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Ecosystems as Natural Assets

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  • Barbier, Edward B.

Abstract

It is now standard in economics to model natural resources as a special form of capital that can be depleted or accumulated. The following review shows how such an approach can be extended to ecosystems, implying that they are a form of natural asset that produces a flow of beneficial goods and services over time. The review includes a discussion of valuing ecosystem services, focusing on the problem of benefits that vary spatially across landscapes and illustrated with the example of coastal ecosystems. The starting point of the basic natural asset model is the assumption that any ecological landscape that is conserved must compete with other assets in the portfolio of wealth owners in the economy. The model shows the importance of valuing ecosystem services to the optimal allocation of landscape among competing uses. It includes the possibility of an ecological transition, when it becomes technologically feasible to restore developed land as ecological landscape. The basic model is then extended to allow for the value of an ecosystem service and the costs of maintaining this service to vary with the spatial distance across the natural landscape; for the implications when the economy is opened to trade; and finally, for examining the effects of the risk of ecological collapse.

Suggested Citation

  • Barbier, Edward B., 2009. "Ecosystems as Natural Assets," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(8), pages 611-681, November.
  • Handle: RePEc:now:fntmic:0700000031
    DOI: 10.1561/0700000031
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    File URL: http://dx.doi.org/10.1561/0700000031
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    Cited by:

    1. Ben White & Nick Hanley, 2014. "Should We Pay for Ecosystem Service Outputs, Actions or Both?," Discussion Papers in Environment and Development Economics 2014-08, University of St. Andrews, School of Geography and Sustainable Development.
    2. Rintaro Yamaguchi & Masayuki Sato & Kazuhiro Ueta, 2016. "Measuring Regional Wealth and Assessing Sustainable Development: An Application to a Disaster-Torn Region in Japan," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 129(1), pages 365-389, October.
    3. Lázaro-Touza, Lara & Atkinson, Giles, 2013. "Nature, roads or hospitals? An empirical evaluation of ‘sustainable development preferences’," Ecological Economics, Elsevier, vol. 95(C), pages 63-72.
    4. World Bank Group, 2016. "Valuing Water Resources in Turkey," World Bank Other Operational Studies 25291, The World Bank.

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