This paper argues that using Gross Domestic Product (GDP) alone to measure a country's sustainable development is insufficient. It proposes the Inclusive Wealth Index (IWI), which incorporates natural, human, and produced capital, to provide a more comprehensive assessment. Analysis of 163 countries over 30 years reveals significant losses in natural capital, particularly in low-income countries due to population growth and biased capital investments. The study emphasizes the critical role of natural capital and inclusive capital management for sustainable development and suggests using IWI to guide policy decisions aligned with SDGs and the Paris Climate Agreement.

Shunsuke Managi, Shuning Chen, Pushpam Kumar, Partha Dasgupta