Sustainability, the capital approach and the built environment

Sustainable development is concerned with how current decisions about how to manage a portfolio of wealth - comprising all of the assets in an economy including natural wealth - have an impact upon future well-being. Contributions to this debate based on the link between asset accounting and indicators of sustainable development are reviewed. This 'capital approach' focuses on wealth accounting and indicators of genuine (or adjusted net) saving, the amount of saving over and above the value of total asset consumption. If the genuine saving rate is negative, it provides an indication that current behaviour is eroding the capital on which its development depends. Such empirical discussion about the sustainability of development paths is typically concerned with assessing whether national economies are sustainable. However, as demonstrated, for example, by Pearce in 2003, these insights and the indicators that follow are also relevant for discussions about the contribution of economic sectors such as construction and the built environment to sustainability. This provides a useful addition to existing approaches (such as those based on a 'triple-bottom line'). The paper concludes with some thoughts about how the capital (or wealth-accounting) approach could be extended to gain further insight into the contribution of the built environment to sustainability.