Inclusive Wealth index goes beyond GDP

Agence France-Presse
The Inclusive Wealth Index goes beyond GDP, which looks at prosperity through the narrow lens of economic activity, ignoring devastating impacts on the ecosystem and failing to show whether all sectors of society are benefiting

 RIO DE JANEIRO, Brazil – Emerging giant economies and the United States lived beyond their environmental means as they raced for growth, said a UN survey unveiled Sunday at the conference on sustainability here.

China, Brazil, South Africa and the US all dug deep into Nature’s treasure chest between 1990 and 2008 as their economies expanded voraciously, it said in a look at 20 nations accounting for three-quarters of global GDP.

The findings came through a new benchmark called the Inclusive Wealth Index, or IWI, presented at the UN Conference on Sustainable Development in Rio.

The 10-gathering is due to climax in a three-day summit of world leaders, ending on Friday.

IWI aims at going beyond Gross Domestic Product (GDP), which looks at prosperity through the narrow lens of economic activity.

GDP has long been criticized for encouraging short-term growth, ignoring what can be devastating impacts on the ecosystem and failing to show whether all sectors of society are benefiting.

“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,” said Achim Steiner, executive director of the UN Environment Program (UNEP), which co-authored the report.

“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.”

The new index looks at four baskets of assets–including use of natural resources, level of education and health–in the search for a wider picture of fair and sustainable growth.

From 1990-2008, GDP expanded by 422% in China, by 37% in the United States, by 31% in Brazil and by 24% in South Africa.

But when seen through IWI’s prism, things looked quite different.

On this basis, China’s economy expanded by only 45%, Brazil’s by 18% and the United States’ by just 13%. South Africa’s actually decreased by 1%.

The differences are explained largely by population growth in many countries, but also by declining natural resources, especially fossil fuels, according to the IWI.

The change with GDP is especially stark when assessed only for natural capital, one of the 4 assets used in the IWI mix.

During 1990-2008, natural resources per capita declined by 33% in South Africa, by 25% in Brazil, 20% in the United States and 17% in China.

Only Japan, among the 20 nations, did not see a fall in natural capital, thanks mainly to an increase in forest cover.

The 20 countries in the assessment were Australia, Brazil, Britain, Canada, Chile, China, Colombia, Ecuador, France, Germany, India, Japan, Kenya, Nigeria, Norway, Russia. Saudi Arabia, South Africa, the United States and Venezuela.

The aim is to update the IWI every two years and widen its areas of coverage so that it becomes a useful tool for policymakers.

The other author of the report was the International Human Dimensions Program on Global Environmental Change, an initiative hosted by the United Nations University. – Agence France-Presse