Carrying Capacity

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How the carrying capacity rates of renewable and non-renewable resources may be applied to the economic and monetary system

James Quilligan:

"First, the carrying capacity rate for renewable resources follows a carefully guided policy of maintenance and sustenance to ensure that resources are replenished sustainably in meeting the needs of people in the present (meanwhile, the needs of people in the future are in no jeopardy, so long as renewable resources continue to be replenished and provisioned within their carrying capacity - hence, the carrying capacity rate of renewables is geared toward market coefficients for provisioning for people in society at the current time (and will continue to be sustainable far into the future) - this rate based on renewables in no way precludes (in fact, should be accompanied with) the creation of taxes toward a universal basic income and for maintenance of the renewable resource)

Second, the carrying capacity rates of non-renewable resources are treated quite differently - society must decide scientifically how much non-renewable resources to use in the present and how much to save for the future - by guaranteeing that valuable resources will be 'left in the ground' or put away securely into a tamperproof lockbox, as it were, this formula has a benefit which, in one way, is similar to how gold used to function - since a certain percentage of non-renewables are held in strict reserve for future generations, adherence to this process creates a value which is entirely *independent of the market and is based on a relative scarcity index (sorry that it doesn't glitter, too)- this fraction (how much non-renewables to use for people now / how much non-renewables to set aside for people in the future) provides for a fixed and stable monetary rate that is tailor-made for the valuation of currency in the present - in a society which is facing net energy loss and steep declines in non-renewable resources, this would be an extremely stable, strong, treasured, desired, sacrosanct and entirely non-marketized value - thus, instead of commodity market rates, inflation or unemployment, or currency exchange rates, monetary economists really ought to be turning their attention to sustainability rates - in conclusion, I have never advocated returning to a gold standard, but to a policy of currency values which are fixed to a meaningful measure of non-renewable resources, similar in some ways to the way that gold used to operate - and that is what I have outlined for you above." (

Are capital-based accounting systems the right approach ?

Mark McElroy:

"Perhaps the single most important feature of the International Integrated Reporting Council’s (IIRC) proposed standard for integrated reporting is that it is capital-based. It is predicated, that is, on the view that organizational performance — both financial and non-financial — is a function of what a company’s impacts on vital capitals are, given the importance of such capitals for human/stakeholder well-being.

Indeed, the fact that performance is a function of impacts on vital capitals is arguably the least controversial claim in the sustainability literature, and is all but taken for granted in financial management. Financial performance, that is, is a function of an organization’s impacts on financial capital, and non-financial performance is a function of its impacts on natural, human, social, constructed (or built) and intellectual capitals. The latter, intellectual capital, is sometimes embedded in the preceding three.

Importantly, another emerging standard, the Global Initiative for Sustainability Ratings (GISR), is also capital-based. It, too, is predicated on the view that sustainability performance is a function of impacts on vital capitals.


Both standards deserve to be supported in the strongest possible terms, if only because of their grounding in capital theory. Impacts on capitals — in light of the role they play in human/stakeholder well-being — determine an organization’s real performance. Performance measurement, reporting and rating systems should be constructed accordingly.

The Global Reporting Initiative (GRI), for its part, is woefully behind on this issue, if not willfully dismissive of it. In the recently released update to its sustainability reporting Guidelines (G4), the proposition that GRI add a focus on capital impacts as a requirement for reporting was rejected. Sadly, this portends another five or six years of dubious — yet still GRI-compliant — reporting, because without assessments of impacts on vital capitals, sustainability reporting, per se, cannot be done.

To be clear, neither the IIRC nor the GISR speak in terms of the carrying capacities of vital capitals — not yet, anyway. In principle, though, the inclusion of the idea that capital stocks and flows have carrying capacities is essential to the capital-based view of performance, because the fact that impacts on capitals can increase or decrease the quality or sufficiency of such capitals is precisely what makes them relevant. Indeed, human well-being depends on them.

It is not enough, then, to simply say that an organization’s operations have had impact on water resources (a type of natural capital); rather, the question must be: Have its impacts diminished the quality or sufficiency of such resources at levels required to ensure human (and non-human) well-being? Assuming we can allocate shares of natural resources to specific organizations – which we can – actual use then can be compared to such allocations as a basis for assessing performance. The concept of carrying capacity provides us with just the kind of measurement model we need to perform such calculations." (