Inclusive Wealth Report 2018

The Inclusive Wealth Report (IWR) is a biennial effort led by the UN Environment to evaluate the capacities and performance of the nations around the world to measure sustainability of economy and wellbeing of their people. The existing statistical systems in the countries are using System of Environment and Economic Accounts which are geared to measure flow- income. The flow would critically depend upon the health and resilience of capital assets like manufactured capital, human capital and natural capital.

A country’s inclusive wealth is the social value (not dollar price) of all its capital assets, including natural capital, human capital and produced capital. The IWR 2018 builds on previous versions of the report (IWR2012 and IWR 2014) and advances methods of measuring the base of economy- capital of all types. It covers the period from 1990 to 2014, which is 25 years, which provides us with a picture of the changes in capital assets over almost a generation.

The methodologies for calculating components of human capital are enriched and updated. It has come up with alternative shadow prices of human capital (education and health), based on a non-parametric methodology called frontier analysis.

The results of the IWR 2018 covering 140 countries indicate that:

  • The Inclusive wealth (IW) in 135 countries was higher in 2014 compared to the level in 1990 and the global growth rate of IW was 44% over the indicated period, which implies an average growth rate of 1.8% per year. However, during the same period the global GDP growth per year was 3.4%, which is close to twofold of the annual growth rate of growth in IW.
  • In terms of Inclusive wealth per capita and Inclusive wealth per capita adjusted, 89 and 96 of the 140 countries saw increases over the study period compared to their levels in 1990.
  • The global level growth of each of the three capitals over the study period indicate that produced capital was growing at an average rate of 3.8% per year and health and education induced human capital was growing at 2.1%. Contrary, natural capital was decreasing at a rate of 0.7% per annum. 
  • The structure of capital at the global scale as of 2014 has composed of produced capital (21%), human capital (59% of which 26% education induced human capital and 33% is health induced human capital), and natural capital (20%).

An overview of the basis for wealth estimation and explores how various types of conservation and development policies recognizing the tradeoff can be understood better with the help of inclusive wealth. The findings also suggest that over the past twenty years the negative wealth effects of a decline in natural capital have been offset by growth in human and physical capital.

The Inclusive Wealth Report 2018 demonstrates that assessing and valuing natural capital and the change in per capita inclusive/comprehensive wealth over time has the potential to keep track of progress on most Sustainable Development Goals (SDGs)