Discussion Paper

Counting Nonmarket, Ecological Public Goods: The Elements of a Welfare-Significant Ecological Quantity Index

Aug 15, 2008 | James W. Boyd


In this paper, I address a difficult, important, and long-standing problem in national income accounting: How to capture the welfare contributions of nonmarket, public environmental goods? The strategy I advocate here is to use principles from economic accounting, welfare economics, and environmental valuation to define the nonmarket units that should be used in a quantity index of ecological goods and services. A goal is to mimic the household-level foundations of conventional national income or product accounts, but extend them to the nonmarket natural economy. I describe the underlying theory and show how it can be used to define a practical, empirical strategy for constructing a welfare-significant ecological quantity index.