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

By Jitendra
Published: Thursday 19 June 2014

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

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%

Regional wealth

The table above indicates a direct correlation between resource depletion and development: the more developed a region is, less is the depreciation of its wealth. Europe and Central Asia, for example, have witnessed less wealth depreciation, whereas Sub-Saharan Africa and middle and north Africa are facing high wealth depreciation.  

Juergen Voegele, the World Bank director for agriculture and environmental services, said that this kind of data would help countries to identify fragile areas of their growth.

“The measurement will allow both the World Bank and policymakers in our client countries to identify some of the threat to sustainability of economic growth and poverty before it is too late to reverse trend,” he said.

Report: The little green data book 2014

Report: World development indicators 2014

Report: 2014 Environmental Performance Index

Statistics: Compendium Of Environment Statistics India 2013

Report: Global economic prospects 2014

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