Natural capital accounting perspectives: a pragmatic way forward

Figures & data

Box 1. Circular economy – an expanded framework

The Circular Economy (CiE) Post-Keynesian metaphor signals a move from a linear approach to economic progress to one in which resources are kept in circulation for as long as possible. This strategic policy switch is expected to create new economic and employment opportunities alongside a range of environmental benefits (e.g., CO2 emissions reduction). While the ideas behind the CiE are decades and more old (Pearce and Turner 1990, chp2), there has been a renewed interest in this approach in policy circles in recent years. Much of the focus has been on the efficiency and productivity gains with waste management and recycling and most recently with problematic rebound effects (Figge and Thorpe 2019). The further development of natural capital accounting and value plurality can help to provide an expanded version of the CiE that encompasses not just waste management and recycling across product chains, but also natural capital enhancement and maintenance in the wider environment. An expanded CiE system is constrained by two ‘boundary’ conditions; an outer environmental boundary (known in the literature as Planetary Boundaries,PBs, see Rockström et al. 2009; Steffen et al. 2015), and a lower ‘social floor’ boundary linked to minimum acceptable levels of wealth (broadly defined) inequality and deprivation. The CiE sits between these boundaries, see Figure 1, in thermodynamic terms this is an ‘open system’ which inevitably stresses the environmental boundaries and risks the crossing of thresholds and tipping points (Giampietro 2019). Society therefore needs to learn to adapt and to anticipate future risks, public investments will need to be assessed to enable a transition to a low carbon economy. The Complementary Accounts Network can provide the complementary sets of accounting data/indicators to assess green projects and warn society about the unregulated growth in maro-economic physical scale and associated externalities that risk breaching both environmental and societal thresholds or tipping points that may threaten global systems resilience. The social inequality boundary which can be monitored through CAN and wealth accounting, also has an economic dimension. There is a strong case to argue that gross inequality carries an economic price in terms of inefficiency and lower values for environmental public goods investments . (Stiglitz 2013, Drupp et al. 2018). Figure 1. Circular economy.Accounting provides the ideal framework and tools to better assess the state of the capital stocks (physical/manufactured, human, social and natural capital assets) and flows of benefits over time.

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