Local Government and Natural Capital

Abstract

This chapter marks a significant change in the book's narrative, as the analysis moves from private citizens to the public sphere. Its starting point is that good government can develop distinctive capabilities to ensure that certain types of goods and services, especially those involving externalities and economic public goods, are provided for persons to use to enhance wellbeing. For some policies, particularly where local residents can improve outcomes by participating in policy design or implementation, local government can do this better than central government. In this context, the chapter explains Ostrom's theory of co-production of local government services and applies it to regional economic development. The chapter also discusses natural capital. Since ecosystem services provided by the natural environment can be diminished by human activity, investment in natural capital is required to maintain wellbeing.