Weak and Strong Sustainability Indicators, and Regional Environmental Resources
Nigeria or Madagascar are consuming more of their capital than they add as savings to their
capital.1
This rather astonishing result shows on one hand that weak sustainability indicators like the
savings rule according to (3) incorporate significant measurement problems, and on the other
hand, that such an indicator seems to be not very helpful in discussing which economy is on a
sustainable development path. Besides the fact that the substitutability assumption is at least
doubtful, there are a number of problems associated with the monetary valuation of natural
capital which is needed to compare natural capital and man-made assets. Section 3 concen-
trates on some crucial elements of monetary valuation of natural capital.
3 Environmental Valuation and Substitutability
3.1 Lexicographic Preferences
As mentioned above, the savings rule approach discussed in section 2 is an anthropocentric
one aiming at deriving the „worth“ of an asset, be it natural or man-made, by valuing the func-
tions provided by this asset (valuation of assets in the „cash economy“ according to Price,
1993). Even if it is assumed that all functions can be valued from this viewpoint, e. g. by ask-
ing people for their willingness-to-pay for the protection of species because they hold altruis-
tic motives or feel moral satisfaction, the method of monetary valuation presupposes that
people are prepared to trade natural goods for money. It is this trade-off people are willing to
accept. But this approach leaves out preferences which cannot be stated by respondents in a
monetary form. This is especially the case when respondents either are not able to make ade-
quate deliberations on the subject, or when respondents refuse to value natural goods in mone-
tary terms. Refusing to answer a valuation question can be explained by respondents` point of
1 Pearce and Atkinson have been heavily criticized for their work and conclusions on several grounds (see e. g.
Gowdy and O'Hara, 1997). In this context, Endres and Radke (1998) discuss the combination of weak and
strong sustainability indicators and conclude that there are some natural assets which can be substituted by
man-made capital while others are not substitutable.