0.12 Natural capital & Sustainable development introduction

Introduction to natural capital

We have earlier considered the role of physical capital, human capital and intangible capital. Now we turn to natural capital and sustainability issues beginning with some general introductory comments. Then we will turn to four specific areas in natural capital utilization and conservation.

1. Tropical forests
2. Energy- including nuclear energy
3. Water
4. Fisheries

We will also consider the implications of natural exploitation for climate change (especially energy) and what climate change means for water, fisheries and forests.

Sustainability

The concept of sustainable development was unfamiliar to economists 25 years ago when it was “rediscovered”. There is even now a Dow Jones sustainability index. (Dow Jones once owned The Wall Street Journal). The Dow Jones sustainability index is both a guide for managers who lead “green” businesses and to governments who seek “green growth.” It is also a “report card” on the “greenness” of U.S. business firms. Some firms talk the talk, few walk the walk on sustainability. This is also true of governments.

Sustainable development is not a new concept. For at least 500 years the concept was integral to daily life in Native American tribes in both the U.S. and Canada. The Choctaw, Cherokee, Sioux and Navajo, to name a few, had definite ideas about sustainability. Indeed in most tribes the interaction between humans and the natural environment was an important basis of their values and their religions. Consider this quote from a famous chief:

“Treat the earth well. It was not given to you by your parents. It was loaned to you by your children.”

In 18 ^th Century America even the European interlopers had notions about sustainable development.

Thomas Jefferson, 1789, wrote:

“The earth belongs to each generation. No generation can contract debts greater than may be repaid during the course of its own existence.”

Under other labels, sustainable development has engaged the interests of physical scientists and economists since the early 19 ^th Century, when Reverend T.R. Malthus predicted an inevitable and ongoing collision between population growth subsistence and sustainability.

But, Malthus did not foresee the waves of technological revolutions in industry and science that were yet to come. Also, he did not foresee the behavioral changes that helped fuel fertility decline in the past thirty years. Both these factors have kept the Malthusien “wolf at bay” in most of the world. But can the world avoid a Malthusien apocalypse in the future?

To answer that question, we will need to turn our attention to the creation of conditions favorable for sustainable use of nature’s bounty.

Sustainable development is basically about trying to have “green growth:” economic growth for the current generation that does not jeopardize future prospects for growth or well-being of future generations. And the well-being of both the current and future generations depends on clean air to breath, clean water to drink and much more.