Accounting for Ireland’s natural capital and measuring sustainable development
Environmental economists offer what is arguably the most internally consistent theory of sustainable development. A sustainable development path is one that maintains welfare opportunities for future generations. An economy’s “genuine savings” (GS) represent changes to the productive capacity of the economy and thus indicate the capacity for the generation of future well-being. GS goes “beyond GDP” by including important assets omitted in the conventional national accounts. GS is a measure, in monetary terms, of the change in the value of the stocks of natural (clean air, natural resources) produced (machines and infrastructure) and human (knowledge) capital on an annual basis. Empirical applications have shown GS to be a good forward-looking indicator of well-being. GS has gained international recognition through the World Bank who publish estimates for most countries. This paper presents augmented estimates of Irish GS by constructing a time-series predominantly from national data sources and includes characteristics omitted by the World Bank (peat depletion, forestry growth, agricultural land value and air pollution) and examines technological advancement, transboundary pollution, climate change and population growth.