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A New Balance Sheet for Nations: UNU-IHDP and UNEP Launch
Sustainability Index that Looks Beyond GDP
Growth Masks Fact that Natural Resources Facing Rapid
Depletion in 19 out of 20 Countries Assessed
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.
The indicator was unveiled in the Inclusive Wealth Report 2012 (IWR), a joint initiative
launched at Rio+20 by the United 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 1990 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 1990 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:
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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 percapita 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
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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 wellbeing.
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:
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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, 1:002:45pm 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.
Media Contacts:
Nick Nuttall, UNEP Division of Communication and Public Information Acting Director
and Spokesperson, Tel. +55 11 6593 8058 +254 733 632 755, e-mail:
nick.nuttall@unep.org
Anne Kathrin Raab, UNU-IHDP Communications Manager, Tel. +49 228 815 0616, email: raab@ihdp.unu.edu
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:
http://www.cambridge.org/us/knowledge/isbn/item6922822/Inclusive%20Wealth%20Rep
ort%202012/?site_locale=en_US
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, nongovernmental 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.