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Abstract

This paper merges inclusive wealth accounting theory with ecosystem based management (EBM) to resolve two problems. First, we provide measures of an ecosystem’s contribution to larger scale sustainability accounts by enabling ecosystems to be better included in inclusive wealth measures. We show the ecosystems are better thought of as portfolios of assets, and the portfolio’s performance is depended on the performance of the underlying assets, including their interactions. Second, the wealth held in the ecosystem is an attractive headline index for EBM regardless of whether ecosystem wealth is ultimately included in a broader index. We generalize natural capital theory to approximate realized shadow prices (accounting prices) for multiple interacting stocks of biotic and abiotic assets and liabilities that comprise ecosystems. We apply our approach to the Baltic Sea ecosystem, focusing on the interacting community of three commercially important fish species; cod, herring and sprat. The accounting prices of the three species show decreasing patterns with larger stock accumulation. Our results reveal the “supporting value or regulation services” embodied in the shadow price of a species through its trophic influence on other species. Prey fish have greater shadow prices than would be expected based on market value and predatory fish have lower shadow prices than may be expected based on market value.

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