Capital stock model

Complementing the three-dimensional model, another fundamental principle of Swiss sustainability policy is the capital stock model. The capital stock model was developed at the World Bank as early as 1994.3 It is based on the idea that there are three types of capital stock, namely environmental, economic and social. Sustainability capital consists of the sum of the three capital stocks:

K sd =

K env + K econ + K soc

According to this view, the Earth’s «capital» should not simply be consumed but needs to be constantly renewed. Sustainability is achieved when it is possible to live off the interest rather than on the capital. The question of how far environmental, economic and social capital can be substituted for each other is addressed by the concepts of «strong» and «weak» sustainability. Strong sustainability requires that none of the three individual types of capital should be diminished in the long term, while weak sustainability imposes this condition only for the aggregate capital stock. Thus, in the latter case, the consumption of environmental capital, for example, would be permitted as long as it was «compensated for» by an increase in economic or social capital.

The Federal Council advocates an intermediate position between strong and weak sustainability. In the literature, this is also termed «sensible sustainability» or «weak sustainability plus». This approach acknowledges that individual assets can be replaced, and that the various types of capital may be mutually complementary. Limited substitution is therefore permissible provided that for each type of capital there are critical limits below which the stock must not fall. Nor can the rundown of one stock below the critical limits be offset by an increase in capital in another area. Critical limits – such as environmental standards relevant to health (air pollutant levels), sociopolitical standards (equal opportunities, minimum income, decent living conditions, etc.), or guaranteed human rights – represent non-negotiable minimum requirements or threshold values.

The framework concept developed by ARE for assessing the sustainability of political plans enables the impact of measures on the three capital stocks to be gauged by a grid of criteria.