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Wackernagel&Rees Ecology

Wackernagel&Rees Ecology

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E L S E V IE R
E c o lo g ic a l E c o n o m ic s 2 0 (1 9 9 7 ) 3 - 2 4
E C O L O G IC A L
E C O N O M IC S
COM M ENTARY
Perceptual and
structural barriers to investing
in n a tu r a l c a p ita l:
E c o n o m ic s
f r o m
a n e c o lo g ic a l
fo o tp r in t p e r s p e c tiv e
M a th is W a c k e m a g e l a ,* , W illia m
E. R ees
b
a U niversidad
A n d h u a c d e X a la p a ,
P riv . A n to n io
C hedraui
C aram
s / n , C .P . 9 1 1 8 0 X a la p a ,
M e x ic o
b S c h o o l o f C o m m u n iO , a n d R e g io n a l P la n n in g ,
U nitJersity o f B ritish
C o lu m b ia ,
6 3 3 3
M em orial Road,
V a n c o u v e r ,
B C
V6T IZ2, Canada
Received 4 August 1993;accepted 28 M ay
1 9 9 6
A b s t r a c t
T h is
p a p e r
a r g u e s
that perceptual
d is to rtio n s
a n d
p re v a ilin g
e c o n o m ic
rationality, far from
e n c o u r a g in g
in v e s tm e n t in
n a tu ra l c a p ita l, a c tu a lly
a c c e le ra te th e d e p le tio n
of natural capital stocks. M oreover, conventional m onetary

analyses cannot detect the problem . T his paper therefore m akes the case for direct biophysical m easurem ent of relevant stocks and flow s, and u s e s

for this
p u r p o s e
th e
e c o lo g ic a l fo o tp rin t c o n c e p t. T o
d e v e lo p
th e
argum ent,
th e
p a p e r
e la b o ra te s
th e
n a tu ra l
c a p ita l
c o n c e p t
a n d
a s s e r ts
th e
n e e d
o f
in v e s tin g
i n
n a tu ra l
c a p ita l
t o
com pensate
fo r
n e t
l o s s e s .
It shows
h o w
th e
e c o lo g ic a l
footprint can be used
as a biophysical m easure for such capital, and
a p p lie s th is c o n c e p t a s a n a n a ly tic a l to o l f o r e x a m in in g
the barriers to investing in natural capital. It picks four issues from
a rough taxonom y of barriers and discusses them
fro m
a n
e c o lo g ic a l fo o tp rin t p e rs p e c tiv e : it s h o w s
w hy
m arginal prices cannot reflect ecological necessities; how
in te rre g io n a l risk
p o o lin g
e n c o u r a g e s
r e s o u r c e
liq u id a tio n ; h o w
present term s
of trade
u n d e rm in e
b o th
lo c a l a n d
g lo b a l e c o lo g ic a l s ta b ility ;
and how
efficiency strategies m ay actually accelerate resource throughput. A ffirm ing the necessity of biophysical approaches
fo r e x p lo rin g
th e
s u s ta in a b ility
im p lic a tio n s o f b a s ic
e c o lo g ic a l a n d
th e rm o d y n a m ic
p rin c ip le s , it d ra w s
lessons for current
d e v e lo p m e n t.
K eyw ords:P e rc e p tu a l b a rrie r; S tru c tu ra l b a rrie r; In v e s tm e n t; N a tu ra l c a p ita l
1 .
In tr o d u c tio n :
n a t u r a l
c a p ita l
a s
a p p r o p r ia te d
c a r r y in g
c a p a c ity
L et
u s
ta k e
a
c lo s e r
lo o k
a t
th is
'n a tu ra l
c a p ita l'
(Schum acher,
1974, p.
1 2 ).
T h e p u r p o s e o f th is p a p e r is to h ig h lig h t s o m e o f
the present barriers
t o
in v e s tin g
i n
n a tu r a l c a p ita l. It
a r g u e s th a t p e r c e p tu a l d is to r tio n s a n d p r e v a ilin g
e c o -
* C orresponding
a u th o r. F a x : (5 2 -2 8 )
1 4 2 -3 4 3 ; e -m a il: m a th -
is w a @ c o a c a d e .u v .m x
n o m ic
ra tio n a lity , fa r
fro m
e n c o u r a g in g

in v e s tm e n t in n a tu ra l c a p ita l, a c tu a lly a c c e le ra te th e d e p le tio n o f n a tu ra l

c a p ita l
s to c k s .
A s
c o n v e n tio n a l
m o n e ta ry
analyses seem
b lin d
to n a tu ra l c a p ita l d e p le tio n , th e
p a p e r
th e re fo re
m akes
th e
c a s e
fo r
d ire c t
p h y s ic a l
m easurem ent of relevant stocks and
flow s, and
u s e s
fo r th is p u rp o s e th e e c o lo g ic a l fo o tp rin t c o n c e p t.
H ow ever,
b e fo re
e m b a rk in g
o n
th is
ta s k ,
th e
m e a n in g o f th e
'n a tu ra l c a p ita l' c o n c e p t n e e d s to b e
c la rifie d .
E c o lo g ic a l
e c o n o m is ts
a c k n o w le d g e
th a t
in d u s tria liz e d
s o c ie tie s d e p e n d
fo r su rv iv a l n o t o n ly
o n la b o r a n d h u m a n - m a d e c a p ita l, b u t a ls o o n n a tu ra l
0 9 2 1 -8 0 0 9 /9 7 /$ 1 7 .0 0
C o p y rig h t \u00a9
1 9 9 7 E ls e v ie r S c ie n c e B .V . A ll rig h ts re s e rv e d .
P IIS 0 9 2 1 -8 0 0 9 (9 6 )0 0 0 7 7 -8
4
M . W ackernagel, W .E. Rees/E cological Econom ics 20 (1997) 3-24
c a p ita l.
H ow ever,
n a tu ra l
c a p ita l
h a s
n o t
y e t
b e e n
d e v e lo p e d
in to
a n
o p e ra tio n a l
c o n c e p t,
e v e n
w ith in
e c o lo g ic a l e c o n o m ic s . V a rio u s in te rp re ta tio n s o f n a t-
u ra l c a p ita l h a v e b e e n
advanced. N arrow
d e fin itio n s
id e n tify
n a tu ra l
c a p ita l
m ain ly
w ith
com m ercially
a v a ila b le
renew able
a n d
non-renew able
r e s o u r c e s
(B arb ier,
1 9 9 4 ,
p . 2 9 2 ).

H o w e v e r , th is p a p e r b u ild s o n a m o r e e c o lo g ic a lly c o m p le te d e fin itio n th a t w o u ld in c lu d e

n o t
o n ly
a ll
th e
b io p h y s ic a l
r e s o u r c e s
a n d
w aste
s in k s
n e e d e d
t o
support the
hum an
econom y,
b u t
a l s o
th e
re la tio n s h ip
am ong
th o s e
e n titie s
a n d
p r o c e s s e s
th a t p ro v id e
l i f e
support to
th e
e c o s p h e r e
(C ostanza
a n d
D a ly ,
1 9 9 2 ).

N atural capital refers to a s to c k o f n a tu ra l a s s e ts th a t is c a p a b le o f p r o d u c in g a sustainable flow . For exam ple, a forest or a fishery i s

c a p a b le
o f
p ro d u c in g
a
p e r p e tu a l
h a r v e s t,
y e a r
after year. The forest or the fish
s to c k is th e
n a tu ra l
c a p ita l, th e s u s ta in a b le h a r v e s t is n a tu ra l in c o m e .
T h e r e is r e n e w a b le n a tu ra l c a p ita l, in c lu d in g
s e l f -
p ro d u c in g
s to c k s
lik e
biom ass
o r
o th e r

b io lo g ic a l resources, or replenishable assets such as w ater, solar e n e r g y

o r
a tm o s p h e ric
o z o n e .
A nd
th e re
i s
n o n -re -
n e w a b le n a tu ra l c a p ita l lik e fo s s il fu e l, m in e ra ls a n d
ores whose
in c o m e
c a n
be considered
s u s ta in a b le
i f
the capital losses are com pensated (see below ). N atu-
ra l
c a p ita l
i s
th e
to ta lity
o f
th e s e
a s s e ts ,
a n d
th is
p a p e r
u s e s
a
b io p h y s ic a l
a p p r o a c h
t o
a g g r e g a te
i t s
various form s.
In s h o rt, n a tu ra l c a p ita l is n o t ju s t a n in v e n to ry o f
r e s o u r c e s ;
i t
in c lu d e s
a ll
th o s e
c o m p o n e n ts
o f
th e
e c o s p h e r e ,
a n d
th e
s tru c tu ra l
re la tio n s h ip s
am ong
th e m , w h o s e
o rg a n iz a tio n a l in te g rity
is essential for
th e c o n tin u o u s
self-production of the system
itself. J
I n d e e d , it is th is h ig h ly
e v o lv e d s tru c tu ra l a n d
f u n c -
tio n a l
in te g ra tio n
th a t
m akes
o f
th e
e c o s p h e r e
th e
u n iq u e ly
liv a b le
'e n v iro n m e n t'
i t
i s
fo r
th e
v e r y
organism s it com prises (R ees,
1 9 9 0 ,
1 9 9 2 a ). G e o c li-
m atic,
h y d ro lo g ic a l,
a n d
e c o lo g ic a l
c y c le s
d o
n o t
s im p ly tra n s p o rt a n d
d is trib u te n u trie n ts
a n d

e n e r g y , b u t a re a m o n g th e s e lf-re g u la to ry , h o m e o s ta tic m e c h - anism s

th a t
s ta b iliz e
c o n d itio n s
o n
E a rth
fo r
a ll
c o n te m p o ra ry life -fo rm s , in c lu d in g
h u m a n k in d .
i 'O r g a n iz a tio n ' s ig n ifie s th o s e p ro p e rtie s a n d re la tio n s h ip s th a t
m ust be present for a thing
to exist. M aturana
a n d
V arela
(1 9 8 8 ,
pp. 42-43)
refer to
th e
u n iq u e
s e lf-p ro d u c in g
a n d
s e lf-re g u la tin g
p ro p e rtie s th a t d e fin e liv in g
system s as
'a u to p o ie tic
o rg a n iz a tio n .'
1 .1 .
T h e
c o n s ta n t c a p ita l s to c k s
c r ite r io n
H a v in g f o r m a liz e d th e c o n c e p t o f n a tu ra l c a p ita l,
e c o lo g ic a l e c o n o m is ts a re d e b a tin g
v a rio u s fo rm u la -
tio n s
o f
a
'c o n s ta n t
c a p ita l
s to c k s '
c o n d itio n
fo r
s u s ta in a b ility ( C o s ta n z a a n d D a ly , 1 9 9 2 ; D a ly , 1 9 8 9 ;
P e a r c e
a n d
A tk in s o n ,
1 9 9 3 ;
P e a r c e
e t
a l.,
1 9 8 9 ,
1 9 9 0 ;
P e z z e y ,
1 9 8 9 ;
R ees,
1 9 9 2 a ).
I n
k e e p in g
w ith
o u r
em phasis
o n
e c o lo g ic a lly
s ig n ific a n t
fo rm s
o f
n a tu ra l c a p ita l, a n d g iv e n c u rre n t in d ic a tio n s o f g lo b a l
e c o lo g ic a l d e te rio ra tio n , w e
subscribe to
the precau-
tio n a ry
p rin c ip le
th a t e a c h
g e n e ra tio n
s h o u ld
in h e rit
a stock of essential biophysical assets
a lo n e
n o
le s s
th a n
th e
stock of such
a s s e ts in h e rite d
b y
th e p re v i-
o u s g e n e ra tio n . 2 A d e q u a te

n a tu ra l c a p ita l s to c k s a re n e e d e d to m a in ta in s u ffic ie n t e c o lo g ic a l flo w s fo r th e hum an

econom y.
A nd,
g ro w in g
p o p u la tio n s
w o u ld
n e e d
t o
tra n s la te
i n
re d u c in g
e c o n o m ic
in p u ts
p e r
c a p ita . In
fact, to
s e c u r e
m aterial
w e ll-b e in g
i n
th e
fu tu re , o n e c o u ld
e v e n
a rg u e fo r th e m a in te n a n c e
o f
p e r c a p ita
stocks (Barbier,
1 9 9 4 ,
p . 2 9 5 ).
F o r m o re
people, w e w ould need m ore forests, m ore farm
la n d
and m ore w ilderness areas~
T h is
in te rp re ta tio n
em phasizes
e c o lo g ic a l
n e c e s -
s ity ,
p a rtic u la rly
th e
life -su p p o rt
fu n c tio n s
o f
s e l f -
p ro d u c in g

b io p h y s ic a l c a p ita l. It a ls o re fle c ts D a ly 's d e fin itio n o f 's tr o n g s u s ta in a b ility ' w h ic h re c o g n iz e s that m anufactured (or hum an-m ade) capital and natu- ra l c a p ita l re m a in

n o n -s u b s titu ta b le
c o m p le m e n ts in
m o s t p ro d u c tio n
fu n c tio n s (D a ly ,
1989, p. 22).
W e should acknow ledge here that how ever radical
th e
c o n s ta n t
s to c k s
c rite rio n
m ig h t
a p p e a r ,
i t
s t i l l
re fle c ts
p re v a ilin g
a n th ro p o c e n tric
a n d
'r e s o u r c i s t '
values. Em phasis
i s
o n
th e
p ra g m a tic
m in im a l b io -
2 The
m a jo r
a lte rn a tiv e
in te rp re ta tio n
o f
th e
'c o n s ta n t
c a p ita l
s t o c k s '
c rite rio n
a r g u e s
fo r
m a in ta in in g
a
c o n s ta n t
a g g r e g a te
stock of hum an-m ade
a n d
natural capital (see Pearce
e t a l.,
1 9 8 9 ;
P e z z e y ,
1989). How ever, this version
a s s u m e s th e
s u b s titu ta b ility
of m anufactured
fo r n a tu ra l c a p ita l. O r, o n e c o u ld
a r g u e th a t it is
th e n a tu ra l in c o m e th a t s h o u ld b e k e p t c o n s ta n t - -
m ore efficient
te c h n o lo g y
m ig h t
p r o d u c e
th e
sam e
flo w
o n
a
sm aller
c a p ita l.
H ow ever,
a s
m any
e c o lo g ic a l
fu n c tio n s
s u c h
a s
b io d iv e rs ity ,
e c o lo g ic a l
s ta b ility
a n d
in te g rity ,
o r
atm ospheric
o z o n e
fo r
U V
p ro te c tio n
d e p e n d
o n
s to c k s
ra th e r
th a n
flo w s,
a n d
a s
w e
m ay
a lr e a d y
b e
short of
n a tu ra l
c a p ita l,
it s e e m s
m ore
r e a s o n a b le
t o
f o c u s
th e
a n a ly s is
o n
th e
s to c k s ,
a n d
u se
th e
te c h n o lo g ic a l
im -
p r o v e m e n ts fo r liv in g b e tte r o n
th e s a m e c a p ita l.
M . W a c k e r n a g e l, W .E . R e e s / E c o lo g ic a l E c o n o m ic s 2 0 ( 1 9 9 7 ) 3 - 2 4
5
p h y s ic a l
re q u ire m e n ts
fo r
hum ane
s u rv iv a l.
O n
th e
o th e r
h a n d ,
th e
p r e s e r v a ti o n
o f
b io p h y s ic a l
a s s e t s
e s s e n ti a l
to h u m a n k in d
d o e s
im p ly
th e
d ire c t p ro te c -
tio n
o f w h o le
ecosystem s and
th o u s a n d s
of keystone
s p e c ie s ,
a n d
th o u s a n d s
m ore
w ill
b e n e f it
in d ire c tly
fro m
th e
m a in te n a n c e
o f
th e
sam e
system s
u p o n
w h ic h
hum ans
a re
d e p e n d e n t.
I n
sh o rt,
th e
m ost
p ro m is in g
h o p e
fo r m a in ta in in g
s ig n ific a n t b io d iv e r-
s i t y
u n d e r
o u r p re v a ilin g
v a lu e
s y s t e m
m ay
well be
th e
e c o lo g ic a lly
e n lig h te n e d
hum an
s e l f - i n t e r e s t
im -
p lic it
i n
s tr o n g e r
v e r s io n s
o f
th e
c o n s ta n t
n a tu ra l
c a p ita l s to c k s c rite rio n .
O f course,
s h o u ld
h u m a n k in d
shift to
m ore
e c o -
c e n tric
v a lu e s ,
i t s
ow n
s u r v iv a l
m ig h t
b e
a s s u r e d
e v e n
m ore
effectively. Respect for and
the preserva-
tio n
of other species
a n d
e c o s y s te m s f o r th e ir in trin -
sic v a lu e w o u ld a u to m a tic a lly e n s u re h u m a n
e c o lo g i-
cal security.
F o r
th e
p r e s e n t,
how ever,
th e
n e x t
s te p s
a re
t o
d e te rm in e
h o w
b e s t to
m easure
c o n s ta n c y
o f n a tu ra l
c a p ita l, o r in
other words, how
th e
v a rio u s
fo rm s
o f
n a tu ra l
c a p ita l
c a n
b e
a g g r e g a te d .
P e a r c e
a n d
c o l-
le a g u e s
id e n tify
th re e
p o s s ib le
a p p r o a c h e s
t o
th e
m easurem ent issue based on constant physical inven-
to ry , c o n s ta n t
p r e s e n t
v a lu a tio n
o f
s to c k s ,
a n d
c o n -
stant incom e
flows. They
fin a lly
s e t t l e
o n
m o n e ta ry
m easures
o n
g ro u n d s
th a t
c o n s ta n t
p h y s ic a l
c a p ita l
w o u ld
" b e
a p p e a lin g
fo r
renew able
r e s o u r c e s ,
b u t,
c le a rly ,
h a s
l i t t l e
r e l e v a n c e
t o
e x h a u s tib le
r e s o u r c e s
s in c e
a n y
p o s itiv e
r a t e
o f
u se
r e d u c e s
th e
s t o c k "
( P e a r c e
e t a l.,
1990, p.
1 0 ).
W e
c h a lle n g e
this view. U sing
m oney
v a lu e s a s a
m easure
o f
n a tu ra l
c a p ita l
c o n s ta n c y
i s
m is le a d in g
fro m
a n
e c o lo g ic a l
p e r s p e c tiv e
p r e c i s e l y
b e c a u s e
a
c o n s ta n t
(o r
in c r e a s in g )
d o lla r
v a lu e
o f
a
r e s o u r c e
s to c k
c a n
r e s u l t
fro m
th e
p h y s ic a l
d e p le tio n
o f th e
s to c k
( a n d
i t s
fu n c tio n s ).
S im ilarly ,
a
s ta b le
in c o m e
m ay
r e s u l t
fro m
r i s i n g
m a rg in a l
p ric e s
for resource
c o m m o d itie s a s c o rre s p o n d in g
s to c k s d e c lin e (th is o f
c o u r s e
assum es
th a t
m arket
p ric e s
a re
a c c u r a te
a n d
in v o la tile , w h ic h
th e y a re n o t). T h u s , m o n e ta r y
m ea-
sures can
foster the
illu s io n

o f c o n s ta n t s to c k s w h ile p h y s ic a l in v e n to rie s a c tu a lly s h rin k . M o r e f u n d a m e n - ta lly , p ric e s c a n

s a y n o th in g
at all about non-m arket,
F ig . 1 . T h e e c o lo g ic a l
footprint. T he ecological
f o o tp r in ts o f in d iv id u a l
re g io n s a re m u c h la rg e r th a n th e a re a s th e y p h y s ic a lly o c c u p y . S in c e
in d u s tria l
econom ies draw
o n
resources from
a ll
o v e r th e
w orld, w e
s a y
th a t th e y
a re
i n
e ffe c t a p p ro p ria tin g
c a rry in g
c a p a c ity
fro m
e ls e w h e re , in c lu d in g th e g lo b a l c o m m o n s (P h il T e s te m a le ).

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