Which countries are the ‘wealthiest’?

23 06 2022

Last week I wrote a post about various indices of country-level environmental performance, which I prefaced with a caveat that the data are a few years old.

This week I’m going to discuss national indices of economic performance and prosperity. There are indeed some surprises.

But standard metrics of economic performance at the national level almost universally fail to encapsulate the sustainable economic prosperity of its citizens. One could, for example, simply list the ‘wealthiest’ nations according to simple economic turnover by employing the standard, but wholly unsatisfactory metrics of gross domestic product (GDP) and gross national income (GNI). Even most economists admit that GDP and GNI are dreadful measures of ‘wealth’, and the differences between them are largely immaterial.

Top 5 ‘wealthiest’ nations according to per-capita gross national income: Qatar, Macao, Singapore, Kuwait, Luxembourg.

It is probably easier to view GDP as a speedometer, for it measures the speed with which an economy is contributing to the generation of goods and services (i.e., economic turnover), but it does not measure the loss of biodiversity, ecosystem services, and other environmental assets such as forests and mined resources, it does not measure the build-up of greenhouse gases or hormone-mimicking toxic chemicals, nor does it take depreciation of physical capital in our society’s infrastructure in account. As it turns out, GDP actually rises following environmental disasters such as a major oil spill because of the jobs created to clean up the mess, but it does not measure in any way the economic advantage of growing produce in your garden because the goods are not ‘traded’ in the standard market

Nor does GDP account for the disparity in wealth among a nation’s citizens, so even though most people might be poor, the existence of even a handful of billionaires can in fact raise a country’s GDP. The GDP metric is so unappealing that even the World Bank has tried to come up with better ways to measure wealth. Although it still falls short of measuring true wealth, ‘total wealth’ — measured as the present (discounted) value of future consumption that is ‘sustainable’ — tries to take into account a country’s present wealth minus damage to its non-renewable stock that is currently being exploited unsustainably (e.g., forests). As such, economic policies based on total wealth would be better able to ensure the long-term sustainability of a nation by including the ‘stock’ of existing capital that includes natural capital. 

Top 5 ‘wealthiest’ nations according to per-capita total wealth: Norway, Qatar, Switzerland, Luxembourg, Kuwait.

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Unbounded economic growth destroying biodiversity

16 08 2010

…we can’t have more of everything instantaneously

…increasing takeover of the ecosystem is the necessary consequence of the physical growth of the macroeconomy

…consider telling the economist to go to hell

Herman Daly

© M. Leunig

Last month I had the privilege of listening to Rob Dietz of the Centre for Advancement of the Steady State Economy (CASSE) when attending the 2010 International Congress for Conservation Biology. He introduced the CASSE and their mandate – to promote stable or mildly fluctuating levels in population and consumption of energy and materials. This is the steady-state economy.

I’ve hinted before that our essentially linear economy (natural resource exploitation -> transport -> manufacturer -> redistribution -> sale -> consumption/use -> disposal (discussed in a very easy-to-understand way in the Story of Stuff) is not sustainable in the long term because of the finite resource base of the planet (think trees, coal, oil, arable land). My colleagues and I have even shown analyses based on hard data demonstrating that total wealth is the ultimate driver of environmental degradation at the country scale.

So, it is my opinion (and a growing number of others‘) that we need a new way of measuring economic prosperity, or the world will enter a state of permanent financial crisis. The mantra of constant economic growth is simply unrealistic as our human populations continue to expand. This is a very simplistic statement and on the surface an apparently impossible goal; however, people who put together the CASSE believe it is achievable.

It is for this reason that I have been communicating with Rob Dietz and others at CASSE about reposting some of their excellent essays on ConservationBytes.com. Please feel free to comment here on the subject matter because the CASSE people will be monitoring. I hope we can expand the readership and support base, and eventually start to convince politicians that growth will eventually kill us and a good slice of the planet’s biodiversity.

So with that, here’s the first repost by Professor Herman Daly entitled “Opportunity Cost of Growth“: Read the rest of this entry »

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