Sustaining Welfare for Future Generations. A Review Note on the Capital Approach to the Measurement of Sustainable Development

The objective of this policy paper is twofold: -To present an update on an economic approach to measure sustainable development - the capital approach - and how this approach may be combined with the ecological approach to arrive at indicators of sustainable development; -Show how this analytical framework is actually used in longer term policy making in Norway - a country that relies heavily on non-renewable resources. A model of development is presented based on produced, human, natural, health - and social capital and the level of technology. Natural capital is divided into two parts - natural capital produced and sold in markets (oil and gas) - and non-market natural capital like clean air and biodiversity. Then the policy rules and indicators that flow from this framework are applied to Norwegian longer term policies for sustainable development.