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    James Cantrell / World Bank

    Gross Domestic Product (GDP) looks at only one part of economic performance—income—but says nothing about wealth and assets that underlie this income. For example, when a country exploits its minerals, it is actually depleting wealth. The same holds true for over‐exploiting fisheries or degrading water resources. These declining assets are invisible in GDP and so, are not measured.

    Wealth accounting, including natural capital accounting (NCA), is needed to sustain growth. Long‐term development is a process of accumulation and sound management of a portfolio of assets—manufactured capital, natural capital, and human and social capital. As Nobel Laureate Joseph Stiglitz has noted, a private company is judged by both its income and balance sheet, but most countries only compile an income statement (GDP) and know very little about the national balance sheet.

    A major limitation of GDP is the limited representation of natural capital. The depletion of natural capital – including assets like forests, water, fish stocks, minerals, biodiversity and land – poses a significant challenge to achieving poverty reduction and sustainable development objectives. The issue is especially important in developing countries as shown in a World bank publication, The Changing Wealth of Nations 2018. Low-income countries depend on natural capital for 47 percent of their wealth. And yet, in several of these countries, natural capital is being depleted without any corresponding investments in human capital (such as education or health) or produced capital (such as infrastructure), leading to an overall decrease in wealth and a failure to improve standards of living among the poor.

  • Our goal is a world where measuring and valuing the natural resources leads to better decisions for development. We believe that incorporating natural capital into national economic accounts can support better decisions.

    Natural capital accounts (NCA) can provide detailed statistics for better management of natural resources that contribute to economic development. For example, land accounts can help countries assess the value of competing land uses. NCA can help countries rich in biodiversity to design a management strategy that maximizes the contribution to economic growth while balancing tradeoffs among ecotourism, agriculture, subsistence livelihoods and other ecosystem services like flood protection and groundwater recharge.

    The World Bank Group leads a partnership to advance natural capital accounting internationally. The Wealth Accounting and the Valuation of Ecosystem Services (WAVES) partnership aims to promote sustainable development by ensuring that natural resources are mainstreamed into development planning and national economic accounts.

    Building on the experience of the WAVES partnership, the World Bank has developed the new Global Program on Sustainability (GPS) to expand the application of a `sustainability’ lens to decision making in developing countries. Structured around three inter-connected pillars of engagement (information, implementation, and incentives), the GPS will contribute to achieving the Sustainable Development Goals by supporting developing countries’ efforts to manage their natural capital sustainably.

    In implementing GPS, the World Bank will collaborate with partners active in this space, including UN agencies (UNSD, UN Environment, FAO); Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES); Natural Capital Project at Stanford; Global Earth Observation (GEO) Platform; NASA; the European Space Agency; NGOs such as IUCN, WRI, WWF, TNC; academics; and other experts.  The work will be carried out in the context of the System of Environmental-Economic Accounting (SEEA) framework, the UN-sanctioned standard for Environmental data collection and use.

  • From a baseline in 2010 when NCA was mostly limited to high-income countries, WAVES has demonstrated that it is possible to do accounts in middle-income and data-poor countries and use these accounts to inform national development plans and policies.

    WAVES engagement with Botswana, Colombia, Costa Rica, Madagascar, and the Philippines, the initial core implementing countries, ended in June 2016. These countries embarked on natural capital accounting programs endorsed at the highest level of their governments, have institutionalized accounts, are acting as mentors to other countries in the region, and are showing the way on using accounts for monitoring SDGs or their national plans.

    Guatemala, Indonesia and Rwanda joined WAVES as core implementing countries in late 2013. These countries have made important strides toward developing NCA and using them for decision making. For example, Rwanda’s land accounts are informing its national land management system, allowing policy makers to study trends in land use and changes over time. In Indonesia, the ecosystem accounts on peatlands have several policy implications: for example, they can identify areas that can be considered a priority for rehabilitation or can support the National Action Plan to Reduce Greenhouse Gas (GHG) emissions.

    NCA is being used in the monitoring of national plans or SDGs in many countries. The Rwanda WAVES team was asked to contribute to the National Strategy for Transformation. In Indonesia, the information from the accounts, especially land, water, and ecosystems will feed into the system dynamics model being used by the Planning Ministry (BAPPENAS) to calculate the carrying capacity of natural systems to balance economic, social, and environmental goals.

    Among the more senior WAVES countries, Botswana has produced its fourth edition of the water accounts and has been called upon to present the use of its water accounts to the UN Commission identifying monitoring mechanisms for SDGs. With several accounts in place, Costa Rica’s new national plan has a strategic goal on environment sustainability with the expectation that accounts will help monitor the progress.

    In 2017, work started in Zambia, Nepal, and Kyrgyzstan. 

    Five new countries, Uganda, Myanmar, Lao PDR, Cambodia, and Vietnam joined the program in 2018. Uganda, a new core implementing country, has a work program focusing on forests and wetland asset accounts, and on the development of experimental ecosystem services accounts. In addition, the WAVES program will give project-level support (TTA) to four countries in East Asia. These TTAs are focusing on ecosystem accounts (including forests, water, wildlife) and related valuation (Lao PDR and Cambodia), and on coastal ecosystem accounts and scenario analysis (Myanmar and Vietnam).

    WAVES continues its role as a convening force for sharing and contributing to the knowledge and experience on NCA, with a strong focus on influencing policy in countries. The Policy Forum has emerged as the most prominent vehicle on the global stage. In 2018, the Forum welcomed more partners to its organizing committee.


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