How to measure the sustainability of capital stocks? Indicators used by Agenda21

How to measure the sustainability of capital stocks?

Indicators used by Agenda21

Introduction

This essay is about the attempt to measure sustainability with the theoretical model of a capital stock. As a result of the Agenda21 the CSD, the commission set up in response to agenda21, was commissioned to work out a list of proposed indicators that work in reality. This listing now is to be examined in the following pages. Due to the extent of this paper not all indicators can be analysed and so only a few will be chosen to show the strengths and weaknesses of the work list. The task will not be to discuss the sustainability or capital stocks as approaches in themselves.

Relevant Definitions:

Sustainability

Sustainability is best described by the statement of the Brundtland Commission in 1987 : “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (Turner,Pearce&Bateman, p.54,1994). A prerequisite for this claim is the maintenance of social, economic and environmental sustainability (Goodland,1995).

For are a better understanding of sustainability we first have to explain/ clarify what we mean by capital stocks.

Capital Stocks

When economists wish to measure something, they always try to capture it in monetary terms. That is why they put forward the notion of capital for recording the relevant resources, which are the bases of societal well-being (Hanley/Shogren, p.134,2001).

We can differentiate between three (or four) distinct stocks of capital.

natural capital stock (Kn), which is defined as the stock of environmentally provided assets as ,for example, soil , forests and wetlands (Goodland,1995). Thus the environment is considered to be as capital (El Serafy,p.168).

man-made capital stock (Km): this is what we traditionally consider as capital; produced assets that are easily assigned monetary value and sold in world markets. Some examples include appliances, furniture, automobiles, buildings, dams and other elements of the built environment (www.sprl.umich.edu).

human capital (Kh): this generally refers to the health, well-being, and productivity potential of a society. Types of human capital include mental and physical health, proper housing and sanitation, education, and work skills. These elements not only contribute to a happy, healthy society, but improve the opportunities for economic development through a productive workforce (Goodland,1995).

Now we can define weak sustainability as:

Kn+Kh+Km= K

Due to the assumption of perfect substitutability, weak sustainability preserves total capital (K), but not necessarily each of the three kinds of capital.

A more recent approach created a fourth kind, called social capital:

like human capital, it is related to human well-being, but on a societal rather than individual level.

It consists of the social networks that support an efficient, cohesive society, and facilitate social and intellectual interactions among its members. As defined by the Civic Practices Network, "social capital refers to those stocks of social trust, norms and networks that people can draw upon to solve common problems."(www.sprl.umich.edu).

Examples of social capital include neighbourhood associations, civic organisations, and co-operatives. Political stability, democracy, government efficiency, and social equity are also considered part of social capital.

In the following we also take social capital into consideration, because, we suppose, that the dimension of society substantially affects a country’s ability to grow sustainably.

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