Assigning Economic Value to Natural Resources (1994) / Chapter Skim
Currently Skimming:
Overview
Overview
Pages 1-16
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 1... ...
At the National Research Council (NRC) 1993 workshop on "Valuing Natural Capital for Sustainable Development," consiclerable attention was focused on the national income accounts, which, in their calculations of GNP or GAP, make no or very inadequate allowance for natural resource use and environmental degradation.
|
From page 2... ...
And yet, the incompleteness of the current national income accounts forces us to reexamine our definitions of economic progress and national prosperity. Revising these indices also demands consideration of our obligations to future generations-what sort of environmental legacy and natural resource endowment we wish to leave them.
|
From page 3... ...
· International institutions, principally the World Bank anti the UN Statistical Office, have incorporated natural capital estimates in partially revised GDP accounts for a number of countries.
|
From page 4... ...
Beginning with his 1989 World Resources Institute study, Wasting Assets, Repetto, at times in collaboration with others, has not merely critiqued prevailing accounting practice on conceptual grounds, but has attempted at least partial recalculation of some developing economies' national accounts to reflect net natural resource depletion. Thus, the 1989 study suggested that Indonesia's net domestic product (NDP)
|
From page 5... ...
have emerged as the principal players in the field, with France and the Netherlands emphasizing development of an integrated conceptual framework, and Norway and the United States concentrating on mobilizing extensive resource and environmental databases that are used for many independent accounts or policy objectives, but have not been incorporated into the main national accounts. ENVIRONMENTAL ACCOUNTING CHALLENGES It is clear that social accounting reforms embodying natural capital, if they are to materialize at all, must proceed in a step-wise, evolutionary, and pragmatic manner.
|
From page 6... ...
Sustainability In addressing measurement and methodological issues raised by environmental accounting, experts in both the social anti physical sciences have focused considerable attention on the concept of sustainability. This concept was the starting point for (liscussion at the workshop, where it was examined from a variety of different viewpoints, including those of the life and physical sciences, economics, and industrial, technical, and commercial fields.
|
From page 7... ...
While conserving natural capital does imply absolute protection against net physical depreciation or depletion, such a rigidly conservationist view is not inherent in all variants of the sustainability concept. Biologic sustainability, for example, is not tied to preservationism; every single biological entity does not need to be conserved, indeed cannot be, in order for a biological system to qualify as sustainable.
|
From page 8... ...
Not only is there no actual substitutability for species, but even for cases of near substitutability, the time scales that are involved often exceed many human lifetimes. Some have in fact argued that natural capital and man-made capital are complementary and only marginally substitutable (Daly, 1990~.
|
From page 9... ...
And many experts, including several in attendance at the workshop, question this conception of intergenerational equity, seeing it as anthropocentric and overly biased toward development now at the expense of conservation for the future. Technical Issues If environmental economic approaches are to be successful, cooperative research is needed to address not only the conceptual, definitional problems described above, but also to overcome technical challenges in valuing natural assets and to devise suitable methods and practices for accurate environmental accounting.
|
From page 10... ...
of environmentally sensitive national accounts reformers advocate. Comprehensive accounting reform requires that all the quantitative or qualitative deterioration of such natural capital as air, water, or soils would need to be charged against the nation's GDP.
|
From page 11... ...
But if farmers compensate for soil quality losses by changes in farm practices entailing an increase in operating expenses, the soil-Ioss effect will show up as lower net farm income and GDP, assuming a full employment economy. · A third problem is the difficulty of characterizing and quantifying the natural environment.
|
From page 12... ...
For example, although the Netherlands has been one of the more active promoters of environmental accounting reforms, Dutch statisticians are wary of moving too aggressively in monetizing environmental resources or damage within economic frameworks, arguing that physical measurements and monetary quantities are too dissimilar to be validly compared (`The Economist, 19931. Yet other statisticians maintain that without such comparisons, fundamental accounting reforms and related efforts such as cost-benefit analyses cannot be undertaken.
|
From page 13... ...
Another issue central to both environmental and economic valuations is the common tradeoff between short term economic growth and poverty alleviation on one hand, and long term sustainable development, on the other. it is difficult to calculate social values for resources that are not traded in conventional markets, for example, "scenery." Scenery is not bought and soils, though it does have economic impact just ask a real estate developer or tourist industry employee.
|
From page 14... ...
Environmental accounting might allow us to consider the value of a wetland to bird watchers as well as developers, but cannot allow us to consider wetlands preservation from say, the perspective of hundreds of thousands of migratory birds whose feeding ground along a major flyway is threatened by human activity. ISSUES FOR FURTHER STUDY Seven issues were identified at the workshop for urgent attention and further study: criteria for selecting appropriate natural capital assets for economic valuation; actually selecting them; developing techniques for environmental accounting appropriate for national policymaking, firm-level decisionmaking and complex dynamic systems analysis; developing non-monetized inventories for selected natural assets; tracking irreversible processes; identifying points of leverage for future action; and, finally, determining priorities for revising the national income accounts and other economic indices versus alternative means for characterizing the broader societal consequences of economic decisions with significant resource depletion and environmental degradation impacts.
|
From page 15... ...
Techniques are needed to update the national income accounts or other official economic indicators so that national debate and policy decisions accurately reflect the importance of natural assets. The nation requires continual improvement in methodologies by which people can assess these benefits and damages.
|
From page 16... ...
Ecological Economics 2~:~-6. Environmental Accounting for Sustainable Development.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.