Sustainability is an Objective Value

The loss of natural functions has traditionally not been recognised in national income accounting (Hueting 1980). Loss of environmental function has been an unmeasured reduction in both productive capacity and direct welfare. To account for this loss in true national income it is necessary to value natural functions in order to subtract the loss. This requires prices for natural functions, which in turn requires supply and demand curves. Roefi e Hueting has proposed a supply function that is the marginal cost curve of restoration of the natural function. His diffi culty arises with the demand curve that is unknown because markets for many natural functions do not exist, and even if they did, most interested parties (for example future generations, other species) are not allowed to bid in the market. The logic of income accounting requires the subtraction of the value of sacrifi ced ecological functions. But sacrifi ced functions cannot be valued in the same way as other goods and services because the demand curve cannot be defi ned — that is, cannot be defi ned in the same way as other demand curves, namely in terms of individual preferences expressible in markets. Hueting's resolution is a perpendicular ‘demand curve’, an expression of objective value, not individual preferences (Hueting 1991). The objective value is sustainability. This entails a rejection of the dogma that individual subjective preferences are the sole source of value, and introduces collective objective value as an additional source.