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Three systems of rights to natural resources are studied in Ch. 7: private, communal, and state. Institutional failures are shown to be the cause of inefficiencies and inequities, both in momentary allocations of resources and in the inter‐generational transfer of resources. It is argued that in the world we have come to know, there is a bias in the use of the natural environment, in that use at any moment is excessive, not insufficient. Since observed prices frequently do not reflect the social worth of natural resources, use should be made of notional prices, called accounting prices.
Dasgupta develops methods of valuation and evaluation with the aim of measuring, and searching to improve, the quality of our lives. He focuses on the ways in which our quality of life is now known to be tied to the natural environment.
Ecosystems are capital assets: When properly managed, they yield a flow of vital goods and services. Relative to other forms of capital, however, ecosystems are poorly understood, scarcely monitored, and--in many important cases--undergoing rapid degradation. The process of economic valuation could greatly improve stewardship. This potential is now being realized with innovative financial instruments and institutional arrangements.