Strong Sustainability and Critical Natural Capital

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Strong Sustainability and Critical Natural Capital
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4. Strong Sustainability and Critical
Natural Capital
Jean-François Noël and Martin O’Connor*
4.1 STRONG SUSTAINABILITY
It has, by now, become commonplace to refer to ecological goods and
services as deriving from existing stocks of ‘natural capital’. Formally,
this involves the simple extension of the well-established economist’s and
accountant’s notions of a firm’s capital as the stocks and equipment
capable of delivering flows of money or physical services through time. As
Daly (1994, p. 30) describes it:
Natural capital is the stock that yields the flow of natural resources; the
population of fish in the ocean that regenerates the flow of caught fish that go
to market, the standing forest that regenerates the flow of cut timber; the
petroleum deposits in the ground whose liquidation yields the flow of pumped
crude oil.
Moreover, the economist’s concept of opportunity cost seems to apply
equally well to ecological goods as to economic goods. The biosphere as a
habitat and life-support system is a finite, and in many respects
destructible, reservoir of natural capital. Estimating the severity of trade-
offs, and the redistributions of economic opportunities, access to
environmental benefits, financial and ecological costs, and burdens of
risks, thus becomes a major task of ecological economics as a policy
science. The fact that current patterns of use of natural capital are
environmentally unsustainable, can also threaten economic and social
sustainability. In this way, a general precondition for sustainability is the
maintenance of those environmental functions which play a major role in
sustaining natural ecosystems and which make a substantial contribution to
human welfare. The concept of ‘environmental functions’ is here defined
as the capacity of natural processes and components to provide goods and
services which satisfy human needs (see especially, de Groot 1992). These
* Thanks also to Jean-Marc Douguet and Juan Martinez-Alier.
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natural processes and components can in turn be identified as stocks of
natural capitals or flows, provided by these natural capitals.
Weak sustainability, as discussed in the previous chapter, assumes that
welfare is not dependent on a specific form of capital and that
sustainability can be maintained by substituting humanmade
(manufactured) capital or human capital for natural capital. There are no
essential differences between different forms of capital.
Strong sustainability, by contrast, is based on a less blasé assumption
about substitutability. Manufactured or human capital cannot be substituted
for natural capital. Natural capital is distinct and specific. A single
ecosystem or natural resource might fulfill a range of economic production
input, recreational, biological and pollution absorption functions, for
example, forest and river systems. It is not possible to find ready
substitutes for this ensemble of functions fulfilled by a given
environmental asset. Nor can technological progress be considered to
apply in any uniform way to these functions.
The ‘strong sustainability criterion’ for policy then specifies, as a
necessary condition for sustainable development, the maintenance of
natural capital stocks at or above some threshold levels. However, this is
not yet an operational definition. A number of different formulations of the
rule have been proposed, which seek to establish conventions for natural
capital measure. Some serve useful didactic purposes, others are intended
to be the basis for empirical estimation work.
The simplest formulation of strong sustainability, put forward by David
Pearce and his colleagues (for example, Pearce and Turner 1990; Pearce
et al. 1988), refers to natural capital in aggregate terms, separate from
manufactured capital., and requires non-negative change in the natural
capital stock through time. That is, where Kn is the natural capital stock,
the rule is: d(Kn)/dt ≥ 0.
This formulation is largely impressionistic. There is no meaningful way
of aggregating the grand diversity of natural resources, environmental
services, and ecosystems so as to quantify this rule (see Victor 1991;
Victor et al. 1997; and our discussions in Chapters 2 and 3). So it serves a
symbolic role, signalling the importance of attention to maintaining
environmental functions. For operational purposes, a number of other
approaches have emerged that place emphasis on identifying and
understanding the ecological–economic systems that we want sustained.
In the ecological economics literature, sustainability requirements are
typically expressed in terms of three sorts of constraints to be imposed on
economic growth paths so as to respect ecological limits (compare Barbier
and Markandya 1990; Costanza and Daly 1992):
(1) that the utilization of renewable resources should not exceed their rate
of renewal;

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(2) that waste emissions should be less than the assimilation capacity of the
environment; and
(3) that exhaustible resources should be extracted at such a rate as permits
their replacement by renewable sources.
The ‘weak’ sustainability perspective would imply that each of these
constraints might be relaxed by virtue of technological progress that allows
(through substitution and/or efficiency improvements) a continued reducti-
on in dependency on natural capital as a production input or sink for
pollutants. In the ‘strong’ perspective, the presumption is that there are not
unbounded possibilities of substitution away from environmental sources
and sinks. This view is supported by thermodynamic considerations, which
imply the continuing necessity of primary energy inputs and the continuing
inevitability of waste outputs. So, while condition (3) allows that depletion
of non-renewable stocks may take place if renewable energy and natural
resources are able to be found and exploited, conditions (1) and (2) are
taken as binding constraints. Barbier and Markandya (1990) developed a
simple model that partially captures this conception, where natural capital
is not wholly substitutable with produced capital, and it is assumed that a
certain minimum positive stock of the natural capital must be maintained.
An ecosystems view of natural capital (see Common and Perrings 1992;
Berkes and Folke 1992), focuses on maintenance of ecosystem stability
and resilience as a precondition of sustainable economic development
(Perrings 1994). This sort of systems approach emphasizes how ecological
and economic systems need to be understood as complementary inputs of
dynamic structures that are self-reproducing or self-renewing, and also
highlights the need for scientific understanding of ecosystem functioning
and change.
One strength of the ‘strong’ perspective on sustainability, in whatever
version, is the emphasis it gives to empirical (scientific, social and
economic) investigation of ecosystems, natural resource availability,
substitution and technological change possibilities, and economic
prospects. Victor et al.(1997) suggest two important policy implications
that flow from this perspective.
The first, they reiterate, is that to achieve sustainable development,
economies must operate within a set of constraints designed to protect
natural capital. Up until now, these authors observe, policy norms have
been introduced largely as ad hoc responses to specific problems, such as
the impact of CFCs (chloroflurocarbons) on the ozone layer. For the
future, there is a need for more systematic assessment of priorities and
opportunity costs involved.
The second policy implication is that resources must be committed for
the research, providing information that the market (with its forces of
supply and demand) will not reveal if left to its own devices. Meeting
environmental standards can, obviously, impose significant economic
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costs. So it is desirable that the norms instituted as policy objectives be
based on good information. This includes information about technological
options and substitutability, as well as about ecological functions and
change. There exists a public-good role for research and development
investment in these regards.
4.2 CRITICAL NATURAL CAPITAL AND COST-
EFFECTIVENESS ANALYSIS
It is possible to bring these various viewpoints together in a hybrid
approach based on the identification of categories of ‘critical natural
capital’ whose stocks ought to be maintained at or above identified
minimum levels. This follows the spirit of arguments put forward some
time ago by environmental economists in favour of environmental
standards (notably Ciriacy-Wantrup 1952; Bishop 1978).
Economic and social as well as ecological sustainability imply the need
to maintain critical environmental functions. Most environmental functions
are non-market goods and services, such as pollution absorption, waste
reception and recreational or scenic amenities, and so on. The two sets of
goods and services are linked asymmetrically: the maintenance of critical
natural capital is a prerequisite for economic sustainable activity, without
the reverse being generally true. Among the primary requirements for
human welfare are the environmental functions known as ‘life-support
systems’. Any threat on these life-support functions would endanger
human life and threaten future economic activity.
Natural capital, while modifiable through time partly through human
agency, is none the less preexisting to human influences. Its components
are not pure artefacts and are not produced solely by human hands.
Furthermore, to the extent that manufactured capital needs natural capital
for its production, the former can never be a complete substitute for the
latter.
We shall define Critical Natural Capital (henceforth CNC) as that set
of environmental resources which, at a prescribed geographical scale,
performs important environmental functions and for which no substitute in
terms of manufactured, human or other natural capital currently exist. We
shall discuss this definition and give examples shortly. In this view, the
sustainable management of natural resources will have two main
objectives:
• the delivery of an economic welfare through the production of
economic goods and services; and
• the delivery of ecological welfare through assuring maintenance of
critical environmental functions or a given level of CNC.

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The problem of resource management for maintenance of essential and
desired environmental functions may be approached in terms of the cost-
effectiveness methodology expounded by Baumol and Oates (1971). While
initially elaborated in the context of pollution control, the approach is, in
principle, equally applicable to the management of natural resources, and
thus applicable to natural capital more generally. The idea is, first, to
determine environmental standards or norms, for example, for pollution
emissions or natural resource consumption, in physical terms independen-
tly of any notion of economic optimization; and second, to find the least-
economic–cost way of achieving the defined norm. A separation is thus
maintained between ecological objectives as such, and the question of
economic requirements for attaining them.
For example, in the approach of Hueting for estimating an
‘environmentally corrected’ national income (see Hueting 1991; Hueting
et al. 1992), physical norms are defined for environmental functions based
on some assessment of their sustainable use level, and then remedial
measures are identified that are needed in order to satisfy these norms. The
goal is then to obtain estimates of the costs that the society would need to
incur to achieve these norms.
The approach generates, at the level of economic aggregates (which,
depending on the analysis, may be sectoral, regional or national economy
aggregates), two distinct sorts of measures that can be used as indicators
for sustainability (compare Faucheux and Froger 1994; Faucheux et al.
1994).
The first is a measure of the distance from sustainability: this is an
estimate, in terms of current consumption (money units or percentage of
GNP), of the extent to which current economic activity violates the
specified sustainability norms, and, ipso facto, an indication of the
magnitude of the reorientation of economic activity that would be required
to respect the norms. It is information about the state of the sector or of the
economy relative to sustainability criteria. Underneath the aggregate
figure, of course, there is likely to be considerable variation, from one firm
to another, from one industrial sector or consumption category to another.
Some sectors may be contributing to major breaches of norms while other
sectors may be judged non-offensive.
The second indicator is a cost of achieving sustainability measure: in
traditional terms, a monetary figure may be sought for the minimum cost
that would have to be borne in order, through preservation, prevention,
protection or restoration measures, to respect the designated sustainabilty
norms. This would be a quantification of the opportunity cost of achieving
sustainability. Since scarce economic resources will have to be engaged to
achieve environmental goals (such as restoration activities, pollution
abatement, or natural–capital augmenting but higher-cost alternatives for
production), this opportunity cost can, in principle, be expressed in money
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terms as an amount of consumption that would have to be forgone by the
society to achieve or maintain the specified levels of environmental
functions. In effect, the analysis aims at quantifying the policy trade-off
between: (i) depleting/degrading environmental functions (critical natural
capitals) by not making the adjustments required to satisfy the norms; and
(ii) forgoing consumption and/or using up economic capital if it makes the
resource commitments required for achieving the norms.
These opportunity costs can, properly speaking, be defined only in an
intertemporal analysis framework. The comparison should be made
between the consumption opportunities associated with a development
path of transition towards sustainability, and the consumption opportunities
(presumably higher in the short term) associated with a trajectory that
depletes or degrades critical natural capital. The respective consumption
aggregates can be compared in undiscounted or discounted (present-value)
terms, where the discounting procedures should, in theory, reflect
intertemporal opportunity cost. Yet what is really more interesting is to
compare the distribution through time of consumption. In the case of a
timepath marked by high then declining consumption, the decline can be
read as a sign of the irreversible weight of the difficulties with nature
(degradation of critical natural capitals).
The importance of distributional issues is also plainly portrayed in this
approach. First of all, it places clearly in view the temporal distribution of
the trade-off between consumption and critical natural capital maintenance.
Groups within the present generation may be unwilling to sacrifice their
present opportunities in favour of the future good, and this will be the basis
of debates about timing and level of effort for CNC maintenance and
repair. Moreover, any alteration of the sectoral structure and temporal
patterns of economic activity will clearly entail redistributions of costs and
benefits, not just through time but also between groups and sectors of each
generation. The question, therefore, is not so much the ‘size’ of the
economic pie, or of the cost of achieving sustainability (in present-value
terms), as its composition and distribution across sectors, across social
groups, between countries and so on. The norms for sustainability are
simultaneously, policy instruments for economic and ecological distributio
n choices. Analyses of possible strategies for achieving sustainability goals
can, therefore, also provide a starting-point for analysing other key social
policy issues such as possible employment and income redistribution
effects associated with this reorientation of economic activity.
In this way the strong sustainability perspective furnishes the basis for
construction of indicators for ecological and economic sustainability that
function as explicit policy objectives and as information about opportunity
costs associated with meeting environmental targets. Hueting’s
preoccupation has been to define macroeconomic sustainability indicators.
In Chapter 11 we shall indicate, with the example of carbon dioxide

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emissions linked to climate change, how our dynamic modelling approach
can be applied to this sort of problem. The same dynamic cost-
effectiveness perspective may be applied at sectoral or regional levels. We
shall sketch later in this chapter the beginnings of an empirical example at
regional level, water quality in Bretagne.
4.3 SETTING THE SUSTAINABILITY STANDARDS
Any empirical procedure depends on specifying the categories of
environmental functions to be protected. The threshold levels for critical
natural capital use may be defined either quantitatively or qualitatively,
depending on the nature of the services furnished. These threshold levels
serve the role of norms or indicators for sustainability. They allow
measures of the distance between the actual use level of this capital
(quantified in terms of environmental indicators) and the thresholds
supposedly not to be crossed. (In practice, many such standards are
violated in advance, and the question is whether or not remedial action will
be taken.) The reference values may be determined in terms of, for
example, a past state of the environment, a desired future state, or criteria
for a sustainable use of the environment. While having some scientific
foundations, we have emphasized that they are inevitably the product of
negotiations and hence reflect a compromise of scientific judgements and
social preferences for environmental quality.
On the one hand, the importance of uncertainties and distributional
considerations mean that norms for maintenance of critical natural capital
or for environmental functions generally, cannot be set through use of
conventional economic valuation methods. On the other hand, scientific
analyses alone are not sufficient to determine them without ambiguity.
Many environmental problems are characterized by a fluid and incomplete
state of scientific knowledge, accompanied by the inherent unpredictabili-
ties of complex systems (see Chapter 5). There is also the question of
social distribution of risks, benefits, costs and opportunities, or the
problem of the distribution of sustainability (as described just above and in
Chapter 2).
In practice, the selection of the levels of environmental functions to be
sustained amounts to a choice process that is as much political as technical
in nature. This is clear enough with regard to climate-change policy
negotiations. It is no less true for local problems concerning the particular
water resource features, species habitats, heritage values, community
structures, and so on, that are to be respected and provided for. Social
groups differentiated by place, time, cultural heritage, collective identity,
life experience and hence preferences, will have widely divergent
priorities. In the setting of norms, it is necessary to choose among the
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various particular economic and ecological outcomes that might be
feasible within the framework of longterm sustainable activity. Hueting
speaks of competition between environmental functions for situations
where the use of one environmental function is at the expense of some
other function. This is the case, for example, when productive uses of the
environment impede its use for recreational purposes. It is equally true
when choices must be made between alternative nature conservation
strategies relating to habitat protection. This competition implies there will
have to be choices made as to the precise environmental functions, features
or activities to be maintained or sustained.
There may be social as well as physical reasons for defining natural
systems as critical natural capital. Non-built environments are often
cherished for recreational, aesthetic and spiritual reasons, in ways that
impose strong limits to their substitutability by manufactured goods and
services. The conservation and enhancement of ecosystems as habitats for
non-human life, and for living biological diversity, may be motivated by
ethical convictions of respect and coexistence. (Sometimes this is
expressed in terms of existence values or intrinsic value.) A wide range of
empirical studies suggest that many people are unwilling to consider that
wildlife and unique landscapes should be set against manufactured goods
in resource management evaluations (for example, Stevens et al. 1991;
Spash and Hanley 1994; Vadnjal and O’Connor 1994; Burgess et al.
1995). In the strong sustainability perspective, communities defined by
locality or by ethnic or cultural appurtenance, may identify features of their
habitats as ‘critical’ natural capitals in view of their symbolic or functional
significance in defining group identity.
4.4 AN IDENTIFICATION PROTOCOL FOR CRITICAL
NATURAL CAPITAL
We have designated as Critical Natural Capital that set of environmental
resources which performs important environmental functions and for
which, on a specified geographical scale, no substitute in terms of
manufactured, human or other natural capital currently exist. Making
applicable the concept of CNC requires the following considerations to be
addressed:
• identifying the role and significance of different natural capital
systems for supporting sustainable economic activity;
• defining the relevant spatial and temporal scales for which natural
capital systems may be critical;
• identifying the socio and cultural factors which may contribute to
making critical any natural capital components; and

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• the weight of the Precautionary Principle when environmental
function losses in question are characterized by uncertainty and
irreversibilities.
A general framework for taxonomy can be given by cross-tabulating the
general type of environmental functions involved, with key spatial and
mobility features of the capital use or degradation. The main types of
environmental functions can be grouped under ‘the five S’s’, namely:
Source, Sink, Scenery, Site, Life support. The dynamic characteristics of
the natural capital use are clustered in three pairs: use as a productive
input versus degradation through pollution;†in situ use†versus†transportati
on by human agency; localized ecosystem impact versus dispersed impacts
(see Table 4.1).
Table 4.1 A General taxonomy framework for critical natural capital
Source Sink Scenery Site Life-
support
Use as input
Degradation
In situ
Transported
Localized impacts
Dispersed impacts
The idea is not to place each component of critical natural capital within
a single box of the matrix, but rather to consider whether and how a chosen
CNC element may fit the characteristics of each of the boxes. Following
the identification and characterization of CNC in this way, application of
the strong sustainability criterion involves quantifying the various
competing uses of environmental functions of this CNC that are causing or
threatening to cause loss of environmental functions, and quantifying the
actions that could be taken to avoid or remedy this loss. This competition
for CNC use may be quantitative (extraction or depletion of resources),
qualitative (emission of substances beyond a disruptive level or
concentration) and spatial (congestion). The following steps are required:
• identifying and quantifying the effects or each use/user category on
the living environment;
• determining scientifically the causes of these effects (depletion,
concentration and congestion); and
• relating these causes to the emissions, extraction or occupation
patterns of particular human activities (the boundaries and levels of
these activity patterns must be established).
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Carrying out this analysis comprehensively for even one country would
be a tremendous undertaking, which is not the purpose of our book. We
can note quickly a range of contrasting examples:
(1) Primary energy sources: Thermodynamically available energy is an
essential component of all economic production. While substitution
between energy forms is generally possible, the complexity of energy
infrastructures and related land uses makes it important to distinguish
major subcategories: fossil fuels (coal, oil, gas), uranium and other
fission fuels, solar energy captured through photosynthesis, hydroelectr
icity, wind, tidal energy, geothermal heat, and so on.
(2) The atmosphere as multifunction life-support system: The functions
are critical in several dimensions: the air that we breathe; acid rain;
ozone layer; atmospheric circulation and its implications for climate
stability/change; and so on.
(3) Forest ecosystems: On a large scale, forest ecosystems are an
important component of atmosphere renewal and purification; this
includes their role as carbon sinks. On local scales, forest cover may
also be important for stabilizing soils in groundwater quality, retention
and flood control. Forests may also be economically or culturally
critical as habitats and as food and energy sources.
(4) Freshwater resources: Sufficient water supply for drinking, irrigation
and other uses has always been a determining factor in the localization
of human habitats. Water must be available on a daily basis, and its
character as part of the life-support system is evident. Since watersheds
are demarcated geographically, and water resource depletion or
degradation (through pollution and so on) are similarly localized, and
since water transport over long distances is costly, this is a critical
natural capital that may properly be analysed at local and subnational
regional levels, as well as in the context of world regions.
(5) Wild and agricultural genetic diversity: The status of genetic
resources in general (wild resources, improved traditional varieties,
modern varieties and genetically engineered varieties) as a critical
natural capital can be argued as a matter of possible future economic
interest, or on the basis of ethical and precautionary principles. What is
particularly interesting about biodiversity as natural capital is that it is
interwoven with cultural diversity. In effect, we may speak of the
environmental public goods provided by traditional farming societies,
in the form of their investments embodied in agricultural genetic
resources and husbandry practices, see, for example, Richards (1984);
Guha and Gadgil (1992); Toledo (1988, 1989); Descola (1988);
Rocheleau (1991). This agricultural genetic diversity capital stock
cannot be understood unless we consider the entire human ecological
complex of the societies that have created, conserved and raised this

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wealth of genetic diversity. There is a complementary relationship
between wild and agricultural biological diversity. The cultivated
natural capital (agricultural genetic diversity) requires, for its
perpetuation, to be complemented by the wild relatives of cultivated
plants. Given these ecological complexities, it is very difficult to
quantify (in what units?) a stock of biodiversity capital.
Other major categories of natural capital that might be judged critical
include arable land and marine fisheries. In the rest of this chapter, we
shall discuss the example of surface - and groundwater resources in the
Bretagne (Brittany) region of France. A synthetic analysis is given of the
way in which this element has been used in the past and of the economic
and social benefits provided by these uses. This allows identification of the
important economic and environmental functions which give the CNC its
status, and the damage or threats currently being incurred. An outline is
then given of how a strong sustainability criterion might be applied to
water as a regional CNC and the means to preserve the resource thus can
be explored.
4.5 WATER AS CNC: THE EXAMPLE OF BRETAGNE
Water is the ubiquitous natural capital. Drinking water is, along with air
and healthy food, fundamental in human metabolism and human life.
Sufficient water supply for household and agricultural uses has,
historically, been often a determining factor in the localization of villages
and cities. Water is a source of motive power, and now hydroelectricity,
and is an essential cooling medium in fossil fuel and nuclear thermal power
generation. What would we be without it?
The classical political economists, who seem to have grown up where
there was lots of rain, considered water as non-scarce. John Locke (1690)
described water as a free gift of nature, or of Divine Providence, such that
every person could take what he/she needed and more, yet there was
always enough left for the other person. Alfred Marshall (1916) in his
famous Principles, noting that water was essential for life, explained the
relative prices of water and diamonds as an apparent paradox of value in
terms of relative scarcity. The European Union Task Force on Water sees
things now quite differently (unpublished working document) (1997):
Water has become a coveted economic good, whose management will be one of
the main problems of the Twenty First century. The availability of water at the
appropriate time and place and demand for it are increasingly frequently
imbalanced, encouraging overexploitation and degradation of water reserves,
and indeed provoking conflicts between competing users, or even countries.
Even when water is not in short supply, pollution, waste and other management
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short-comings are common, threatening the environment and the longterm
security of supply at an acceptable price. ... EU action in the area of water, in
particular through research actions, is justified by the importance of the stakes,
but also because the water cycle establishes a material bond between
increasingly interdependent economic actors. Water is largely a shared resource
(in several Member States over 50 per cent of the supply depends on other
countries); a wide variety of actors are involved in its management; their
decisions frequently have transregional and transnational impacts and must
therefore be coordinated.
We shall consider one case, the conflict between water use for drinking,
and its use (by omission rather than deliberate choice) as an agricultural
effluent sink in the Bretagne region of western France.
Although there are some problems with industrial pollution, the most
widespread environmental pressures on water resource quality in Bretagne
are associated with the development of intensive agriculture. From a
geological point of view, Bretagne is a Hercynian region with crystalline
rocks, that are not able to form grand-scale aquifers. Most drinking water
is provided by surface-water sources — taken from artificial lakes or
pumped directly from watercourses. Vulnerability of such water to
environmental pressures from agriculture is much greater than that of water
provided by deep aquifers.
Agriculture is a major part of the French economy, and concerns with
water and soil pollution associated with modern agricultural practices have
been growing for several years. The Bretagne region is one of the worst
affected by these phenomena among all the French regions. There is quite
some historical irony here. One of the most significant features of the so-
called modèle économique breton or miracle breton since the 1950s,
which has brought the region squarely into the modern economy, is the
importance of intensive agricultural production. The existence of many
zero-graze farming units (ateliers hors-sol) in animal production for
poultry, pigs and cattle is an adaptation to the limited average area of
agricultural farms and the low level of fertility of many soils. The farming
activity itself makes an important use of artificial or natural fertilizers and
phytosanitary products (pesticides) and most of the vegetal production is
linked with animal husbandry.
The Bretagne region is the leading French region for pig and poultry
production (respectively, 51 per cent and 30 per cent of national
production), it is one of the most important for veal production (23 per
cent of national production), for adult bovine production (11 per cent of
national production) and for milk collecting (about 20 per cent of national
collection) and animal food processing (about 40 per cent of French
production). This production is obtained using only 6 per cent of the
French cultivated land area (Surface Agricole Utile, SAU), which indicates
the high degree of intensity attained by Bretagne’s agriculture. This is the

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result of a very strong movement which began with poultry breeding
during the 1960s and which has been followed with other forms of
intensive animal husbandry. Employment in the agrifood industry (AFI)
sector represents 30 per cent of industrial employment in the Bretagne
region (and more than 50 per cent in some districts). Of the 40,000 new
jobs created from 1970 to 1990 in Bretagne, 22,000 were AFI jobs.
Locally, this amounts to very high environmental pressures levels. For
example, an agronomist estimates that in the Trieux watershed (a small
river basin of 280 km
2
), the poultry number increased nearly 400 per cent
between 1970 and 1988. In parallel, average values of nitrates in Trieux
water changed from 17 mg/l in 1975 to 46 mg/l in 1995. One can estimate
that 98 per cent of these nitrates come from agriculture and only 1 per cent
respectively from pisciculture and domestic pollution. Threats to drinking
water quality are now publicly being noticed, for example:
• In 1991, the firm Katell Roc which bottled source water in the village
of Lizio, in the Morbihan Département was forced to interrupt its
activity. The nitrate level in water at this time was higher than the
maximum admissible level and there was no means of diminishing it
at a reasonable cost.
• Legal action was undertaken in 1995 by 176 inhabitants of the town
of Guingamp against the water company Lyonnaise des Eaux (in
charge of water treatment and distribution in this town), because the
nitrate content of drinking water distributed was higher than
authorized (50 mg/l). Guingamp’s citizens were successful in their
action, the Lyonnaise des Eaux company was condemned to
compensate people for the value of mineral water bottles purchased
for days in which the nitrate standard was not adhered to. Similar
legal action against the company Générale des Eaux, the other big
French water company, succeeded for the same motives at Trégueux,
in the Côtes d’Armor Département. However, some months after this
judgment, the Lyonnaise undertook a legal action against the State.
This action arose because the State had a general obligation of
enforcement of the standards and had authorized implantation of
many pigs and poultry farms in the neighbourhood of Guingamp.
For assessing the pressures exerted by agriculture on the water resource
natural capital of Bretagne, one can measure the potential amount of
animal excretions emitted into agricultural land per hectare of used
agricultural area. Approximatively 70 of Bretagne’s ‘cantons’ (small
administrative units above the municipality level), have a potential
nitrogen content of animal excretions higher than 170 kg/ha, which is the
authorized limit level by the European ‘Nitrates’ Directive. They are for
this reason classified as ‘areas of structurally exceedent animal excretions’.
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Within the same European directive framework, the entire Bretagne region
is classified as a ‘vulnerable area’. The situation has seriously worsened
since 1988.
The content in nitrates of both surface water and the subterranean water
for drinking is, in some parts of Bretagne, much higher than the level fixed
by the European directive of 50 mg/l (EEC Directive EEC/91/676
12/11/1991). The main reason for the worsening during recent years, is
that many farms have increased their size without permission. A State
programme conducted by the Ministry for Environment, called ‘PMPOA’,
or Programme de Maîtrise des Pollutions d’Origine Agricole (Programme
for controlling pollutions of agricultural origin) is currently in operation. In
return for some pecuniary aids, it forbids any pig or poultry development,
except for new young farmers. All farms extended without permission
before January 1994 will nevertheless be regularized. Only extensions
made after January 1994 or false declarations will eventually be penalized.
Another concern is the possibility of the extra-regional exportation of
animal excretions and the reduction of commercialized mineral fertilizers,
substituting these animal excretions for mineral fertilizers. It is doubtful
that the relatively limited PMPOA programme will be able to reverse such
a strong trend.
Another important threat against ecosystems comes from the
phytosanitary product residuals. These chemical products are either
herbicides, whose use is linked with some intensive cultures like corn (27
per cent of cultivated area, against 21 per cent for cereals in the Bretagne
region), or pesticides for struggling against parasites or diseases. The most
commonly used herbicides are atrazine and simazine, and lindane and
diuron are the most commonly used pesticides. Some local measures were
made in several coastal rivers of the Finistère Département. Maximal
annual concentrations measured indicate the frequent overloading of a
norm threshold of 0.1 µg/l in the river water. There is high variability from
season to season. In a measure station on the Elorn river near Brest, there
was 3.39 µg/l of simazine in 1991 (but only 0.07 µg/l for 1994 and 1995 at
the same place) and 3.3 µg/l of atrazine in 1993 (but only, respectively,
0.25 µg/l and 0.18 µg/l for 1992 and 1994). A level of 2.1 µg/l of Diuron
was measured in the Penfeld river near Brest in 1993.
Phytosanitary and pesticides pollution seems to be less permanent in
Bretagne’s river waters than nitrate pollution, but the chemicals
accumulate easily in trophic chains. Attention was directed on this type of
pollution some years ago when marine fish and shell productivity fell
rapidly in the Brest bay, into which the above-mentioned rivers flow. The
European standards (EEC Directive EEC/80/778 15/07/1980) applied in
France since 1989 for drinking water are 0.5 µg/l for the cumulated sum of
the pesticides measured and 0.1 mg for any individual pesticide.

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(Exceptions are made for aldrine, dieldrine, heptachlorine and
heptachlorinepoxyde, where the norm is set higher, at 0.03 µg/l.)
An Administration guideline of 1990 has, since, somewhat softened the
standard rules for simazine and atrazine. When drinking water with an
atrazine or simazine content of 0.1 µg/l < atrazine < 2 µg/l or 0.1 µg/l <
simazine < 17 µg/l is detected, this water can be consumed. The people
affected must, however, be informed that emissions are above the
European Union standards, the monitoring of water quality must be
improved, a technical inquiry for explaining this must be organized, and a
better programme must be established and implemented. When the ambient
levels of atrazine are above 2 µg/l or for simazine above 17 µg/l, people
should be informed immediately of this and a recommendation made for
not using this water for drinking or making of foods. (This guideline was
applying the WHO norms recommended in 1990. In 1991 the WHO norm
for atrazine was restricted to 1.5 µg/l, but there has not been any change to
the values applied by the French authorities.)
The critical norm levels for pesticides are often reached in the Bretagne
region; indeed, in recent years 75 per cent of tested water was above the
limits. For example, in June 1993, near Rennes, in the Seiche river, a little
tributary of the Vilaine river, the total of pesticides molecules was above
30 µg/l, that is, 60 times the level permitted by the norm. If such pressures
exist in the river water, they will quite likely reach drinking water through
water treatment plants. A recent study made by the Water Agency and the
Regional Council reported that 76 of 104 pumping stations were affected
by significant contamination.
Elimination of pesticides after they have entered water bodies is only
possible with the installation of active coal beds, which are very costly. A
conclusion by the Bretagne Regional Council’s report (Région Bretagne
1993) can be noted: ‘If an analogous [to that existing for nitrates]
procedure existed in the pesticides case, this would indicate that our region
should clearly be classified as a vulnerability area regarding pesticide
pollution’. The situation is worsening. According to the same report, mean
values in nitrates content have multiplied by five during the last 15 years
and often the water resources are higher than the norm of 25mg/l which is
taken as the alert threshold. Presently many captured water reservoirs are
being abandoned and the risk of not being able to use these resources for a
long time into the future is increasing.
As insisted by the Bretagne Regional Council (Région Bretagne 1993),
‘Water ... is a key element — a transversal one — at an ecological and
economic level’. If current agriculture practices are abandoned or modified
drastically, then water quality will (other things equal) improve, gradually,
through natural renewal. But artificial depollution solutions are expensive.
There exist two denitrification plants in Bretagne and a third is in
development. The latter’s cost will be 180 million French Francs, for a
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relatively small supply volume. It is not economically possible to plan the
extension of such plants to all water resources in Bretagne. Even if bottled
mineral water is, at present, taken by the courts as the basis for
compensation of severely affected people, this does not constitute a
feasible substitute to the large-scale water supply by public distribution
networks. High unit price is an obstacle to its exclusive use for many low-
income consumers, and it is unlikely that the State or a municipal authority
would envisage a mass programme of subsidized bottle water! If a
solution is to be found, it is clearly the nitrate content of water which will
have to be diminished in situ, by decreasing the pressures that intensive
agriculture creates on water in Bretagne.
The direct responsibility for this situation is the existence of intensive
agriculture, and particularly of industrial husbandry. A strong correlation
exists between the development of modern forms of animal production and
the increasing content of water resources in nitrates. If we search for more
institutional aspects of liability, it is clear that for economic regional
development purposes, public authorities (including municipalities,
Regional Councils, French national authorities and European Commission
agencies through the common agricultural policy and other development-
oriented measures) have all promoted the growth of such activities without
taking into account the possible future water quality disaster. From this
point of view it will be interesting to follow future developments of this
legal action intented by the Lyonnaise des Eaux company against the State.
The already cited Regional Council report (Région Bretagne 1993)
observes with circumspection:
It would not be right to focus upon any sector of regional activity. In all
domains, from producer to consumer, the same ‘logics’ are operating and if the
impact of any one economic sector — of agriculture in fact — is heavier than
the impact of other sectors, this is only because of its importance in Bretagne’s
economy. This reality is worsened by the rapidness and the nature of the
evolution which Bretagne’s agriculture has experienced, and at bottom by the
direct impact of agriculture and husbandry methods upon the soil, water and
landscape. The ‘logics’ which have determined agricultural evolutions are the
same that are at work everywhere in industrial production methods,
rationalization and distribution sector changes. However, these ‘logics’ whose
general social consequences are becoming more and more visible, are in our
case operating directly on natural elements whose laws are infinitely more
complex, on which life depends.

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4.6 VALUATION FOR SUSTAINABILITY
Let us now consider the Bretagne water quality problem as one of resource
valuation from the point of view of sustainability. At the heart of the
welfare theoretic approach to environmental resource management are
three ideas. These are: (i) opportunity cost, meaning that any decision to
use (or to conserve) a quantity of water, or to maintain (or degrade) a
quality of water, precludes some other use of significant social value; (ii)
Pareto improvement, the idea that improvements in allocative efficiency
may be possible: it may be possible to achieve gains for one interest
without imposing a cost on any other interested party; and (iii) welfare
distribution, meaning the questions of equity, inequality and fairness in
access to the benefits (and exposure to risks) of water resource use and
conservation.
At present, those interests most benefiting from the (implicit) use of
water resources as a chemical pollutant sink are not paying directly for this
service. If the polluter-pays principle were to be applied, how much should
be paid and to whom? This involves both efficiency and distributional
considerations. The valuation task, from an allocative efficiency point of
view, would be to quantify the gains in welfare (present and possible
future) that might be obtainable by reducing the pollution severity, and to
compare these gains with the costs of the pollution abatement. If the gains
outweigh the losses then a Pareto improvement is possible, meaning that
through reduction in pollution and careful policies for redistributing
economic opportunities, some interests in the society could (in principle)
be made better off without anyone being made worse off.
Yet, as programmes for water quality improvement are put in place (see
below), the question arises, how will benefits and burdens of the water
resource management choices be distributed? The degradation of Bretagne
water resource quality is characterized by irreversibilities, given the long
time horizons for natural purification and/or the large costs for quality
improvement, changes in agricultural practices, or alternative supplies for
the region. The life-support aspect of drinking water is the most obvious
critical dimension of the resource. But adverse consequences of bad-
quality water in Bretagne are not limited to household drinking water.
Other uses that can be disrupted by a low quality of water are drinking
water for animals, pisciculture, water supply for some industrial activities,
rural tourism, coastal tourism, thalassotherapy, conchyliculture, coastal
fisheries and aquaculture. Excess of nitrates and other fertilizer run-off can
cause the eutrophication process of both the water courses and the coastal
marine waters. For example, nitrate flows can provoke ‘green tides’ due to
algae proliferation. Such phenomena are very detrimental to tourism
activities and generate important costs for clearing algal blooms from
beaches.
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Many water resources values, especially in situ functions of
groundwater, rivers, estuaries and wetlands and coastal seas, cannot be
easily, or adequately, expressed through market-like processes for
revealing preferences. It is also acknowledged in studies attempting to
quantify the significance of river, estuary and wetland functions, that
money-based valuations based on comparisons with market goods (such as
contingent valuation techniques) do not take into full account the
interdependencies of the dynamic systems and the services that they
provide (compare Bonnieux et al. 1995; Boyer et al. 1990; de Groot 1992;
Fustec and Frochot 1995; Laurans et al. 1996; Noël and Tsang 1997;
OCDE 1992; O’Connor 1997b). Taking a wide perspective, it is
impossible to quantify all the roles played by the environment as a source
of livelihood and as a place for human activity. To this we may add:
• The further that concerns for cost–benefit appraisal (CBA) are
extended into the domains of aesthetic and cultural as well as
economic appreciation of natural cycles and systems, the more
difficult it becomes to obtain quantitative monetary valuation
estimates based on the assumptions of value-commensurability and
substitutability that underlie established CBA approaches.
• The further that concerns of economic and environmental policy
extend to the long-term future, the more will intertemporal
distributional considerations predominate, in theory and in reality,
over allocative efficiency in policy formulation and appraisal.
In economic theory, and in practice, valuation depends on the
distribution of entitlements and of money incomes (Samuels 1992;
Martinez-Alier and O’Connor 1996). This is particularly clear in the
context of sustainability. Suppose that no weight is given to the suggestion
that future generations have an entitlement to high-quality water resources,
as drinking water or as a patrimony/heritage value, and so on. Then, it can
appear socially optimal, that is, Pareto efficient with the rights distribution
skewed towards the present generation of users, to deplete or degrade
irreversibly the water resources, a boom-and-bust economic development
timepath.
In the Bretagne water context, valuation for sustainability means acting
today to provide for access to high-quality water for tomorrow and the next
millennium. The basic issues in this regard refer not to optimization but
rather to the intertemporal distribution of benefits and costs. The logic of
valuation would then be: first make the proposition to sustain/conserve the
water quality resource and then investigate what commitments this does or
might entail. The question, ‘how much is water quality worth?’ finds its
answer by making explicit the nature of the choices, through time, as to

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what levels and types of economic activity will be sustained and what other
possibilities are forgone.
To quantify such prospects, scenario analysis may be used to assess
costs and benefits in a comparative way with reference to two or more
distinct scenarios about water resource use.
• One set of scenarios would explore business-as-usual prospects,
which for Bretagne involve water quality degradation trends that are
unsustainable.
• Other scenarios would explore development prospects that respect
the principle of sustainable use of high-quality water as a renewable
resource.
Valuation for sustainability, on the basis of scenario analyses that
postulate the maintenance of critical natural capitals, involves a reframing
and an extension to new terrains, of some well-established fundamentals of
welfare economics, concerning the inseparability of allocative (efficiency)
and distributional (equity) goals. In welfare-theoretic terms, the primary
norms are established along two axes.
• First, the sustainability goal is reflected in the general way that the
second group of scenarios, those premised on sustaining the critical
natural capitals, are formulated.
• Second, within the scenario(s) for sustainability, attention must be
given to the question of how, and to what extent, one might be able
to reconcile the CNC-maintenance goal to the diverse preoccupations
expressed by the variety of stakeholders. Moreover, in situations of
indeterminacy and conflict (which are most often the case), many
different sustainability commitments might be identified and
explored. Difficult choices and compromises will have to be made.
This is the matter of the distribution of sustainability.
Opportunity costs for alternative uses of the CNC in question can then
be estimated for alternative water uses, within the broad parameters by
each scenario. This multilevel analysis procedure respects the welfare-
theoretic requirement to resolve distributional conflicts interdependently
with the implementation of policies and allocation frameworks that will
encourage efficient (and sustainable) water resources use.
The research design outlined here also makes the identification of
stakeholder interests a fundamental component of analysis. This is needed
in order to achieve a tuning of the categories of analysis and result
presentation for effective decision support. The identification of stakeholde
rs as participants within the loop of research tasks (Figure 4.1) makes plain
the nature of the applied research as social–scientific analysis responding
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to high-stake public policy issues. We see at work here one of the
principles of integrated environmental assessment (IEA), which is
characterized by the bringing together of natural science and
socioeconomic analyses for adequate quality of decision support
information.
The stakeholder interests are usually quite diverse. They include, on the
one hand, all the direct users of the water resources, whether as an in situ
use or extractively, and on the other hand, the various agencies presumed
(whether in the public eye or by duly constituted authority) to have
competence for managing the water resource and surrounding lands.
• Scientific Analysis of the CNC System
(forest, river, wetland, fishery, etc.)
(problems to be solved)
• Stakeholder Interests
(responses to problems) • Analysis of Functions delivered
to the exterior
A. Scientific Analysis of
Environmental functions
• Communication of Results B. Quantification of Socioeconomic
Significance of Environmental Functions
( Services rendered ):
• Monetary Valuations
constructed on a platform of MultiCriteria appraisal and Scenario analyses
Figure 4.1 Social/scientific process of valuation for sustainability
In the Bretagne example we have discussed, there has not yet been a
systematic quantification of scenarios for sustainable water use, but the
pragmatic beginnings of scientific analysis, investment reorientation and
stakeholder concertation are already clear. In a sustainability perspective, it
would be clearly more cost-effective to avoid the further degradation of the
water quality situation where it has not yet reached a critical level. As the
Regional Council has already observed (Région Bretagne 1993):

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Not acting today will be equal to an inevitable adandoning of new captured
water resources or imposing long distance water transfers with subsequent
supplementary charges on water prices, at the same time when water companies
are faced with the growth of their renewal expenditures. It is necessary to
emphasize that neither water transfers nor detrification treatments can solve the
problem.
The question, thus, is how this management for water quality
sustainability can be oriented and organized. We have already sketched the
way that norms for water contamination can be applied for actual drinking
water sources. This involves a continuous testing process, relatively
expensive, which helps identify trends and hotspot contamination probl
ems. In complement to the site measures, indicators also need to be
constructed at a regional level, as benchmarks for assessing the process of
economic change.
A useful indicator concerning nitrification at the regional level would be
the potential amount of animal excretions emitted into the agricultural
land by hectare of used agricultural area (relating to the French concept
of Surface Agricole Utile or SAU). This may be calculated as the ratio of
total animal nitrogen production (average production by animal times the
number of animals given by declaration to the administration) divided by
the agricultural used area (given by agricultural census but adjusted by a
25 per cent reduction coefficient for taking account of existing spreading
restrictions). This ratio would give an estimation of the pressure exerted by
agricultural activities on soil and consequently, on water. Of course, this is
only a rough estimate, given that it is an average over the region, while
husbandry practices and drainage conditions vary a lot. (Also, some
clandestine modifications of animal numbers occur, and a certain amount
of extraregional exportation of animal dejections takes place.)
Similarly, for pesticides and phytosanitary products both in drinking
water and in the river water, a useful indicator would be the total quantity
of pesticides used in the Bretagne region. For pesticides, it is necessary to
attack the problem at its source, and the very costly anti-pesticide
treatment for drinking-water processing does not, in any case, solve the
problem of pesticide concentration in trophical biological chains (algae,
shellfish and fish).
Both these pressure indicators are located upstream of the possible
contamination of specific sources of drinking water by nitrates or
pesticides. At the level of regional averaging, they can play a role of
warning indicators. They offer the avantage of not being dependent of
knowledge on the actual behaviour of these products in environment or on
methods or technologies existing for water purification. The historical data
is sufficient to be able to calculate an order-of-magnitude relation between
the average environmental pressures and the likely contamination levels in
various water sources. Some allowance has to be made for complexities
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such as lags associated with chemical build-ups in soil and land-use
changes (Mollard et al. 1997), but in this way an effective bridge is made
between the intensity of the localized problems and regional statistical
information.
It is worth noting the beginnings of remedial action. Regional
authorities have implemented two specific plans called Programme
Bretagne Eau Pure. The first one covered the period 1990–96, the second
the period 1994–98. The first progamme was devoted mainly to making an
assessment of the situation, the second one is more operative. A budget of
895 million FF (more than US $150 million) has been committed under
this second programme through financial support of the European Union,
the French State, the Bretagne Regional Council, the General Councils of
the Départements (subunits within the region) and the Water Agency
Loire-Bretagne. Its first preoccupation is to implement a set of Targeted
Actions at the watershed level, which will use 90 per cent of the total
financial resources (about 790 million FF). Twenty small basins have been
designated for such action, and each contract includes acquisition of
measuring equipment and projects aimed at reducing agricultural pollution
along with domestic pollution, pisciculture pollution, at improving space
and natural habitats management, and at establishment of agronomic
advisory services together with local experiments and information services.
The balance of the programme budget goes to scientific research (nearly
60 million FF), public awareness programmes and administration. A
further 693 million FF has been committed under the PMPOA framework.
Finally, some 900 million FF is committed by the Water Agency Loire-
Bretagne for the building of sewage stations, a traditional public health
function which now takes on a wider environmental management
significance as well. To evaluate properly the significance of these
investments, they would need to be placed in the context of regional
economic statistics. Yet the figures given already show that restoration
action for the deteriorated CNC will need much investment of both time
and monetary capital over coming years.
4.7 CONCLUDING OBSERVATIONS
These arguments can be generalized to other renewable critical natural
capitals and the benefits potentially to be obtained from them — land
degradation, water supplies and quality, wetlands, biodiversity, fisheries
and forests. If the goal is to preserve an identified critical natural capital,
then the sustainability commitment must first be made, and feasibility and
opportunity costs explored on that basis. This may be explored in scenario
terms. In effect, we answer the question, ‘how much is it worth?’, by
identifying the other consumption or investment options that we choose to

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put aside. This cannot be a market-based valuation; it involves collective
choices. Only once the question has been formulated from the point of
view of longterm ecological economics taking into account uncertainties
and the irreversible nature of the resource quality loss, only then will the
right perspective be established to calculate the costs and opportunities (in
money, in resources, in job opportunities, in industrialization options
forgone) of development strategies premised on protecting the quality of
the resource. Nobody says that maintaining water quality costs nothing, or
that it will be profitable in the short term, or that it will suit everybody’s
economic interests or preferred lifestyle. Rather, it is a sustainability
commitment that has a cost, but one that many in society think is worth
paying and arguing for.
For these reasons, valuation for sustainability has to be partly a
scientific and social scientific (including economic analysis) endeavour,
and partly a political movement that appeals to intergenerational justice in
favour of repair, renewal, regeneration and reproduction (and to other lines
of reasoning, such as the defence of peoples whose ethnic identity is
threatened, as well as their farming systems). Only on this basis can
economic arguments and analyses be effectively framed. The orientation
should not be to defend water quality (or biological diversity, or forest
cover, and so on) primarily in terms of the commercial of its immediate
use, or even in terms of a possible future commercial value (a monetary
option value), but also, and above all, in terms of an existence value that
can hardly be reduced to money.