leading picture of the value of a nation's economic activity to the people concerned. The conventional totals, gross domestic product (GDP) or gross national product (GNP) or national income, are not so bad for studying fluctuations in employments or analyzing the demand for goods and services. When it comes to measuring the economy's contribution to the well-being of the country's inhabitants, however, the conventional measures are incomplete. The most obvious omission is the depreciation of fixed capital assets. If two economies produce the same real GNP but one of them does so wastefully by wearing out half of its stock of plant and equipment while the other does so thriftily and holds depreciation to 10 percent of its stock to capital, it is pretty obvious which one is doing a better job for its citizens. Of course the national income accounts have always recognized this point, and they construct net aggregates, like net national product (NNP), to give an appropriate answer. Depreciation of fixed capital may be badly measured, and the error affects net product, but the effort is made.

The same principle should hold for stocks of nonrenewable resources and for environmental assets like clean air and water. Suppose two economies produce the same real net national product, with due allowance for depreciation of fixed capital, but one of them is wasteful of natural resources and casually allows its environment to deteriorate, while the other conserves resources and preserves the natural environment. In such a case we have no trouble seeing that the first is providing less amply for its citizens that the second. So far, however, the proper adjustments needed to measure the stocks and flows of our natural resources and environmental assets are not being made in the published national accounts. (The United Nations has been working in this direction for some years, so the situation may change, although only with respect to environmental accounting.) The nature of this problem has been understood for some time, and individual scholars, beginning with William D. Nordhaus and James Tobin in 1972, have made occasional passes at estimating the required corrections.

That is hardly news. The additional insight that I want to explain is that there is a "fight" way to make that correction—not perhaps the easiest or most direct way, but the way that properly charges the economy for the consumption of its resource endowment. The same principle can be extended to define the fight adjustment that must be made to allow for the degradation or improvement of environmental assets in the course of a year's economic activity. The properly adjusted net national product would give a more meaningful indicator of the annual contribution to economic well-being.

The corrections are more easily defined than performed. The necessary calculations would undoubtedly be more error-prone that those the U.S. Department of Commerce already does with respect to the depreciation of fixed capital. Nevertheless, I would suggest that talk without measurement is cheap. If we—the country, the government, the research community-are serious about doing the fight thing for the resource endowment and the environment, then the proper measurement of stocks and flows ought to be high on the list of steps toward intelligent and foresighted decision.

The second and last step in my argument is more abstract. It turns out that the measurements I have just been discussing play a central role in the only logically sound approach to the issue of sustainability that I know. If "sustainability" is anything more than a slogan or expression of emotion, it must amount to an injunction to preserve productive capacity for the indefinite future. That is compatible with the use of nonrenewable resources only if society as a whole replaces used up resources with something else. As you will see when I return to this