Advertisement

Eastern Economic Journal

, Volume 43, Issue 3, pp 391–405 | Cite as

Natural Capital and Wealth in the 21st Century

  • Edward B. Barbier
Article

Abstract

Extending the wealth accumulation model of Piketty and Zucman [2014] to include net depreciation in fossil fuels, minerals, and forests produces two key indicators: the net national saving rate adjusted for natural capital depreciation, and the ratio of this rate to long-run growth. These indicators are applied to eight rich economies over 1970–2013 and developing countries for 1979–2013. Whereas in developing economies capital accumulation has largely kept pace with rising natural capital depletion, in the rich countries adjusted net savings have fallen to converge with the rate of natural capital depreciation, suggesting less compensation by net increases in other capital.

Keywords

capital natural capital national income accounting natural resources wealth 

JEL

E01 Q01 

Notes

Acknowledgments

The author wishes to thank Diego Nocetti and three anonymous referees for their comments and Thomas Piketty for helpful discussion and suggestions.

References

  1. Arrow, Kenneth J., Partha S. Dasgupta, Lawrence H. Goulder, Kevin J. Mumford and Kirsten Oleson. 2012. Sustainability and the Measurement of Wealth. Environment and Development Economics, 17(3):317–353.CrossRefGoogle Scholar
  2. Barbier, Edward B. 2015. Nature and Wealth: Overcoming Environmental Scarcities and Inequality. London: Palgrave Macmillan.CrossRefGoogle Scholar
  3. Dasgupta, Partha S. 2001. Human Well-being and the Natural Environment. New York: Oxford University Press.CrossRefGoogle Scholar
  4. Charles, Jones I. 2015. Pareto and Piketty: The Macroeconomics of Top Income and Wealth Inequality. Journal of Economic Perspectives, 29(1):29–46.CrossRefGoogle Scholar
  5. Fenichel, Eli P. and Joshua K. Abbott. 2014. Natural Capital: From Metaphor to Measurement. Journal of the Association of Environmental and Resource Economists, 1(1/2):1–27.CrossRefGoogle Scholar
  6. Ferreira, Susan, Kirk Hamilton and Jeffrey R. Vincent. 2008. Comprehensive Wealth and Future Consumption: Accounting for Population Growth. World Bank Economic Review, 22(2):233–248.CrossRefGoogle Scholar
  7. Goldin, Claudia and Lawrence F. Katz. 2008. The Race Between Education and Technology. Cambridge, MA: Harvard University Press.Google Scholar
  8. Greasley, David, Nick Hanley, Jan Kunnas, Eoin McLaughlin, Les Oxley and Paul Warde. 2014. Testing Genuine Savings as a Forward-looking Indicator of Future Well-being over the (Very) Long-run. Journal of Environmental Economics and Management, 67(2):171–188.CrossRefGoogle Scholar
  9. Hamilton, Kirk. and Clemens, Michael. 1999. Genuine Savings Rates in Developing Countries. World Bank Economic Review, 13(2):333–356.CrossRefGoogle Scholar
  10. Hamilton, Kirk. and Hartwick, John M. 2005. Investing Exhaustible Resource Rents and the Path of Consumption. Canadian Journal of Economics, 38(2):615–21.CrossRefGoogle Scholar
  11. Hartwick, John M. 1977. Intergenerational Equity and the Investment of Rents from Exhaustible Resources. American Economic Review, 67(5):972–974.Google Scholar
  12. Hartwick, John M. 1990. Natural Resources, National Accounting and Economic Depreciation. Journal of Public Economics, 43:291–304.CrossRefGoogle Scholar
  13. Organization for Economic Cooperation and Development (OECD). 2011. An Overview of Growing Income Inequalities in OECD Countries: Main Findings. Divided We Stand: Why Inequality Keeps Rising. Paris: OECD.Google Scholar
  14. Piketty, Thomas. 2014. Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
  15. Piketty, Thomas and Gabriel Zucman. 2014. Capital is Back: Wealth-Income Ratios in Rich Countries, 1700–2010. Quarterly Journal of Economics, 129(3):1255–1310.CrossRefGoogle Scholar
  16. Solow, Robert M. 1956. A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics, 70(1):65–94.CrossRefGoogle Scholar
  17. Solow, Robert M. 1986. On the Intergenerational Allocation of Natural Resources. Scandinavian Journal of Economics, 88(1):141–149.CrossRefGoogle Scholar
  18. Swan, Trevor W. 1956. Economic Growth and Capital Accumulation. Economic Record, 32(2):334–361.CrossRefGoogle Scholar
  19. United Nations University (UNU)-International Human Dimensions Programme (IHDP) on Global Environmental Change-United Nations Environment Programme (UNEP). 2014. Inclusive Wealth Report 2014: Measuring Progress Toward Sustainability. Cambridge and New York: Cambridge University Press.Google Scholar
  20. Weitzman, Martin L. 1976. On the Welfare Significance of National Product in a Dynamic Economy. Quarterly Journal of Economics, 90(1):156–162.CrossRefGoogle Scholar
  21. World Bank. 2011. The Changing Wealth of Nations: Measuring Sustainable Development in the New Millennium. Washington, D.C.: The World Bank.Google Scholar
  22. World Bank. 2016. World Development Indicators. Washington D.C: The World Bank. http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators.

Copyright information

© Eastern Economic Association 2016

Authors and Affiliations

  1. 1.Department of Economics & FinanceUniversity of WyomingLaramieUSA

Personalised recommendations