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Wealth reallocation and sustainability under climate change


Climate change is often described as the greatest environmental challenge of our time. In addition, a changing climate can reallocate natural capital, change the value of all forms of capital and lead to mass redistribution of wealth. Here we explain how the inclusive wealth framework provides a means to measure shifts in the amounts and distribution of wealth induced by climate change. Biophysical effects on prices, pre-existing institutions and socio-ecological changes related to shifts in climate cause wealth to change in ways not correlated with biophysical changes. This implies that sustainable development in the face of climate change requires a coherent approach that integrates biophysical and social measurement. Inclusive wealth provides a measure that indicates sustainability and has the added benefit of providing an organizational framework for integrating the multiple disciplines studying global change.

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Figure 1: The reallocation of natural capital wealth between two otherwise identical locations, when accounting prices reflect some degree of economic scarcity.
Figure 2: The influence of demographic changes on marginal growth, and hence the accounting price of a fish stock.
Figure 3: The reallocation of wealth between asymmetric regions.


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Research support by NSF awards OCE-1426700, OCE-1426746 and OCE-1426891, NJ Sea Grant award R/6410-0011, the Knobloch Family Foundation, and the project Green Growth Based on Marine Resources: Ecological and Socio-Economic Constraints (GreenMAR), funded by Nordforsk.

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E.P.F. and M.L.P. conceived the paper; E.P.F., M.L.P. and J.K.A. conducted analyses; E.P.F. led writing and all authors contributed to edits.

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Correspondence to Eli P. Fenichel.

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Fenichel, E., Levin, S., McCay, B. et al. Wealth reallocation and sustainability under climate change. Nature Clim Change 6, 237–244 (2016).

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