A vast subject area. Here is a random sample of some stuff that might be ueful or provide furher links of use

http://www.sciencedirect.com/science/article/pii/S0169204602001834

http://www.aaajournals.org/doi/abs/10.2308/accr.2004.79.2.329

http://www.sciencedirect.com/science/article/pii/S0921800907001620

http://link.springer.com/article/10.1023/A:1011128332243#page-1

http://www.jstor.org/stable/2138337

http://books.google.com/books?hl=en&lr=&id=o1kFRCmlnzAC&oi=fnd&pg=PA17&dq=valuing+environmental+capital&ots=L6jhWLhUHq&sig=VNbM9_FC37frhILmtleqZ559dC0#v=onepage&q=valuing%20environmental%20capital&f=false

http://books.google.com/books?hl=en&lr=&id=o1kFRCmlnzAC&oi=fnd&pg=PA17&dq=valuing+environmental+capital&ots=L6jhWLhUHq&sig=VNbM9_FC37frhILmtleqZ559dC0#v=onepage&q=valuing%20environmental%20capital&f=false

http://www.sciencedirect.com/science/article/pii/S0921800902000885

http://www.sciencedirect.com/science/article/pii/S0169204602001834

http://link.springer.com/article/10.1023/A:1024045221992#page-1

Thanks so much Neil. I am intending doing this using grounded theory, which I may even apply to the literature itself, but need to have some basis from which to begin. This will be a great start - much appreciated.

Regards

Douglas

Hi Douglas, I responded to this but I guess it didn't fly due to my fumbling expertise to Research Gate. Natural Capital is used to refer to the financial, environmental, social value that humans derive from the three large systems of air, land, and sea. It is often expressed as the goods and services we benefit from these systems. The reason it is important is that our present economy externalizes or discounts these benefits. Neglecting to account for Natural Capital in economic decisions constitutes a major flaw in our economy, which actually only accounts for financial capital. Robert Costanza and Paul Hawkin are two of the early advocates of Natural Capital and of how its recognition is needed in order that we don't over-consume our resource base, change our climate, and worsen the wellbeing of over half of our population. If you are interested in this you should understand the importance, also, of Social Capital and how it needs to be properly valued in out society. Hi Douglas, I responded to this but I guess it didn't fly due to my fumbling expertise to Research Gate. Natural Capital is used to refer to the financial, environmental, social value that humans derive from the three large systems of air, land, and sea. It is often expressed as the goods and services we benefit from these systems. The reason it is important is that our present economy externalizes or discounts these benefits. Neglecting this in our accounting constitutes a major flaw in our economy, which actually only accounts for financial capital. Robert Costanza and Paul Hawkin are two of the early advocates of Natural Capital and of how its recognition is needed in order that we don't over-consume our resource base, change our climate, and worsen the wellbeing of over half of our population. If you are interested in this you should understand the importance, also, of Social Capital and how it needs to be properly valued in out society.

Thanks Thomas. Where this started was trying to look at investment decisions taking all stakeholders into account and that then moved to including the Five Capitals Model of Jonathon Porritt. I then focused more to look only at mining investments, still with the Five Capitals. Now I am trying to focus further on just the Natural Capital aspect (which I am splitting into two - environmental capital and natural resources). I may still have to focus even further to pure environmental capital - we shall see. I will Google Scholar Costanza and Hawkins and see what they have to say.

Regards

Douglas

If you are just starting, I would recommend consulting some grey literature. Especially, the Inclusive Wealth Report 2012 (www.unep.org/pdf/IWR_2012.pdf‎) and introductory publications of TEEB (The Economics of Ecosystems and Biodiversity - http://www.teebweb.org/). As a basic reference for how to valuate the environment, you may also take a look at the Millenium Ecosystems Assessment (Synthesis report 2005 - http://www.unep.org/maweb/)

For a higher Chakra, I also recommend to take a look at Engel, S. and R. López, “Exploiting Common Resources with Capital-Intensive Technologies: The Role of External Forces” (Environment and Development Economics, 13 (2008):565-89). The paper discusses how the options that external players like mining companies introduce might affect local decisions that lead to natural resource destruction. So it is less focused on the natural capital side itself, but very relevant for decision making.

Thank you Ellen, I shall certainly look at those. This is part of a PhD trying to use the 5 Capital Model as a basis for making sustainable mining decisions, so the most difficult to value capitals are Natural, Human and Social Capital. The struggle continues!

Regards

Douglas

@Douglas: In this case you might want to start with the Inclusive Wealth Report.. It has an extensive discussion about ways to generate a complete picture of the wealth of a country including human and natural capital. They had an excellent writing team (collaboration of UNEP, the World Bank and IHDP) that probably did a lot of the struggling that this PhD is encountering already.

Ellen:

We have calculated a way to value ecosystem services based on net primary production; estimates are derived from economic production functions. See the attached paper for a description of the methodology. And we have used these estimates to evaluate the economic efficiency of converting natural ecosystems to soybean agriculture in the Brazilian Amazon. That paper also is attached. Please let me know if you have any questions.

Robert

Article Ecosystem Service Value and Agricultural Conversion in the A...

And the other paper

Forgot to attach

Article Valuing Ecosystem Services: A Shadow Price for Net Primary Production

Dear Douglas,

I think you raise an important question and I believe that it requires careful attention. Now, if you want to use the value of natural capital into a mining investment decision problem, this implies that you want to use the value of natural capital to reach some normative conclusion (should we proceed with this investment or not?). Any pricing of natural capital is contingent on the existing a) scale of the economic system relative to the surrounding environment and b) current distribution of income. In my opinion this creates an insurmountable problem. By basing a normative decision on the existing income distribution and economic scale, one is implicitly assuming that both scale and income distribution are "optimal". But if this is not the case, in what sense the prices assigned to the natural capital are "right" (or appropriate) to guide further investment decisions?

Dear Michele

I think that what you say is true. I have attached my proposal / discussion document on this topic - well, on the whole PhD original idea actually. You will see me struggling to focus down and down (and this is the 5th draft - the first was impossible). You will see that I think I have to address your question as concerning myself with switches or triggers and not including everything in some kind of all encompassing model.

Your comments are and would be appreciated.

And thank you Robert. I have downloaded the articles and shall read them this week-end.

Dear Douglas,

I had a quick look at your document. For me the main issue is that you define sustainability in terms of NPV. I come from a completely different perspective. Sustainability is essentially a biophysical constraint, not a financial one. The whole issue of sustainability (in my opinion) is not to make sure that NPV remains positive, but to make sure that the biophysical scale of the economic system under consideration does not exceed the biophysical capacity of the supporting environment. With respect to mining, I found this talk particularly interesting http://www.youtube.com/watch?v=TFyTSiCXWEE

Dear Michele

I don't think I define sustainability as NPV, but I do believe that there has to be a measurable indicator of sustainable. In other words, for a mining venture, and using the 5 Capitals as a model, I would have to derive an economic measure for each capital, otherwise how would I convince a board of directors or an investor to take something into account? So, for example, if creating an opencast mine means that traditional grazing grounds are disrupted / destroyed but I employ all those people or relocate them to another site how do I place a value on the potential loss of the grazing land and compare that with the possible benefit to the people? And that can go for butterflies or, as in a recent case, Baboon Spiders (which are not threatened but which cost the company several thousand Dollars to re-locate). There needs to be some kind of economic value as opposed to some kind of "virtue" in assessing the impact on the various capitals. What I think should happen is that some minimum measure should be in place for all the capitals, some kind of benchmark. We should be able to determine that a minimum level or trigger has been reached that would prohibit the project until a remediation position or alternative has been found. These "triggers" on each capital need to be determined and put in place before the project can be assessed and before it can proceed. So I revert to my question: how does one actually determine the value of the natural environment and the community? How does one determine that minimum level or trigger?

Hi Douglas,

I certainly agree that one needs a metric for sustainability. But I believe that such a metric needs to be a biophysical one, not a price-based one. Prices are very imprecise indicators of scarcity (think of whether prices are working to signal excess CO2 emissions in the atmosphere, for example) and work only in limited circumstances. In the end the biosphere really does not care about the price of something (while it does care about biophysical flows of matter/energy). Therefore I would rather work with material-flow-netowrk or with some environmental footprint indicator rather than with a NPV. Whether board of directors would listen is a different argument (and perhaps that is part of the problem too).

Hello Douglas,

I understand your concerns regarding your question "What is the value of natural or environmental capital? " I have similar of my own. Although I do not have simple answer I will try to help somehow.

As mining engineer I understand each deposit as unique one to be individually economically evaluated as a mining project. Also as a land surveyor and participant in real estate valuation practice I can recommend you digging in IVS International Valuation Standards if you need a value. It seems that you live in RPA but you may also try this source at least for future reference: European landscape character assessment initiative

http://www.paesaggiopocollina.it/paesaggio/dwd/lineeguida/elcai_projectreport.pdf

You may also try to work with land/urban planners. As for landscape valuation I have read several articles but all subjective. I mean each of valuation models were correct but only for certain area. Also as you probably know such approaches as willingness to pay (WTP) or willingness to accept payment (WTA), in exchange for environmental goods are still based on consumers behavior.

You can try to find case-studies of complex environmental - real estate valuations and also compensation as court cases.

See also methods in (page 43) http://books.google.pl/books?id=FLVCUklzN3EC&pg=PA37&lpg=PA37&dq=Winpenny+methods+of+environmental+valuation&source=bl&ots=v6ZkR-tkjA&sig=vLyh-_nLbmoJjnyVQXA7ac7ZWns&hl=en&sa=X&ei=jqZlUqjPAqaN0AWxzIGYCw&ved=0CDEQ6AEwAA although similar was cited earlier.

All in all you have chosen difficult topic to work on. Good luck.

Best regards

MD

Dr. Robert Kauf mann I read your abstract will you plz brief me again in short how you calculated the cost?

Dear Michal

Thank you for the response. I like the idea of case studies as it ties back to my desire to use Grounded Theory methodology. If I find enough case studies I may well be able to find commonalities amongst the cases and thus develop some kind of testable theory.

Thanks also for the LCA article and the reference for the Winpenny methodology. I shall investigate further.

Regards

Douglas

Naresh:

The estimates are based on a production function. Traditional economic models represent output as a function of capital stock and labor (sometimes with a correction for labor quality). My production functions includes net primary production because this quantity represents the amount of biological energy that is available to an ecosystem with which it can generate ecosystem services.

I estimate this production function with data from 1982 to 2000 for 72 nations. The model is estimated using both panel techniques and cointegration/error correction models. In all cases, the output elasticity for net primary production is statistically significant and positive (and does not vary among techniques). This suggests that if two nations have the same capital and labor, but have different amounts of net primary production, GDP will be higher in the nations with the higher level of net primary production. This increase in GDP is the value of ecosystem services.

For the paper on Soybean production in Brazil, we were able to estimate the value of ecosystem services at a fine scale and compare these values to the rent farmers would earn by producing soybeans. IN a significant portion of Brazil, farmers could grow soy because rents were positive, but these rents were smaller than the value of ecosystem services and so total social welfare in Brazil would be reduced by such land use change. The results strenghtned my confidence in the estimates because the value of soybean rents and ecosystem services were comparable even though they were computed using different economic methodologies and different data sets.

Put simply, I think the same approach can be applied to many projects, including the mining project that started this thread.

Robert

https://www.grin.com/document/283864

http://ec.europa.eu/environment/nature/capital_accounting/index_en.htm

https://www.eea.europa.eu/soer-2015/europe/natural-capital-and-ecosystem-services

https://study.com/academy/lesson/economics-natural-capital-the-environment.html

http://institute.smartprosperity.ca/sites/default/files/publications/files/Importance%20of%20Natual%20Capital%20March%202014.pdf