Inclusive Wealth as a Metric of Sustainable Development

Inclusive wealth is a measure designed to address whether society is on a sustainable development trajectory. Inclusive wealth is defined as the aggregate value of all capital assets. Increases in inclusive wealth indicate an improved productive base capable of supporting a higher standard of living in the future. To be truly inclusive, measures of inclusive wealth must include the value of all forms of capital that contribute to human well-being: human capital, manufactured capital, natural capital, and social capital. Sustainability concerns have increased attention on the ways of measuring the value of natural capital. We review various attempts to measure natural capital and to incorporate these into inclusive wealth including estimates using national wealth accounts and integrated ecological and economic models used to estimate ecosystem services. Empirically measuring the value of various types of capital in terms of a common metric is hugely challenging, and no current attempt to date can be said to be fully inclusive. Despite the empirical challenges, inclusive wealth provides a clear, coherent, and systematic framework for addressing sustainable development. Combining measures of semi-inclusive wealth that capture forms of capital that can be relatively easily measured in monetary terms with a set of biophysical metrics capturing important aspects of natural capital that are difficult to measure in monetary terms may provide a good set of signals of whether society is proceeding along a sustainable development trajectory.