2. MISMEASURING OUR LIVES
GDP – Gross Domestic Product
HDI – Human Development Index
List the examples of how we get the two mixed up. Economic growth is a typical example. It is only one of many means to the end of improving well-being.
We believe we understand what motivates the individual – economic rationality. But we know humans act out of emotion (anger, passion, frustration etc)

3. The Right Question
What do we really care about? HUMAN WELLBEING So what do we want to measure and track?

4. Score Card -GDP
Measures only economic production and therefore only material wealth constituent of wellbeing
No social and environmental dimensions
Sustainability- Snap shot in time

5. Interlinkages and Human Well-Being-JSSA.
(Tanaka, 2005)
Level of local nature
Level of physical unhealthiness
Level of mental unhealthiness
Physical
Mental
Source: JSSA 2011

6. Score Card -HDI
Measures health and education in addition to income as constituents of well-being
No environmental dimension
Sustainability- Snap shot in time

7. WE MANAGE WHAT WE MEASURE
KEY PRINCIPLES
VALUES
SUSTAINABILITY
EQUALITY
TRADE-OFFS AND SYNERGIES

8. THE PROPOSITION: INCLUSIVE WEALTH
Point 1: Wellbeing is defined as the discounted flow of present and future generation’s consumption flow. Point 2: The discounted flow is dependent on the capital asset [Productive Base] base of the economy Point 3: Wellbeing increases as long as the CHANGE in the VALUE of the capital asset base is positive

9. IWI: The Coupled System

10. The Capital Asset Base Social Capital Natural Capital Human Capital
Produced Capital

11. INCLUSIVE WEALTH
Value of Assets = Inclusive Wealth Inclusive Wealth is the SHADOW PRICE of the asset multiplied by the QUANTITY STOCK of asset

12. Trade-Offs and Synergies
Substitution between capital assets
Critical Capital Stocks
Inter-dependency among Capitals
Shadow Prices
Rate of Substitution
Externalities

13. Natural Capital Non-Renewable Resources Renewable Resources
Oil, Minerals
Renewable Resources
Ecosystem Services

14. Ecosystem Services
Provisioning
Regulating
Cultural

15. Shadow Prices
Strength and Achilles Heel How do we compute shadow prices? Coupled Systems Modeling

16. IWI
IWI per capita

17. Average annual growth in IWI per capita

18. Average annual growth in IWI per capita

19. Average annual growth in IWI per capita

20. Average annual growth in IWI per capita

21. AVERAGE ANNUAL GROWTH RATES DISAGGREGATED BY NATURAL CAPITAL TYPES

22. ANNUAL GROWTH RATES DISAGGREGATED BY NATURAL CAPITAL TYPES
Agricultural Land
Forest Resources
Minerals
Fisheries
Fossil Fuels
Natural Capital Index

23. KEY DATA SOURCES RESOURCE DATA SOURCE Agricultural Land
Food and Agricultural Organization (FAO)
Fisheries
Sea Around Us Project database (SAUP)
Forest Resources
Fossil Fuels
United States Energy Information Administration (EIA)
Minerals
United States Geological Survey (USGS)

27. Key Findings
Focus on both the aggregate sum of all capitals and each capital
Population growth rate is key for measuring productive base of country
Shadow prices are key to measuring wellbeing and progress.
National accounts need to be revised to reflect all four capitals

28. Key Messages New Yardstick for measuring progress is needed
Wellbeing is multi-dimensional and dependent on the productive base of the economy
Need shadow prices of key ecosystem services