The International Human Dimensions Programme on Global Environmental Change (IHDP)* announced at the Rio+20 Summit on June 17, 2012. the launch of the Inclusive Wealth Report 2012 (IWR 2012). The report measures the wealth of nations.
Inclusive Wealth Report 2012
The report presents a new economic index, which looks beyond the traditional short term economic and development yardsticks of gross domestic product (GDP) and the Human Development Index (HDI). The Inclusive Wealth Index (IWI) assesses changes in a country’s productive base, including produced, human, and natural capital over time. By taking a more holistic approach, the IWI shows governments the true state of their nation’s wealth and the sustainability of its growth.
Twenty countries were assessed in the IWR 2012 over a period of 19 years (1990-2008). Together they represent more than half of the world population and almost three quarters of world GDP and include high, middle, and low-income economies on all continents.
IWI Per Capita Compared to GDP Per Capita and HDI
|Average annual economic performance of 20 countries when assessed with Inclusive Wealth Index (IWI) per capita, Gross Domestic Product (GDP) per capita and Human Development Index (HDI) over a period of 19 years (1990-2008). Credit: UNU-IHDP.|
This is the first of a series of reports that will be published every two years to monitor the well-being and sustainability of countries.
A Summary for Decision-Makers of the IWR 2012 is also available, print copies of which can be picked up at the UNU booth as well. To obtain the digital copy or sign up to order a print copy, please refer to the Website of the Inclusive Wealth Report.
Key findings from the report are:
- While 19 out of the 20 countries experienced a decline in natural capital, six also saw a decline in their inclusive wealth, putting them on an unsustainable track, Russia, Venezuela, Saudi Arabia, Colombia, South Africa and Nigeria were the nations that failed to grow. The remaining 70 per cent of countries show IWI per-capita growth, indicating sustainability.
- High population growth with respect to IWI growth created unsustainable conditions in five of the six countries mentioned above. Russia's lack of growth was due largely to a drop in manufactured capital
- 25 per cent of countries which showed a positive trend when measured by GDP per capita and HDI were found to have a negative IWI per capita. The primary driver of the difference in performance was the decline in natural capital
- With the exception of France, Germany, Japan, Norway, the United Kingdom and the United States, all countries surveyed have a higher share of natural capital than manufactured capital, highlighting its importance
- Human capital has increased in every country and is the prime capital form that offsets the decline in natural capital in most economies
- There are clear signs of trade-off effects between the different forms of capital
- Technological innovation and/or oil capital gains (due to rising prices) outweigh decline in natural capital and damages from climate change, moving a number of countries – Russia, Nigeria, Saudi Arabia and Venezuela - from an unsustainable to a sustainable trajectory
- Estimates of inclusive wealth can be improved significantly with better data on the stocks of natural, human and social capital and their values for human well-being.
While inclusive wealth has increased for most countries, the report shows that an examination of natural capital is crucial for policy makers.
Even though a reduction in natural capital can be offset by the accumulation of manufactured and human capital, which are reproducible, many natural resources such as oil and minerals cannot be replaced. As a result, a more inclusive definition of wealth that will secure a legacy for future generations is urgently needed in the discussion of sustainable economic and social development.
The report, which will be produced every two years, makes the following specific recommendations:
- Countries witnessing diminishing returns in natural capital should invest in renewable natural capital to improve their IWI and the well-being of their citizens. Example investments include reforestation and agricultural biodiversity
- Nations should incorporate the IWI within planning and development ministries to encourage the creation of sustainable policies
- Countries should speed up the process of moving from an income-based accounting framework to a wealth accounting framework
- Macroeconomic policies should be evaluated on the basis of IWI rather than GDP per capita
- Governments and international organizations should establish research programmes to value key components of natural capital, in particular ecosystems.
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- *The IWR 2012 is a joint initiative of the International Human Dimensions Programme on Global Environmental Change (UNU-IHDP) hosted by the United Nations University and the United Nations Environment Programme (UNEP), in collaboration with the UN-Water Decade Programme on Capacity Development (UNW-DPC) and the Natural Capital Project.