DEGRADATION OF ENVIRONMENTAL CAPITAL AND NATIONAL ACCOUNTING PROCEDURES

The capital theoretic approach to the environment as a wastable stock, a stock with a flow of abatement services, is explored in a simple Ricardo-like model involving wheat production and pollution production as an essential by-product. We then turn to how the national accounts are implicit in growth or capital theory models and how formulae emerge for accounting for the wasting of environmental capital (airsheds and watersheds) from 'excessive' use.