Natural capital accounting and the measurement of sustainability

This thesis contributes to the field of sustainable development by investigating complementary approaches to measuring the wealth of nations. The research adopts the ‘capitals theory’ of sustainability, which defines sustainability in terms of non-declining living standards and provides a clear wealth management rule: endowing future generations with the potential to be ‘at least as well off as the present’ requires that comprehensive wealth is non-declining over time. Focusing on the natural capital component of comprehensive wealth, the thesis explores how individual countries might account for resource depletion against the backdrop of rising international trade, the presence of transborder externalities, and the development of international environmental policies. Recalling of Boulding’s notion of ‘Spaceship Earth’ the thesis investigates the implications of accounting for natural capital depletion within national borders (the production-based perspective) versus adopting a more global consumption-based perspective that attributes wealth depletions along a supply chain to the country of final consumption. A 57-sector, 140-region multi-regional input-output model measures natural capital depletions from both the production and consumption perspectives, covering oil, coal, natural gas, minerals, ocean (fisheries), and forest (timber) natural capital depletions. The next paper expands the analysis to produce a new accounting perspective that incorporates carbon emissions as wealth depletions according to the damages they cause rather than the location of emissions. The discussion notes that each perspective entails policy ‘blind spots’ but that together they provide new insight into the measurement of national and global sustainability. The final paper links the thesis directly to global sustainability policy by investigating the extent to which measured progress towards the Sustainable Development Goals represents a genuinely new direction for the international development community.