5.5.4 Environmental Economics ModelEnvironmental economists, on the other hand, do incorporate the economic and socialdimensions of development in their models. Building on neoclassical welfare economics, theyportray total human welfare as including economic, social and environmental welfare, anddefine sustainable development as development that “leads to non-declining human welfareover time” (Pearce, 1991).To integrate the economy and the environment, they portray nature as another form of capital.Conventional 'productive' Capital is now called Man-Made Capital. Human Capital refers tothe stock of human knowledge and skills, health status, educational attainment etc. Theenvironment comprises a stock of Natural Capital, divided into Resources Capital, i.e. stocksof natural resources, and Environmental Quality, determined by the quality of land, 97atmosphere and water sinks, the functioning of global cycles and ecosystems, and humanaesthetic perceptions. In this theory, as development occurs, Natural Capital is depleted andHuman and Man-made Capital accumulate.
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