The United Nations University’s International Human Dimensions Programme on Global Environmental Change (UNU-IHDP) and the United Nations Environment Programme (UNEP) have launched the Inclusive Wealth Report 2012 (IWR 2012), a new report that measures the wealth of nations, at the Rio+20 Summit on June 17.
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 aims. It assesses the value of natural resources, which are being depleted by human activities such as deforestation, in evaluations of economic growth.
The first IWR looked at changes in inclusive wealth in 20 countries (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), which together account for almost three quarters of global GDP, from 1990 to 2008.
The index showed that even though China, the United States, Brazil and South Africa experienced GDP growth, their natural capital was significantly depleted.
Under GDP, the economies of 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 1990 and 2008.
However, under IWI, China’s economy grew by 45 per cent, the US by 13 per cent, Brazil by 18 per cent and South Africa decreased by 1 per cent, mainly due to the depletion of natural resources. Moreover, six nations – Russia, Venezuela, Saudi Arabia, Colombia, South Africa and Nigeria – experienced negative growth under the IWI, whereas it was positive under GDP measurements. Of the nations surveyed, only Japan did not see a fall in natural capital, due to an increase in forest cover.
Commenting on the report, John Sulston, chair of theRoyal Sciety working group on population and Nobel Prize-winning scientist, said traditional measurements of wealth do not take into account the state of the world around us and the inclusive wealth index was a way of correcting this deficiency.
Applying the IWI to a sample of 20 countries reveals some that are considered good economic performers are actually in the environmental red, borrowing natural resources that they just can’t pay back