Appendix B

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Appendix B – Different types of capital

THREE TYPES OF CAPITAL

(excerpt from: Ecological Economics, Vol. 5, No.1. Fikret Berkes and Carl Folke "A Systems Perspective on the Interrelationships Between Natural, Human-Made and Cultural Capital," pages 1-8, 1993.)

Human-made capital is capital generated via economic activity through human ingenuity and technological change; the produced means of production. This is a common definition of capital in economics textbooks.

Natural capital consists of three major components: (1) non-renewable resources such as oil and minerals that are extracted from ecosystems, (2) renewable resources such as fish, wood, and drinking water that are produced and maintained by the processes and functions of ecosystems, (3) environmental services such as maintenance of the quality of the atmosphere, climate, operation of the hydrological cycle including flood controls and drinking water supply, waste assimilation, recycling of nutrients, generation of soils, pollination of crops, provision of food from the sea, and the maintenance of a vast genetic library. These crucial services are generated and sustained by the work of ecosystems (Odum, 1975; Folke, 1991). Only through maintenance of an integrated, functional ecosystem can each environmental good and service be assured; such goods and services cannot be managed one by one as independent commodities.

Cultural capital refers to factors that provide human societies with the means and adaptations to deal with the natural environment and to actively modify it: how people view the world and the universe, or cosmology in the sense of Skolimowski (1981); environmental philosophy and ethics, including religion (Leopold, 1949; Naess, 1989); traditional ecological knowledge (Johannes, 1989); and social/political institutions (Ostrom, 1990). Cultural capital, as used here, includes the wide variety of ways in which societies interact with their environment; it includes cultural diversity (Gadgil, 1987).

For more information on capital see also : World Bank Sources of Capital webpage http://www1.worldbank.org/prem/poverty/scapital/sources/index.htm

Social Capital - Social capital refers to the aggregate of actual or potential resources that can be mobilized through social relationships and membership in social networks:

-Families: The main source of economic and social welfare for its members.

-Communities: Social interactions among neighbors, friends and groups generate social capital and the ability to work together for a common good.

-Firms: Building and sustaining efficient organizations like firms demands trust and a common sense of purpose.

-Civil Society: NGO networks provide opportunities for participation and gives voice to those who may be locked out of more formal avenues to affect change.

-Public Sector: The public sector, i.e., the state and its institutions, is central to the functioning and welfare of any society.

-Ethnicity: Ethnic ties are a clear example of how actors who share common values and culture can band together for mutual benefit.

-Gender: Social networks of impoverished women in Brazil are important for women to obtain income and other necessities.

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