Five Capitals Model of Sustainable Development

Last modified by Vanessa Glenn on 2017/01/31 14:50

The Five Capitals Model of Sustainable Development is theoretical model that extends our understanding of economic sustainability by valuing assets other than financial ones. The five assets, or ‘capitals’ are: economic capital, built capital, human capital, social capital, and natural capital.

The model is a useful tool for organisations because it can be used in practical ways, e.g. as an integrated management system within a particular sector of the economy or as an analytical tool for evaluating sustainability performance.

The five capitals model has been chosen as a framework to organise the contents of this Wiki. The model is well-recognised in regional and community development practice as a useful tool for evaluating development projects. 

The objective is to introduce a model that provides mining companies and governments with a framework that incorporates a range of sustainability indicators that are relevant to monitoring mine closure.

The Five Capitals Model provides a basis for understanding sustainability in terms of the economic concept of wealth creation or ‘capital’. The basic concept of capital, a stock capable of generating a flow of benefits (Porritt, 2005), has been extended to include other forms of capital that are essential to human well-being.

These assets, or types of capital are:

1.       Economic capital: income and financial re-sources.

2.       Built capital: physical infrastructure such as buildings, transport and communications.

3.       Human capital: the skill, knowledge and good health that enables people to work and earn a living.

4.       Social capital: networks and relationships of trust and reciprocity that enable people to co-operate.

5.       Natural capital: access to key natural resources, such as water, land, clean air, fisheries, forests etc. (Brereton & Pattenden, 2007).

The essence of the model is that each of these forms of capital is capable of generating benefit or ‘flow’ in economic terms, leading to a hypothetical model of sustainable capitalism (Porritt, 2005).

The five capitals model comes with some qualifications and caveats. For instance, in using this model it is necessary to acknowledge that the concept of ‘capital’ is useful and that while traditionally these capitals have been land, labour and capital (financial), in the new model these capitals are both tangible and intangible, some to be used and spent and some to be preserved (McIntosh, 2009). A fundamental precept of the model is that it is not acceptable to run down some forms of capital to build up others. In particular, economic growth should not be at the expense of depleting key non-renewable natural resources or destroying the social capital of communities, since by definition growth cannot be sustained under these conditions. However, some substitutability within capital categories is considered acceptable, provided the net impact is positive (or at least neutral) (Brereton & Pattenden, 2007).

Submitted by:  Mary Anne Barclay (25.02.2016)

images 5 caps.png

References:

Brereton, D. and Pattenden, C.,2007, Measuring what matters: Monitoring the contribution of a new mining project to community sustainability, Third International Conference on Sustainable Development Indicators in the Minerals Industry, June 2007, Milos island, Greece

McIntosh, M., 2009, What is a Sustainable Enterprise Economy? Launch paper for the Asia-Pacific Centre for Sustainable Enterprise Griffith Business School, Brisbane, Queensland, Australia. Accessed 25/2/16 at https://www.griffith.edu.au/__data/assets/pdf_file/0005/221945/McIntosh_What_is_a_SEE_APCSE_Launch.pdf

Porritt, J., 2005. Capitalism as if the World Matters, Earthscan, Sterling Va.

 

    
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