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Taking natural capital seriously

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  • Dieter Helm

Abstract

The paper sets out a pragmatic case for preserving the aggregate level of natural capital, in the face of the declines in biodiversity and the rising population, and major increases in consumption that economic growth will bring in this century. The accounting framework to achieving this objective is considered, focused on the role of asset registers. Particular attention is paid to renewable assets at risk of falling below critical thresholds. These assets are key components of the balance sheet. Capital maintenance expenditures are required to maintain the value of assets intact, since renewable natural assets should not be depreciated, but rather treated as assets in perpetuity. Within the aggregate, substitutions with other forms of capital are permitted, but only if there is compensation for any detriment to natural capital. Offsetting is one mechanism for achieving this compensation. The case for enhancing the aggregate is considered, and the paper shows how a broader national plan over a generation could contribute to the policy objective of leaving the next generation with a richer endowment of natural capital. The policy instruments for embedding natural capital into public policy are reviewed.

Suggested Citation

  • Dieter Helm, 2014. "Taking natural capital seriously," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 30(1), pages 109-125.
  • Handle: RePEc:oup:oxford:v:30:y:2014:i:1:p:109-125.
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    File URL: http://hdl.handle.net/10.1093/oxrep/gru005
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    Cited by:

    1. Francisco Ascui & Theodor F. Cojoianu, 2019. "Implementing natural capital credit risk assessment in agricultural lending," Business Strategy and the Environment, Wiley Blackwell, vol. 28(6), pages 1234-1249, September.
    2. Bingjie Song & Guy M. Robinson & Douglas K. Bardsley, 2020. "Measuring Multifunctional Agricultural Landscapes," Land, MDPI, vol. 9(8), pages 1-30, August.
    3. Dwyer, Janet & Short, Chris & Berriet-solliec, Marielle & Déprés, Christophe & Lataste, Francois-Gael & Hart, Kaley & Prazan, Jaroslav, 2020. "Fostering resilient agro-food futures through a social-ecological systems framework: Public–private partnerships for delivering ecosystem services in Europe," Ecosystem Services, Elsevier, vol. 45(C).
    4. Rick van der Ploeg, 2014. "Guidelines for exploiting natural resource wealth," Oxford Review of Economic Policy, Oxford University Press, vol. 30(1), pages 145-169.

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