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Sustainability indicators and the shadow price of natural capital

Author

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  • Sato, Masayuki
  • Phim, Runsinarith
  • Managi, Shunsuke

Abstract

This paper investigates the effect of shadow price regarding weak sustainability indicators based on the genuine savings indicator. We analyse the forest resources considering positive externalities of natural capital, as the approximation from market rent alone would under-estimate the true shadow price. On the basis of previous valuation results of forest resources, we estimate the non-market value and shadow price of forest, which are further used in deriving sustainability indicators measurement. The results show the importance of shadow pricing of natural capital to reflect weak sustainability indicators. Re-calculations of the sustainability indicator provide evidences suggesting that existing weak sustainability indicators tend to over-estimate sustainability, especially among countries with a higher dependence on forest-resource exploitation.

Suggested Citation

  • Sato, Masayuki & Phim, Runsinarith & Managi, Shunsuke, 2015. "Sustainability indicators and the shadow price of natural capital," MPRA Paper 62612, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:62612
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    Cited by:

    1. Paunić, Alida, 2016. "Brazil, Preservation of Forest and Biodiversity," MPRA Paper 71462, University Library of Munich, Germany.

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    More about this item

    Keywords

    Sustainable Development; Inclusive Wealth Index; Natural Capital; Shadow Price;
    All these keywords.

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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