India’s gross domestic product (GDP) per capita rose 120% between 1990 and 2008. But in the same period, the country’s natural capital, the sum of its assets from forests to fossil fuels and minerals, declined 31%, says a leading scholar from the UN University.
Anantha Duraiappah, executive director of the United Nations University’s International Human Dimensions Programme (UNU-IHDP), has led a team of scholars to develop an “Inclusive Wealth Indicator” designed to augment GDP as a measure of economic progress. Few countries do well when seen through this lens.
In fact, the decline in natural resources in India during this period has been higher than 31%, but it is compensated to some extent by increase in spread of education. On an annual basis during this period, India’s GDP growth per capita has been 4.52%, while its rate of decline in natural capital has been 2.04%.
Brazil, another emerging economy, fares worse than India. Between 1990 and 2008, its GDP per capita rose 34%, but its natural capital declined 46%. When measures of natural, human and manufactured capital are considered together to obtain a more comprehensive value, Brazil’s “Inclusive Wealth” rose just 3% and India’s rose 9% over these 18 years.
“The work on Brazil and India illustrates why Gross Domestic Product is inadequate and misleading as an index of economic progress from a long-term perspective,” Duraiappah said at the March 26-29 Planet Under Pressure conference that has brought around 3,000 natural and social scientists together in London.
“A country could completely exhaust all its natural resources while posting positive GDP growth. We need an indicator that estimates the wealth of nations – natural, human and manufactured and ideally even the social and ecological constituents of human well-being.”
The Inclusive Wealth Report is scheduled for release this June, at the UN “Rio+20” summit. It will describe the “inclusive wealth” of 20 nations: Australia, Brazil, Canada, Chile, China, Colombia, Ecuador, France, Germany, India, Japan, Kenya, Nigeria, Norway, Russia, Saudi Arabia, South Africa, USA, United Kingdom and Venezuela. The 20 nations featured in the report represent 72% of world GDP and 56% of global population.
Authored by 17 specialists from the UK, USA, Chile, Malaysia, India, Germany and Australia, the Inclusive Wealth Indicator is undertaken by UNU-IHDP with UNEP support and in collaboration with the UN-Water Decade Programme on Capacity Development (UNW-DPC) and the Natural Capital Project of Stanford University.
“Our goal is to provide national governments with a bi-annual report to assess transition to the so-called green economy, to create productive and sustainable economic bases for the future,” says Duraiappah. “Just GDP per capita will get us nowhere. The new macroeconomic indicators must be economic plus social plus ecological.”
While experts are repeatedly urging a move beyond GDP, governments are not ready. This, and the near total failure of climate negotiations in the 20 years since the Earth Summit was held in Rio de Janeiro, has led to calls at this conference for a system of governance that is more equitable and therefore more sustainable.
Laurence Tubiana, director of the Paris-based Institute of Sustainable Development and International Relations, said countries “are trying to solve 21st century governance problems with 1948-style institutions, which is not going to work”.
Frank Biermann of VU University, Amsterdam, director of the Earth System Governance research alliance and IHDP’s Earth System Governance Project, called for
* Creation of a UN sustainable development council to better integrate sustainable development concerns across the UN system, with a strong role for the world’s 20 largest economies (G20).
* Upgrading the UN Environment Programme to a full-fledged UN agency – a step that would give it greater authority, more secure funding, and facilitate the creation and enforcement of international regulations and standards.
* Stronger reliance on qualified majority-voting to speed decision-making in international negotiations;
* Increased financial support for poorer nations, including through novel financial mechanisms such as air transportation levies.
Biermann said, "Incremental change is no longer sufficient to bring about societal change at the level and with the speed needed to stop earth system transformation. Structural change in global governance is needed, both inside and outside the UN system and involving both public and private actors."
At the London conference, 3,000 experts spanning the spectrum of interconnected scientific interests, policymakers and business representatives are examining the planet’s vital signs, potential solutions, hurdles and ways to break down the barriers to progress. The conference is the largest gathering of experts in global sustainability in advance of “Rio+20” and the largest gathering ever of such a group of experts. It has been co-organised by the International Geosphere Biosphere Programme, Diversitas, International Human Dimensions Programme on Global Environmental Change, World Climate Research Programme, Earth System Science Partnership and the International Council for Science.