This chapter outlines the early use of the concept of natural capital to describe the environment through to its more recent extension to include ecosystems. The concept has proved useful, and controversial, in both the economics of sustainable development and wealth accounting. Regarding sustainable development, the differing perceptions of “weak” versus “strong” sustainability hinge on the critical distinction between forms of natural capital that is substitutable and irreversibly depleted. As long as one is careful to account for the direct and indirect contributions of ecological capital to human welfare, then it is possible to extend adjusted net domestic product (NDP) to include changes in ecological capital. The example of the US is used to illustrate the more conventional extension of NDP to include basic changes in human and natural capital. Mangrove ecosystems in Thailand are employed to show the additional extension of adjusting NDP for loss of ecological capital.
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