FEATURE STORY

A More Accurate Pulse on Sustainability

June 5, 2013

Adjusted net savings (ANS) measures the real difference between production and consumption; it adjusts gross savings by taking into account investments in human capital, depreciation of fixed capital, depletion of natural resources, and damages caused by pollution. 

STORY HIGHLIGHTS
  • The new edition of the World Bank's Little Green Data Book, released on World Environment Day 2013, includes an adjusted net savings (ANS) indicator for more than 200 countries.
  • Also known as genuine savings, ANS monitors whether depletion of natural capital, such as minerals or forests, is compensated for.
  • A positive ANS indicates that a country is adding to its overall wealth and that its economic growth is on a sustainable path.

For the last decade, Sudan’s oil exports helped create strong economic growth for the strife-torn country of 11 million in north-east Africa. But by the time South Sudan was created in 2011, the economy was in recession. When the World Bank undertook an economic analysis of South Sudan in 2012, it found that the country’s gross national savings were high. But, using an indicator called adjusted net savings (ANS) that captures investments in human capital, depletion of natural resources, and damage from pollution a fuller picture emerged. It became clear that the new country needed to invest more of its oil revenues in education and physical infrastructure like roads and water supply to secure long-term sustainable growth.

Similar analysis using adjusted net savings is helping resource-rich countries like countries such as Ghana, Guinea, Guinea-Bissau, Liberia, Mauritania, Mozambique, and Sierra Leone, among others. 

Today, the World Bank published the ANS indicator for more than 200 countries in the Little Green Data Book, the World Bank’s annual compilation of environment data. Also known as genuine savings, ANS monitors whether depletion of natural capital, such as minerals or forests, is compensated for by investment in other assets, such as human capital or infrastructure. 

A positive ANS indicates that a country is adding to its overall wealth and that economic growth is on a sustainable path. While East Asia region is doing well with a positive ANS, many countries in the Sub-Saharan region continue to struggle. 

Open Quotes

As the global community decides on goals related to water, energy access or food, better information on the state of natural resources becomes vital. Success on these goals is underpinned by the health of natural resources and environment. Conventional indicators like GDP do not have this information. Close Quotes

Juergen Voegele
Director, Agriculture and Environmental Services, World Bank

Releasing the Little Green Data Book 2013 on World Environment Day, Juergen Voegele, World Bank Director for Agriculture and Environmental Services, said an indicator like ANS is critical to the ongoing post-2015 development dialogue. 

"As the global community decides on goals related to water, energy access or food, better information on the state of natural resources becomes vital. Success on these goals is underpinned by the health of natural resources and environment. Conventional indicators like GDP do not have this information," said Voegele.  

Ability to inform the post-2015 development agenda

The process for Sustainable Development Goals (SDGs) was launched when leaders from around the world gathered in Rio de Janeiro in June 2012 for the United Nations Conference on Sustainable Development (Rio +20). These goals are expected to define the post-2015 agenda, building on the Millennium Development Goals. Issues currently being discussed for SDGs cover the three pillars of sustainability — economic, social, and environmental.

Yet, many countries do not have the information they need on the state of their environment and natural resources — whether in terms of GDP or from other conventional indicators. Increasingly, they need a new generation of metrics to monitor sustainable development at the macroeconomic level. Following Rio+20, the first report of the High-Level Panel of Eminent Persons on the Post-2015 Agenda (chaired by the presidents of Indonesia and Liberia and the prime minister of the United Kingdom) released last week, identifies the need for better indicators to measure progress on goals as well as better data on natural capital. 

Adjusted net savings (ANS) could be one such indicator providing a new lens on growth and development. "The ANS is a policy-sensitive indicator that provides an early warning signal to policy makers about the sustainability of their country’s economic growth path, allowing them to make corrections as needed," said Glenn-Marie Lange, World Bank program manager for Wealth Accounting and Valuation of Ecosystem Services (WAVES).  

Growing demand for green growth that can be measured

In the past, ANS was used in some countries, like Ghana, Ecuador, Egypt, and Indonesia, to show the value of natural resource assets and assess the cost of degradation and the consequent loss to GDP. This helped strengthen the World Bank’s dialogue with countries about economic growth and sustainable development strategies.

Increasingly, countries want and need greener and more inclusive growth, as well as better ways to measure it. Several countries are working with WAVES, a World Bank-led global partnership, to include the value of natural capital in their national accounts and economic decision making. 

In April 2013, more than 35 finance, development and planning ministers came together at a High-Level Ministerial Dialogue in Washington, D.C., to find out how they can better construct natural capital accounts to help answer their key policy challenges. 

In addition to ANS, the Little Green Data Book has data on other key sectors such as agriculture, forests and biodiversity, energy and emissions, water and sanitation, environment and health and oceans.