The ECO Model: Planetary Shareholding Theory

This paper proposes the ECO Model — a normative theoretical framework in which the Planet is treated as a formal shareholder of firms exploiting natural resources. Rather than treating natural capital as an externality to be corrected through taxation or regulation, the model reconceptualizes it as an equity contribution. The Planet receives shares, voting rights, and dividends earmarked for ecosystem regeneration.

The model rests on six normative axioms and a system of accounting identities defining Planet Capital (Kp), the planetary share (αp, capped at 49%), the Planetary Dividend (Dp), and a Smoothing Fund (Fp). Two sustainability conditions — Sustainability (P1) and Cessation (P2) — formalize the boundaries of viable operation. The institutional architecture builds on existing mechanisms: a Local Planetary Trust (adapted from the Anglo-Saxon trust), a Planetary Co-Auditorship integrated within the statutory auditing profession, and certification and ecological alert procedures inspired by financial auditing.

The framework is positioned as an operational extension of Thate's (2025) concept of 'Earth as Shareholder,' adding quantification, sustainability conditions, and institutional transposition into civil law jurisdictions. A numerical simulation based on sectoral data from the African manganese mining sector illustrates the internal consistency of the equations and the system's resilience to commodity price shocks. The model is then compared analytically with existing instruments — Pigouvian taxation, cap-and-trade, and the SEEA framework — identifying the conditions under which an equity-based approach may outperform externality-based alternatives.

The paper also addresses institutional feasibility in weak governance contexts, the role of the State as sub-soil owner and regulator, the integration of local communities through representation and a Social Transition Fund, and the risks of regulatory capture. By engaging critically with these dimensions, it aims to ground a theoretically ambitious proposal in the practical realities of the contexts it seeks to address — particularly in Sub-Saharan Africa.