Professor Dieter Helm, Chairman of the Natural Capital Committee, has released ‘Natural Capital valuing our planet’, a book published by Yale University Press and following closely the recommendations of the Natural Capital Committee in its recent report to the UK government.
GDP, the conventional measure of economic growth, does not involve a proper balance sheet, and the future consequences of depleting natural capital are ignored, such that depleting natural assets typically leads to an increase in GDP.
At the heart of this book is an asset-based sustainable natural capital rule: passing on to the next generation a set of assets at least as good as the ones we inherited requires a number of conditions to be met and a line in the sand to be drawn — the aggregate level of natural capital should not decline. This requires that natural capital is incorporated in national and corporate accounts, measured, and valued to make sure that the aggregate rule is not broken.
To meet the aggregate rule, the economic rents from depleting non-renewables should be set aside in a fund, which is potentially very big, creating significant opportunities to improve natural capital.
Professor Helm recommends three policies necessary to implement the natural capital approach to economic policy: compensation; environmental taxes, subsidies and permits; and the provision of natural capital public goods, including protected areas, parks and nature reserves.
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