It seems to be fashionable these days to develop an index for sustainable growth. Last week, it was the nef Happy Planet Index. Now as the clock counts down to Rio+20, the United Nations Environment Program (UNEP) has launched its own sustainability index.
Inclusive Wealth Index (Photo – Cambridge Univ. Press)
The Inclusive Wealth Index (IWI) looks beyond GDP and the Human Development Index (HDI) to include a full range of assets such as manufactured, human and natural capital.
IWI was unveiled as part of the Inclusive Wealth Report 2012 (IWR), a joint initiative launched at Rio+20 by the UNEP and the United Nations University’s International Human Dimensions Program on global environmental change (UNU-IHDP).
The report studied changes in inclusive wealth in 20 countries, which together account for almost three quarters of global GDP, from 1990 to 2008. Economic growth in 19 out the 20 countries is masking a serious depletion of natural resources.
Six of the 20 countries also saw a decline in their inclusive wealth, putting them on an unsustainable track. That would be Russia, Venezuela, Saudi Arabia, Colombia, South Africa and Nigeria.
Despite registering GDP growth, China, the United States, South Africa and Brazil were shown to have significantly depleted their natural capital base, with said base being the sum of a set of renewable and non-renewable resources such as fossil fuels, forests and fisheries.
Natural resources per-capita declined by 33 percent in South Africa, 25 percent in Brazil, 20 percent in the United States, and 17 percent in China. The only exception was Japan, which did not see a fall in natural capital due to an increase in forest cover.
Based only on GDP, the economies of China, the United States, Brazil and South Africa grew by 422 percent, 37 percent, 31 percent and 24 percent respectively between 1990 and 2008.
But when measured based on the IWI formula, the Chinese and Brazilian economies increased by only 45 and 18 percent respectively. The United States economy grew by just 13 percent, while the South African economy actually decreased by 1 percent.
“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.
The countries studied in the report are: 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.
Read the full Inclusive Wealth Report 2012 (IWR) – Download (pdf)
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