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Wealth accounting, ecological capital and ecosystem services

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  • Barbier, Edward B.

Abstract

This paper develops a methodology for including ecosystem services in a wealth accounting framework. Accounting for ecosystems and their services leads to adjusting net domestic product (NDP) for the direct benefits provided by the current stock of ecosystems but not for their indirect contributions in terms of protecting or supporting economic activity, property and human lives. When ecosystems are irreversibly converted for economic development, NDP must be further modified to reflect any capital revaluation that occurs with the current conversion of ecological capital to other land uses. The risk of collapse also requires adjustments to NDP, as any capital revaluation associated with ecosystem conversion must be adjusted for this risk, and the discounted minimum value of ecosystems associated with collapse must be subtracted from NDP. These various contributions of ecological capital to wealth accounts are illustrated with the example of mangroves in Thailand over the period 1970–2009.

Suggested Citation

  • Barbier, Edward B., 2013. "Wealth accounting, ecological capital and ecosystem services," Environment and Development Economics, Cambridge University Press, vol. 18(2), pages 133-161, April.
  • Handle: RePEc:cup:endeec:v:18:y:2013:i:02:p:133-161_00
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    Cited by:

    1. Ashley Kerna & Bonnie Colby & Francisco Zamora, 2017. "Cultural and Recreational Values for Environmental Flows in Mexico's Colorado River Delta," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 1-26, April.
    2. Edward B. Barbier, 2016. "The Protective Value of Estuarine and Coastal Ecosystem Services in a Wealth Accounting Framework," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(1), pages 37-58, May.
    3. Ben White & Nick Hanley, 2016. "Should We Pay for Ecosystem Service Outputs, Inputs or Both?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(4), pages 765-787, April.
    4. Carl Obst & Lars Hein & Bram Edens, 2016. "National Accounting and the Valuation of Ecosystem Assets and Their Services," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(1), pages 1-23, May.
    5. Halkos, George & Managi, Shunsuke & Tsilika, Kyriaki, 2017. "Evaluating a continent-wise situation for capital data," Economic Analysis and Policy, Elsevier, vol. 55(C), pages 57-74.
    6. Narita, Daiju & Lemenih, Mulugeta & Shimoda, Yukimi & Ayana, Alemayehu N., 2017. "Toward an Accounting of the Values of Ethiopian Forests as Natural Capital," Working Papers 140, JICA Research Institute.
    7. Perrings, Charles, 2014. "Environment and development economics 20 years on," Environment and Development Economics, Cambridge University Press, vol. 19(3), pages 333-366, June.
    8. Barbier, Edward B. & Burgess, Joanne C., 2019. "Sustainable development goal indicators: Analyzing trade-offs and complementarities," World Development, Elsevier, vol. 122(C), pages 295-305.
    9. Berry, Kevin & Finnoff, David & Horan, Richard D. & Shogren, Jason F., 2015. "Managing the endogenous risk of disease outbreaks with non-constant background risk," Journal of Economic Dynamics and Control, Elsevier, vol. 51(C), pages 166-179.
    10. Narita, Daiju & Lemenih, Mulugeta & Shimoda, Yukimi & Ayana, Alemayehu N., 2018. "Economic accounting of ethiopian forests: A natural capital approach," Forest Policy and Economics, Elsevier, vol. 97(C), pages 189-200.

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