This article was originally published on World Economic Forum.
“…The UN Environment Programme-led Inclusive Wealth Index shows the aggregation through accounting and shadow pricing of produced capital, natural capital and human capital for 140 countries. The global growth rate of wealth tracked by this index is much lower than growth in GDP. In fact, the 2018 data suggests natural capital declined for 140 countries for the period of 1992 to 2014.
Interestingly, many countries record GDP growth while they lose natural capital. One can see the trade-off among various types of capital, but the report clearly conveys that mixing income with wealth is bad economics and dangerous for sustainability measurement.
The Index’s findings include strong recommendations to help reach global sustainability targets, including the UN Sustainable Development Goals. Closely tracking countries’ productive bases is key, as a declining asset base implies a non-sustainable trajectory. Many of the assets critical for maintaining productive bases are either not priced or are priced at much lower levels than they should be. This is especially true for natural capital and human capital assets. Natural capital assets such as forests and water bodies have only been valued for the products they provide for the market, such as timber and fish. However, these ecosystems offer a much larger suite of services, such as water purification, water regulation and habitat provisioning for species, among many others. These are clearly valuable services…”
Read on at: World Economic Forum.