The capital approach is frequently used to model sustainability. A development is deemed to be sustainable when capital is not reduced. There are different definitions of sustainability, based on whether or not they allow that different forms of capital may be substituted for each other.
A development that allows for the substitution of different forms of capital is called weakly sustainable. This article shows that in a risky world and a risk-averse society even under the assumptions of weak sustainability the circumstances under which different forms of capital may be substituted
are limited. This is due to the risk-reducing effect of diversification. Using Modern Portfolio Theory this article shows under which conditions substitution of different forms of capital increases risk for future generations.
Environmental Values is an international peer-reviewed journal that brings together contributions from philosophy, economics, politics, sociology, geography, anthropology, ecology and other disciplines, which relate to the present and future environment of human beings and other species. In doing so we aim to clarify the relationship between practical policy issues and more fundamental underlying principles or assumptions.
Environmental Values has an impact factor (2013) of 1.739.