Human-made or manufactured capital is composed of physical or produced assets. Human capital represents the health, well-being and education, or potential productive capacity of humans as individuals. Finally, social capital addresses the values, norms, and trust embodied in institutions and social networks. The traditional approach in economics for capital tended to focus on the manufactured capital that was necessary to produce goods and services. However, this concept has been expanded to take into account the quality of labor (human capital), the strength of institutional structures that creates
the social context for BVD-523 economic development find more (social capital), and the natural resources that provide the materials necessary for economic activities and the absorptive capacity to assimilate waste (natural capital). In the capital approach, indicators basically fall into two groups: weak sustainability and strong sustainability indicators. The weak and strong sustainability concepts differ in their views on the substitutability of natural capital. The weak sustainability approach is
based on the neo-classical view and advocates for a constant stock of capital where substitution of natural capital is possible. In other words, sustainability is possible as long as total capital stocks are maintained over time periods. Indicators under this this website group include the adjusted net saving (ANS), the genuine progress indicator (GPI), and ‘green GDP.’ The ANS was
developed by the World Bank and estimates the wealth of nations based on the four types of capital mentioned previously, with the exception of human and social capital, which are expressed as ‘intangible capital.’ The ANS estimates the total wealth of nations in terms of the present value of future consumption, produced capital in monetary terms, and natural capital in terms of its shadow prices. Intangible capital is estimated as the difference between total wealth and natural and produced capital. The strong sustainability approach advocates for a constant stock of each form of capital and puts Rho restrictions on the substitutability of natural capital. The rationale is that non-declining natural capital is essential for socio-economic development and must be maintained for future generations. This approach considers that nature provides several functions which are essential for human existence, such as climate stabilization and protection (e.g., the ozone layer), and waste and emissions-absorbing capacity. One of the main indicators under this group is, perhaps, the ecological footprint, defined as the area necessary to support human needs in terms of food, fiber, and materials, as well as the area necessary to absorb waste (Wackernagel and Rees 1996).