The pollution problem in South Asia is now impacting wealth generation, a WB study reports.
South Asia, air pollution, loss of human capital - new World Bank report
- The story: The World Bank released its "Changing Wealth of Nations" (CWON) report which says environmental degradation is leading to a decline in overall wealth. South Asia suffers the most among all regions of the world in terms of loss of human capital due to air pollution. CWON 2021 presents the world’s most comprehensive accounts to date of the wealth of nations that comprise not only what was made by people (produced capital) but also the wealth embedded in people themselves (human capital), and the wealth offered by nature (natural capital).
- What report says: The latest 2021 edition of this periodic report measured wealth creation and distribution in 146 countries covering a 20-year period from 1995-2018.
- It included gross domestic product, human-produced capital, human capital and natural capital like renewable and non-renewable natural resources in its measurement of wealth. The Bank defines human capital as “earnings over a person’s lifetime.”
- Human capital was “the largest source of worldwide wealth, comprising 64 per cent of total global wealth in 2018,” the report said. “Middle-income countries increased their investment in human capital and in turn, saw significant increases in their share of global human capital wealth.”
- Human capital in south Asia accounts for 50 per cent of the region’s wealth. This did not change during the survey period —1995-2018. It shows the importance of a healthy workforce.
- Air pollution the bugbear: But air pollution was taking a toll on this significant wealth generator. South Asia as a region was the most severely affected by the estimated loss of human capital due to air pollution. The report did not quantify such a loss in human capital due to air pollution for any other region.
- South Asia has increased its wealth since 1995. But still, its per capita wealth is among the lowest in the world, comparable to sub-Saharan Africa. “Due to population growth in the same time period, per capita wealth remains among the lowest in the world.
- Over 80 per cent of the region’s wealth was attributed to men, indicating a huge gender disparity in human capital and its contribution to national wealth. The report said globally, wealth had increased during the two decades. In fact, middle-income countries were catching up fast with high-income ones in wealth generation.
- But growing prosperity has been accompanied by unsustainable management of some natural assets. Low- and middle-income countries saw their forest wealth per capita decline eight per cent from 1995 to 2018, reflecting significant deforestation.
- Unequal wealth creation: This wealth creation, arguably the best in recent decades, has not been equal. Low-income countries’ share in global wealth is below 1 per cent, a level which has remained the same for decades. These countries account for 8 per cent of the world’s population. The survey found that countries that depended more on natural resources were also reporting a decline in wealth due to the degradation of resources.
- Over a third of low-income countries saw declining wealth per capita.
- Countries with declining wealth also tend to be degrading their base of renewable natural assets. For low-income countries, appropriately managing renewable natural capital, which accounts for 23 per cent of their wealth, remains crucial.
- Summary: The Changing Wealth of Nations 2021 (CWON 2021) finds that human material well-being is under threat: from unsustainable exploitation of nature, from mismanagement and mispricing of the assets that make up national wealth, and from a lack of collective action at local, national, and regional levels. CWON 2021 provides the data and analysis that can promote a more sustainable approach to prosperity and help policy makers navigate these challenges. The report draws on a unique global asset database that allows detailed examination of the underlying value of a nation’s wealth, taking into account human, produced, and natural capital and noting where assets are being managed sustainably or unsustainably.
- EXAM QUESTIONS: (1) Explain how man-made economic systems are now threatening his own well-being, as seen from the ecological perspective. (2) Explain how air pollution is now impinging on wealth creation processes.
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