Sun, Jun 17, 2012 -
Growth Masks Fact that Natural Resources
Facing Rapid Depletion in 19 out of 20 Countries
Assessed
The Inclusive Wealth Index captures the
value of natural resources, which are being
depleted by human activities such as deforestation,
in evaluations of economic growth.
Rio, 17 June 2012 -
The world's fixation on economic growth
ignores a rapid and largely irreversible
depletion of natural resources that will
seriously harm future generations, according
to a report which today unveiled a new indicator
aimed at encouraging sustainability - the
Inclusive Wealth Index (IWI).
The IWI, which looks
beyond the traditional economic and development
yardsticks of Gross Domestic Product (GDP)
and the Human Development Index (HDI) to
include a full range of assets such as manufactured,
human and natural capital, shows governments
the true state of their nation's wealth
and the sustainability of its growth.
Further Resources
Download the full ReportPress KitGraphsUNU-IHDPPress
Release in PortugueseUN Conference on Sustainable
Development (Rio+20)UNEP Green Economy InitiativeWorld
Remains on Unsustainable Track Despite Hundreds
of Internationally Agreed Goals and ObjectivesGlobal
Environment Outlook 5 (GEO-5) for Local
Government Press ReleaseGoing Green-Pioneering
Private Sector Already Embracing Sustainable
FutureRio+20: Opportunity to Fast Track
Transition to Green Economy, Lift Millions
Out of PovertyGlobal Renewable Energy Investment
Powers to Record $257 BillionThe indicator
was unveiled in the Inclusive Wealth Report
2012 (IWR), a joint initiative launched
at Rio+20 by theUnited Nations University's
International Human Dimensions Programme
on Global Environmental Change (UNU-IHDP)
and the United Nations Environment Programme
(UNEP). The report looked at changes in
inclusive wealth in 20 countries, which
together account for almost three quarters
of global GDP, from 11000 to 2008.
Despite registering
GDP growth, China, the United States, South
Africa and Brazil were shown to have significantly
depleted their natural capital base, the
sum of a set of renewable and non-renewable
resources such as fossil fuels, forests
and fisheries.
Over the period assessed,
natural resources per-capita declined by
33 per cent in South Africa, 25 per cent
in Brazil, 20 per cent in the United States,
and 17 per cent in China. Of all the 20
nations surveyed, only Japan did not see
a fall in natural capital, due to an increase
in forest cover.
If measured by GDP,
the most common indicator for economic production,
the economies in China, the United States,
Brazil and South Africa grew by 422 per
cent, 37 per cent, 31 per cent and 24 per
cent respectively between 11000 and 2008.
However, when their
performance is assessed by the IWI the Chinese
and Brazilian economies only increased by
45 per cent and 18 per cent. The United
States' grew by just 13 per cent, while
South Africa's actually decreased by 1 per
cent.
The report focuses on
the sustainability of current resource bases,
and does not analyze the rest of the 19th
and 20th centuries, when many developed
countries following an accelerated growth
path may have depleted natural capital.
"Rio+20 is an opportunity
to call time on Gross Domestic Product as
a measure of prosperity in the 21st century,
and as a barometer of an inclusive Green
Economy transition-it is far too silent
on major measures of human well-being namely
many social issues and the state of a nation's
natural resources," said UN Under-Secretary
General and UNEP Executive Director Achim
Steiner.
"IWI is among a
range of potential replacements which world
leaders can consider as a way of bringing
great precision to assessing wealth generation
in order to realize sustainable development
and eradicate poverty," he added.
Wealth accounting, the
concept behind the IWI, draws up a balance
sheet for nations and shows countries where
their wealth lies. By taking into account
a wide array of capital assets a nation
has at its disposal to secure society's
well-being, it presents a more comprehensive
picture and informs policy makers on the
importance of maintaining their nation's
capital base for future generations.
"The IWR stands
for a crucial first step in changing the
global economic paradigm by forcing us to
reassess our needs and goals as a society."
said Professor Anantha Duraiappah, Report
Director of the IWR and Executive Director
at UNU-IHDP. "It offers a rigorous
framework for dialogue with multiple constituencies
representing the environmental, social and
economic fields."
The importance of keeping
an eye on the full range of a country's
capital assets becomes particularly evident
when population growth is factored in.
When population change
is included to look at the IWI on a per-capita
basis, almost all countries analyzed experienced
significantly lower growth. This negative
trend is likely to continue for countries
that currently show high population growth,
like India, Nigeria and Saudi Arabia, if
no measures are taken to increase the capital
base or slow down population growth.
The IWR presents the
inclusive wealth of 20 nations: Australia,
Brazil, Canada, Chile, China, Colombia,
Ecuador, France, Germany, India, Japan,
Kenya, Nigeria, Norway, the Russian Federation,
Saudi Arabia, South Africa, USA, United
Kingdom and Venezuela.
The countries selected represent 56% of
world population and 72% of world GDP, including
high, middle and low-income economies on
all continents. A few countries were chosen
based on the hypothesis that natural capital
is particularly important to their productive
base - as in the case of oil in Ecuador,
Nigeria, Norway, Saudi Arabia and Venezuela;
minerals in countries such as Chile; and
forests in Brazil.
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.
Recommendations
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.
UN Under-Secretary General
and Rector of the United Nations University,
Prof. Konrad Osterwalder, concluded that
using the IWI would safeguard the interests
of many developing nations.
"The Millennium
Development Goals (MDGs) have functioned
as an important tool to focus international
attention and action around key pressing
global issues," he said. "As 2015
fast approaches, the deadline for meeting
the MDGs, it is clear that the opportunities
for many developing countries to achieve
their goals may be compromised if the present
rates of decline of various crucial ecosystem
services continue."
"In order to reverse
this decline, we need a natural capital
accounting framework that takes into consideration
the value of ecosystem services in relation
to the wealth of nations," he added.
"Ideally, from now on, it will be essential
that national and international agencies
make use of inclusive wealth per capita
as a yardstick to measure economic progress.
After the press conference,
further discussion of The Inclusive Wealth
Report 2012 will take place at a joint UNEP
and UNU-IHDP side event at Rio+20 on June
17, 2012, 1:00-2:45pm Brazil Time at the
UNEP Pavilion, Athletes Centre, Rio de Janeiro,
Brazil.
Additional Quotes
"While most economies
analyzed in the Inclusive Wealth Report
2012 and the world more generally have been
enjoying positive economic growth rates,
a look at the broader capital base indicates
that this has come at high physical costs.
These expenses should be reflected in the
balance sheet of nations," said Dr.
Pablo Muñoz, Science Director of
the IWR, UNU-IHDP.
"An increase in
total wealth does not necessarily indicate
that future generations may consume at the
same level as the present one; as population
grows, each form of capital is more thinly
spread over the society," said Sir
Partha Dasgupta, Professor Emeritus of Economics
at Cambridge and Science Advisor to the
IWR.
Note to Editors
Manufactured capital
is defined as infrastructure, goods and
investments. Natural capital includes fossil
fuels, minerals, forests, fisheries and
agricultural land. Human capital includes
education and skills.
The report will be publicly
available for download on the IHDP website
from June 17, www.ihdp.unu.edu. A hard copy
will be published by Cambridge University
Press:
Caption: The graph demonstrates
the decline of natural capital in all but
one of the countries assessed in the Inclusive
Wealth Report 2012.
Authors and Review Board
Developed under the
scientific advice of Sir Partha Dasgupta,
Frank Ramsey Professor Emeritus of Economics
at the University of Cambridge, the report
features contributions by over a dozen leading
scholars. Authors were selected based on
their outstanding scientific expertise in
inclusive wealth and environmental economics,
and an extensive publication record in the
area of natural capital, human well-being,
social welfare and valuation, among others.
The review board was chosen based on their
expertise in the field, strong academic
credentials and a good publishing record
in the relevant fields.
Project Partners
The IWR 2012 is a joint
initiative of the United Nations University
International Human Dimensions Programme
on Global Environmental Change (UNU-IHDP)
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.
About UNU-IHDP (www.ihdp.unu.edu)
The International Human
Dimensions Programme on Global Environmental
Change (IHDP) is an interdisciplinary science
program, working towards a better understanding
of the interactions of humans with and within
their natural environment. IHDP advances
interdisciplinary research and collaborates
with the natural and social sciences. It
enhances the capacities of science and policy
communities through a large network and
furthers a shared understanding of the social
causes and implications of global change.
The program facilitates dialogue between
science and policy to ensure that research
results feed into policy-planning and law-making
processes, and offers education and training
to future leaders in the field.
IHDP was founded by
the International Council for Science (ICSU)
and the International Social Science Council
(ISSC) of UNESCO in 1996. The IHDP Secretariat
is hosted by the United Nations University
(UNU) in Bonn who joined as third sponsor
in 2007. IHDP's research is guided by an
international Scientific Committee comprised
of renowned scientists from various disciplinary
and regional backgrounds.
About UNEP (www.unep.org)
The United Nations Environment
Programme (UNEP) is the voice for the environment
in the UN system. Established in 1972, UNEP's
mission is to provide leadership and encourage
partnership in caring for the environment
by inspiring, informing, and enabling nations
and peoples to improve their quality of
life without compromising that of future
generations. UNEP is an advocate, educator,
catalyst and facilitator promoting the wise
use of the planet's natural assets for sustainable
development. It works with many partners,
UN entities, international organizations,
national governments, non-governmental organizations,
business, industry, the media and civil
society. UNEP's work involves providing
support for: environmental assessment and
reporting; legal and institutional strengthening
and environmental policy development; sustainable
use and management of natural resources;
integration of economic development and
environmental protection; and promoting
public participation in environmental management.