ABSTRACT
Considering the natural environment as capital in economic theory dates back at least 200 years, with some of the early work of Ricardo (1817) and Faustmann (1849), and more recently the work of Hotelling (1931). Capital assets store wealth and generate production for future consumption (Hulten, 2006). Similarly, if we use more natural capital to produce economic output today, then we have less for production tomorrow (Barbier, 2014). Over time, many economists developed strong conceptual frameworks for considering the natural environment and its resources as capital, or an economic resource (Weitzman, 1976; Hartwick, 1990; Heal, 1998; Daily et al., 2000; Nordhaus, 2006; Arrow et al., 2012). Despite this, however, efforts to include the natural environment as capital in the decision-making process have been overall weak. This happens in particular where common property or public goods are dismissed and developed.
