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Natural Capital Accounting

Measuring What Matters: Acknowledging Nature’s Role in the Global Economy

Russ Mittermeier's picture
Countries Go Beyond GDP to Make Natural Capital Count for Development

“Accounting” may not be a word that gets many pulses racing. But what if I told you that a new kind of accounting — called natural capital accounting — could revolutionize the way the world’s nations assess and value their economies?
 
Currently, gross domestic product (GDP) is the most widely used indicator of a country’s economic status. But while this number places a value on all the goods and services produced by that economy, it doesn’t account for its “natural capital” — the ecosystems and the services they provide, from carbon sequestration to freshwater regulation to pollination.

A Wave of Commitments for Ocean Health

Valerie Hickey's picture


The Global Oceans Action Summit closed not with a call for action as is so typical of conferences these days, but with a series of very real and resourced commitments to shared and urgent action.Hosted by the Government of the Netherlands, this summit convened around the consensus goal of healthy oceans, and brought the public and private sectors, civil society actors, local communities and even local Dutch fisherfolk to the table. Diverse groups came together to talk, listen and make commitments.

An Accounting System Worthy of Earth Day: Natural Capital Accounting

Rachel Kyte's picture
When presidents, prime ministers, and government ministers of more than 60 nations put their countries’ names behind natural capital accounting last year at Rio+20, something shifted. Countries wanted a better way of measuring progress that went beyond GDP and factored in nature and its services.

Clearly that was no flash in the pan. Last week, I chaired a high-level ministerial dialogue on the margins of the IMF-World Bank Spring Meetings where government ministers and senior representatives of more than 40 countries came together to compare notes on how natural capital accounting is working for them.

Country after country – represented by finance, development, or environment ministers – talked about how natural capital accounting fit their countries’ priorities and how it could be a tool to address some of their key policy challenges. With each statement from the floor, it was clear that natural capital accounting is no longer an academic concept. It is alive and well and being utilized across the world in developing, middle, and high-income countries.

Farewell World Bank. You’re on the Right track. And you have a Big Job Ahead!

Andrew Steer's picture


Andrew Steer in Indonesia

Today is my final day at the World Bank.

When I first entered the doors of 1818 H Street three decades and seven Presidents ago, the big buzz in the cafeteria was Cost Benefit Analysis and Basic Needs. President McNamara had  demanded that every project document identify in detail how many of the poorest 25% it would directly and indirectly benefit, and how. The secret to rapid career progress was expertise in shadow pricing (which was appropriate in light of the massive distortions in goods, labor, currency and capital markets in most of our client countries).

But those shadow prices certainly didn’t include the value of environmental externalities. The entire cadre of environmental specialists for the whole institution consisted of one person. (It wasn’t me.)

Last week at the Rio+20 Conference I met up with an old friend, Emil Salim, who for many years was the longest serving Environment Minister in the World, and is still, well into his eighties,  chief environmental advisor to President Yudhoyono of Indonesia. We reminisced about a meeting he and I were at in 1982, when he asked the President of the World Bank for help in dealing with the acute environmental problems associated with Indonesia’s rapid growth. The polite reply he received was “The World Bank is a development agency, not an environment organization. We don’t do this kind of work.”

The wisdom of children...and prophets

Andrew Steer's picture

UN Photo/Maria Elisa Franco

We’re changing planes in Panama on our way to the Rio+20 Earth Summit.  As we taxi out to take off the pilot tells us that we’ll need to wait for 15 minutes while we burn off 300 pounds of fuel, since the plane may be too heavy to take off.

My 11 year-old daughter, who is sitting next to me, says “Isn’t this very silly? It’s wasteful and bad for the climate. Why do they do it?” 

We’ve brought Charlotte, together with her 10 year old brother, Ben, on this trip so they can see how country leaders struggle with the big issues, and also because they ask the right questions, and help keep us grounded. I explained to her that the fuel on international flights is totally untaxed by international agreement, and that subsidies on fossil fuels amount to over $400 billion each year, including over $70 billion in rich countries. And that governments spend more than 20 times more paying people to consume more fossil fuels than they spend on research to develop renewable energy.

“That’s stupid”, says Ben, who is not as polite as his sister. It’s like telling your kids not to smoke, and then paying them each time you see them smoking.

They’re right, of course. And one of the rare bright spots in Rio was the airtime given to fossil subsidies by civil society and the private sector. The B20 (the business shadow of the G20) Working Group on Green Growth, of which I am a member, urged G20 leaders to publish subsidy levels each year, and set a time-bound schedule for their elimination. Not so easy for political leaders to grasp this nettle, of course, having seen several countries, most recently Nigeria, find their efforts to raise energy prices hit with violent opposition. I discussed with Charlotte how smart politicians, such as in Indonesia and Iran, have found ways to use a share of the revenues saved to provide cash compensation to the poor. “Makes sense”, she said.

How a Week in Rio Leads to an Active Monday Morning

Rachel Kyte's picture

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What will you do Monday morning to start making a difference? UN Photo/Maria Elisa Franco

We came to Rio+20 determined that one outcome of the UN Conference on Sustainable Development must be a plan for what ministers of finance, development and environment and ourselves need to do differently Monday morning, June 25th  – if we are to achieve sustainable development for all. 

We have our plan.

We came to Rio+20 knowing that inclusive green growth is the pathway to sustainable development, and the evidence here is that this international community agrees. 

The analysis behind the World Bank’s report Inclusive Green Growth: The Pathway to Sustainable Development framed many of the conference debates and helped facilitate a new focus on natural capital accounting – a fundamental component of inclusive green growth.

According to the 59 countries, 86 companies, and 17 civil society organizations that supported the World Bank Group-facilitated 50:50 campaign – as well as many others – natural capital accounting is an idea whose time has come.   

In fact, natural capital accounting events filled the Rio Convention Center, and government and civil society groups alike highlighted the importance of moving beyond GDP.

This new energy and emphasis around this issue may be the most important outcome of Rio+ 20. 

Rio's Buzzing About Natural Capital Accounting

Rachel Kyte's picture

Only a very short time ago, we were drawing blank looks when we mentioned "natural capital accounting." This week at Rio, everyone is talking about it. Walls are plastered with flyers about it.  And our event on it yesterday drew such a crowd it was standing-room only.

With three presidents, two prime ministers, one deputy prime minister, a host of ministers, top corporate leaders and civil society groups in the room, we announced that the 50:50 campaign to get at least 50 countries and 50 companies to commit to acting on natural capital accounting was a success. The latest tally: 59 countries, 88 private companies, 1 region, and 16 civil society groups signing on to the Gaborone Declaration, recommitting to other natural capital initiatives, or agreeing to join forces with this movement.

Rio+20, une scène internationale

Rachel Kyte's picture

Cette semaine, la ville de Rio de Janeiro va se transformer en scène internationale pour accueillir des dizaines de milliers de participants à la Conférence des Nations unies sur le développement durable.

Cette grande scène mondiale qu’est la conférence Rio+ 20 va permettre à ceux qui souhaitent agir — acteurs publics, du secteur privé et de la société civile — de montrer comment il est possible d’accélérer les progrès à condition de changer nos modes de croissance.

Rio +20: A Global Stage

Rachel Kyte's picture

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Earth Summit 1992. UN Photo/Michos Tzovaras
Photo: The scene at the 1992 Earth Summit in Rio de Janeiro, where the conference adopted the Rio Declaration on Environment and Development and the Agenda 21 programme of action, among other actions. UN Photo/Michos Tzovaras.


This week, the city of Rio de Janeiro will become a global stage, home to tens of thousands of people attending the UN Conference on Sustainable Development.

Rio+ 20 is an important global stage upon which those committed to action from government, the private sector, and society can show how they plan to demonstrate that we can accelerate progress, if we change the way we grow.

We need a different kind of growth, a greener and more inclusive growth. We think it is affordable with help to those for whom upfront costs may be prohibitive. We think we should be able to value natural resources differently within our economic model. We think that with the right data and evidence we can avoid the irreversible costs of making wrong decisions now. And we can have economic systems that are much more efficient.

Following Up on Our Rio +20 Live Chat

Rachel Kyte's picture

Rachel Kyte on the Live Chat

I enjoyed talking with everyone who signed into the live chat this week. If you missed it, you can catch up with the conversation at World Bank Live.

We talked a lot about the importance of moving beyond GDP to a more holistic way of measuring development that incorporates the value of natural resources. We also discussed inclusive green growth as the path to sustainable development, the need for better oceans management, expectations for Rio +20 – the UN Conference on Sustainable Development – and what people want to see in any sustainable development goals (SDGs) that emerge from the conference.

The hour flew by, and there were several questions that I didn’t have time to get to. I’d like to address some of those now.


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