chapter  6
Valuing the shadow price of forest stock in a sustainability indicator MASAYUKI SATO, RUNSINARITH PHIM
Pages 19

As a component of natural capital, forest stocks provide ecosystem services and well-being to humans (TEEB 2010). Following recent discussions on sustainability assessments, for example, in Dasgupta (2004), it has become necessary to value natural capital considering its contribution to human well-being, not just market profitability. On the other hand, Pearce and Atkinson (1993) introduced the concept of a capital approach and genuine savings indicator. Since then, a considerable amount of theoretical and empirical work on sustainability assessments has accumulated. More recently, Arrow et al. (2012), UNU-IHDP and UNEP (2012, 2014) and the World Bank’s “Adjusted net savings” provide theoretical summaries and empirical analyses for assessing the sustainability of each country’s development. These research frameworks focus on temporal changes in “comprehensive wealth” or “inclusive wealth” as a source of human well-being. As in Arrow et al. (2003), inclusive wealth refers to not only man-made capital, but also human capital and natural capital. Because inclusive wealth is a source of well-being, non-declining well-being requires non-declining inclusive wealth. As a result, temporal changes in inclusive wealth are an indicator of sustainability.