capital stock can be substituted or whether
they are essentially complementary. This
is because man converts natural capital
into manufactured capital as part of the
process of production, whilst simultaneously
depleting assimilative capacity. It can
be argued (Jansson et al 1994, Hawken et
al 1999) that perfect and unlimited substitution
between natural and man-made capital cannot
take place since man-made capital cannot
be created and sustained without energy
and natural resources, and the use of these
resources can lead to adverse impacts as
well as depletion. It is generally stated
therefore that these two forms of capital
are, in fact, complements (whereby human
capital is employed to make effective use
of natural capital) and the degree to which
substitution is acceptable is determined
by the model of sustainability. For example,
so-called 'weak' sustainability refers to
the maintenance of all forms of capital
as a total level without regard to the composition
of the different types of capital involved.
Conversely, strong sustainability requires
not only the maintenance of total capital,
but also attention to the different types
of capital and in particular the natural
capital, such that human and natural capital
are not viewed as substitutable.
| Box
2.1a Forms of Capital Stock |
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Man-made
Capital is generated through economic
activity, human ingenuity and technological
development. It can be thought of
as manufactured capital or the 'produced
means of production' and is the definition
of capital traditionally used in economics.
Human
Capital can be thought of as the collective
human knowledge, skills and intellect
which, when applied, can be used to
convert natural capital to man-made
capital. Human and social capital
together effectively form the 'interface'
between man-made and natural capital.
Social
Capital, sometimes called 'moral capital',
refers to the stock of community resources
and to the community, religious, ethical,
social and cultural interactions which
give rise to collective social wellbeing.
Natural
Capital can very simply be defined
as the 'natural environment' or the
stock of natural assets that yields
a flow of valuable goods and services
into the future.
Sources:
Costanza et al (1997), Jansson et
al (1994), Collados and Duane (1999),
Rees (1996), Goodland and Daly (1996)
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