Source: Small Island Developing States
26 November 2018: The UN Environment Programme (UNEP, or UN Environment) and partners released preliminary findings from the ‘Inclusive Wealth Report 2018,’ which aims to evaluate and report on a country’s wealth and well-being. The report finds that, for many countries, increases in overall global wealth come at the expense of environmental assets, including biodiversity, forests, clean air and water.
The Inclusive Wealth Report ranks 140 countries using the Inclusive Wealth Index, a tool that assesses a country’s ability to “look after its wealth in a way that is sustainable and safeguards its future generations.” The report focuses on stocks of natural (forests, agricultural land, rivers and estuaries, the atmosphere and the oceans), human (aptitude, education, knowledge and skills) and manufactured (buildings, equipment, machines and roads) capital to measure inclusive wealth as an alternative to using gross domestic product (GDP) as a measure of a country’s wealth, arguing that GDP measures only the size of a country’s economy without considering its underlying asset base.
If wealth increases as governments implement the SDGs, the Goals will be sustainable, but if wealth declines as governments try to meet the SDGs, the Goals should be considered unsustainable.
More than one-third of the 140 countries ranked in the report’s Inclusive Wealth Index had increased their GDP since 1998, but experienced a decline in their inclusive wealth per head. Further, only 81 of the 140 countries analyzed are on a sustainable path. The top ten performers on the basis of per capita inclusive wealth for 1992-2014 are the Republic of Korea, Singapore, Malta, Latvia, Ireland, Moldova, Estonia, Mauritius, Lithuania and Portugal. Fifteen countries are assessed as unsustainable by inclusive wealth per capita, when adjusted for carbon damage and oil capital gains. These are Bulgaria, Congo, Gabon, the Gambia, Greece, Croatia, Haiti, Jamaica, Lao People’s Democratic Republic (PDR), Latvia, the Sudan, Serbia, Syria, Ukraine and Viet Nam.
Carbon damage as a share of inclusive wealth “produces a stronger effect on small countries,” the report finds, because smaller countries tend to be too small to absorb such shocks. The report further finds that carbon damage is “relatively large” in high-income countries, such as Germany, France, the UK and the US, among others.
The report also considers the relationship between inclusive wealth and the SDGs, arguing that governments need to have a way to check whether or not the economic measures they take to meet the SDGs jeopardize the sustainability of the Goals. The report suggests that, if wealth increases as governments implement the SDGs, the Goals will be sustainable, but if wealth declines as governments try to meet the SDGs, the Goals should be considered unsustainable. The report argues that the Inclusive Wealth Index allows policymakers to assess whether or not enacted policies are sustainable, and will allow them to make decisions on how to best manage their assets.
UNEP will release the full report in the coming weeks. [Publication: Inclusive Wealth Report 2018: Executive Summary] [Inclusive Wealth Report Website] [UNEP Press Release] [SDG Knowledge Hub Story on 2014 Inclusive Wealth Report] [SDG Knowledge Hub Story on Inclusive Wealth Index Launch]