Human Well-Being and the Natural Environment

Abstract

This book explores ways to measure the quality of life, a problem pervading a number of academic disciplines, but not confined to the academic realm. Indices of human well‐being in current use are insensitive to human dependence on the natural environment, both at a moment in time and across generations. Moreover, international discussions on economic development in poor regions frequently ignore the natural resource base. In developing quality‐of‐life measures, the author pays particular attention to the natural environment, illustrating how it can be incorporated, more generally, into economic reasoning. The discussion offers a comprehensive account of the newly emergent subject of ecological economics. Connections between biodiversity, ecosystem services, resource scarcities, and economic possibilities for the future are developed in a quantitative but accessible language. Familiar terms such as ‘sustainable development’, ‘social discount rates’ and Earth's ‘carrying capacity’ are given a firm theoretical underpinning. The theory developed is used in extended commentaries on the economics of population, poverty traps, global warming, structural adjustment programmes and free trade. The author shows that, whether for valuing the state of affairs in a country or evaluating economic policy there, the index that should be used is the economy's wealth, which is the social worth of its capital assets. The concept of wealth adopted is comprehensive, including not only manufactured assets but also human capital, knowledge, and the natural environment. Wealth is contrasted with popular measures of human well‐being, such as gross national product and the United Nations Development Programme's Human Development Index. The theory is applied repeatedly to data on poor countries, revealing a picture that contrasts sharply with that portrayed in the contemporary literature on economic development.