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Natural Capital: From Metaphor to Measurement
CMEW Internal Seminar
Presenter
Joshua K. Abbott,
Associate Professor, School of Sustainability, Arizona State University
Abstract
Current efforts to value ecosystem services have contributed little to the valuation of natural capital, which suggests that in practice “nature is capital” primarily serves as a metaphor. We provide a theoretically motivated approach for recovering natural capital prices that expands beyond idealized management to encompass current, likely inefficient, management institutions. Theoretically consistent capital valuation requires adjusting for the net marginal productivity of the natural capital asset and price appreciation. We develop a numerical approach, based on polynomial approximation, for approximating the value of capital that integrates estimates from ecological and economic research. Then we demonstrate the approach is capable of recovering the accounting price of capital when it is known a priori. Third, we show that the common approach of valuing natural capital as a simple marginal annuity of ecosystem services suffers from severe biases relative to our full capital‐theoretic approach. Finally, we employ the method to value the Gulf of Mexico reef fish complex as a capital asset under real‐world management conditions. This generates credible accounting prices for a pound of reef fish. Our approach to valuation reveals the essential interdisciplinarity of natural capital valuation and highlights the critical importance of understanding the feedbacks between the state of natural capital stocks, human behavior impacting these stocks, and the role of institutions in shaping that feedback.
Date
Tuesday, April 1, 2014
12:00 - 1:30 p.m. EDT
A light lunch will be provided.
Location
7th Floor Conference Room
All seminars will be in the 7th Floor Conference Room at RFF, 1616 P Street NW unless otherwise noted. Attendance is open, but involves pre-registration no later than two days prior to the event. For questions and to register to an event, please contact Karen Furman at furman@rff.org. Updates to our academic seminars schedule will be posted at www.rff.org/academicseminarseries.
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