India at 6th slot in Inclusive Wealth Index (IWI) per capita

June 27, 2012

India ranked 6^th on Inclusive Wealth Index (IWI) per capita that listed top 20 selected countries on the basis economic performance assessed between 1990 and 2008. The focus on this new measure gained attention in Rio+20 as it emphasized on the “Green Economy”.

As per the IWI report:-

4.3 % per year GDP per capita during this placed India 2^nd only to China, which registered high growth of 9.6%. India also stood next to China in the HDI, with an average 1.4%per head annually. However, it ranked 6^th in the ‘Inclusive Wealth Index per capita’ with 0.9 % per year
The 20 countries together responsible for around 3/4^th of global GDP during this twenty-year time. This was disclosed by the United Nations University and UN development Programme in the run-up to Rio+20.
Despite having GDP growth, China, the US, South Africa and Brazil were found to have considerably eroded their natural capital base. This includes both renewable and non-renewable resources, such as fossil fuels, forests and fisheries. Natural resources per capita declined in the US and in China by 20% and 17 % respectively.
Of the 20 countries surveyed, Japan was the only country which did not registered decline in its natural capital base, due to significant increase in forest cover/
If only GDP is considered, China and the US grew by 422 % and 37 % respectively. Once the IWI was applied, the corresponding figures decline to 45 %and 13 % respectively
India is among the high population growth countries, including Nigeria and Saudi Arabia, which have shown considerably lower IWI growth. This negative trend will keep on going unless steps are taken to enhance natural the capital base or cut population growth.
Six countries who witnessed decline in their inclusive wealth are Russia, Venezuela, Saudi Arabia, Colombia, South Africa and Nigeria.

Inclusive Wealth Report 2012:-

The Inclusive Wealth Report 2012 is the first of a series of biennial reports on the sustainability of countries. It looks at the productive base of economies, based on capital assets – produced or manufactured capital, human capital, and natural capital.
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.

Inclusive Wealth Index (IWI)

The IWI is a more holistic measure which considers full range of assets such as manufactured, human and natural capital, which shows a country’s actual wealth and sustainability.
The Inclusive Wealth Index (IWI) seeks to measure the social value of capital assets of nations beyond manufactured capital. The index is inclusive in the sense that it accounts for other key assets as important components of the productive base of the economy, such as natural capital and human capital. The total value of capital assets – or wealth – is concretely measured by adding up the social worth of each capital type of a nation, where the social (or shadow) prices per unit of capital form act as a weight in its index of inclusive wealth.Further, the index measures changes in wealth (or per-capita wealth) over a period of time. Thus, changes in wealth – or inclusive investment – are measured by assessing the changes in the physical asset base of a nation over time, and subsequently adjusted for population.

What is the role of natural capital in inclusive wealth?

Natural capital represents an essential pool of resources that can induce the building of other capital assets, such as education, health or manufactured capital.

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.

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