Cost of growth: Global natural resources depleting by 45% a year

Analysis of data by World Bank from 136 countries shows poor countries are losing natural resources fast without gaining much by way of human resource capital or gross wealth

Published on:

19 Jun 2014, 1:58 pm

A new report released by the World Bank throws light on how the present GDP-based growth model is leading to fast depletion of natural wealth and resources. The data shows that poor countries are not producing quality human resource capital and that they do not even have gross savings to compensate for their fast depreciating wealth.

The report—The Little Green Data Book 2014—is based on World Development Indicators 2014 and its online database, which is an annual feature of the World Bank. The data book, released earlier this month, analyses wealth depletion of 136 countries.

In debt of future generation

The report is based on how much wealth a country accumulates for its future or next generation. Wealth broadly signifies natural resources, produced capital, and human and social capital. It is this wealth which generates national income. Natural resources here include forests, minerals, energy, agricultural land and protected areas.

Conventionally, the economic performance of a country is measured through gross domestic product (GDP). But the report points out that GDP doesn't take into account depreciation and depletion value of wealth or how wealth is changing. As a result, GDP does not give an idea whether the present pattern of growth adopted by a country is sustainable.

The report calls for building data of indicators to measure sustainable growth. “Assessments of economic performance, therefore, need to be based on both measures of annual growth (such as GDP) and measures of the comprehensive wealth of a country, which indicate whether that growth is sustainable in the long term,” says the data book.

High depreciation of wealth per capita implies that country is becoming poorer by leaving very little wealth for future generation.

Rate of resource depletion

According to data compiled by report, global rate of the natural wealth depletion in a year is 45 per cent, which is the cost of GDP-based growth.

The situation of low-income countries is most alarming. The rate of wealth depletion of low-income countries is 88 per cent. In the case of low middle-income countries, this figure is 58 per cent, for upper middle-income countries it's 34 per cent and for high income countries it is a relatively low 22 per cent (see table).

Data and Wealth Depletion in 2010
	No. of countries with data	Share of countries with depletion
Global	136	45%
High Income countries	41	22%
Upper Middle income	35	34%
Lower middle income	33	58%
Low Income	24	88%
South Asia	6	17%
Europe&Central Asia	15	27%
East Asia&Pacific	11	36%
Middle East&North Africa	7	43%
Latin America& Caribbean	21	57%
Sub-Saharan Africa	32	88%