Monday 18 June 2012

Inclusive Wealth Index aka: markets are not god-given-formulas

The UNEP recently launched a new report/index - the Inclusive Wealth Index (IWI).

The IWI looks beyond the traditional economic and development yardsticks of Gross Domestic Product (GDP) and the Human Development Index (HDI) to include a full range of assets such as manufactured, human and natural capital, showing the true state of a nation's wealth and the sustainability of its growth.  It aims to show whether we are building or destroying the productive base that supports our well being.

Some country examples:
Australia has an annual GDP growth rate of 2.2% over the last 19 years, but an IWI of only 0.1%.
China – GDP 9.6%, IWI 2.1%
US – GDP 1.8%, IWI 0.7%


And there are fab-o graphs to download.

The UNEP press release (with a link to the report etc):  http://www.unep.org/newscentre/Default.aspx?DocumentID=2688&ArticleID=9174&l=en

And The Guardian was where I got tipped off to the existence of this report  (http://www.guardian.co.uk/sustainable-business/rio-20-un-earth-summit-business-diary) includes a good piece on the speech that Achim Steiner made at the launch, which includes the killer points:
  • The environmental community has been scared of economics for too long. If we do not go into the heart of the political economy, we will meet here at Rio +40 and we will be culpable of not having looked at the right issue.
  • Markets are not god given formulas that function according to science , they are social constructs. They can be governed and that is our agenda, not to surrender to markets that are often framed by vested interests.
  • The green economy is not the prerogative of rich countries. If developing countries wait for foreign technology, they will wait for another 20 years . Countries need to look at the resource base within their own national boundaries.
  • My interpretation of the green economy for developed countries is that your footprint is too large and that means reducing your footprint and consumption and de-coupling economic development from resource use.
  • For developing countries it essentially means moving away from an energy economy by jumping to new technology, which is very feasible.

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