Ever since 1987, when the famous UN report entitled "Our Common Future" was first introduced, the concept of "sustainable development" emerged as an elusive concept with no or little operational definitions.
Several studies were conducted to determine what indicators are specific for sustainable development. The majority of economic indicators applied in the global economic analysis cycle do not cater for the depletion of natural resources, pollution and human resources.
It has been clear for several economists and environmentalists that the classical dichotomy between economics and environment should be modified and that new sets of economic indicators should be created to tackle the currently unmonitored rates of resource depletion and environmental degradation.
The World Bank has embarked on using new and deep economic analysis tools to integrate its economic evaluation indicators into environmental concerns and reach a point were true sustainable development indicators will be applied.
The classical economic indicators include Gross Domestic Product (GDP) - the total value of production in an economy - and the Gross National Product (GNP) -GDP plus net factor income from abroad.
Countries were ranked by their GNP per capita and this criteria was used to divide the countries of the world into four main categories: low income (under $ 750 per capita), lower middle income (about $750-$2900), upper middle income (about $2900-$9000) and high income (more than $9000).
More recently, several new approaches have been developed to help address the inherent shortcomings of GDP and GNP measures. These include the development of "green national accounts" that take into account the role of the stocks as well as the flows of renewable and nonrenewable resources. Green GNP is the informal name given to national income measures that are adjusted for the depletion of natural resources and degradation of the environment. This type of adjustment that must be made to standard GNP includes measuring the user costs of exploiting natural resources - the change in value of a phosphate mine as a result of extracting, for example - and valuing the social costs of pollution emissions.
One other important economic policy concept elated to sustainable development is the "genuine saving". This represents the value of the net change in the whole range of assets that are important for development: produced assets, natural resources, and foreign assets.
Human resources are also crucial components of the environmental wealth since it represent a potentially renewable resources with high exploitation momentum.
The World Bank has determined the wealth per capita estimates for 100 countries. The highest rank ($300,000-400,000) was shared by countries such as the USA, Switzerland, Canada, Japan and Norway.
Jordan was categorized within the $50,000-$75,000 range, along with countries like Namibia, Ecuador, Paraguay, Indonesia, Peru, Morocco and Egypt.
This estimate reflects the environmental and human resources together.
Measuring the total wealth of a country involves several assumptions and educated guesses. It is usually the sum of each of the following components:
1. Minerals and fossil fuel: which are valued by taking the present value of a constant stream of resource-specific rents (the gross profit of extraction and return of capital) over the life of the proved reserve.
2. Timber: valued as the present value of an infinite stream of constant resources where the rate of harvest is less than the annual growth. Where timber harvest is non-sustainable, because harvest exceeds growth, a reserve life is calculated and the timber resource is treated the same manner as minerals.
3. Non-timber benefits of forests: these are valued by assuming that 10 percent of forest area will yield an infinite stream of benefits in the form of non-timber products, hunting, recreation and tourism. Per hectare values for non-timber benefits vary from $112 to $145 in developing and developed countries.
4. Cropland: valued as an infinite stream of land rents, where land productivity is projected by region up to the year 2025 and held constant thereafter. Individual rental rates for rice, wheat and maize are multiplied by production values at world price to arrive at per-hectare unit rents for cereal lands, other arable land is valued at 80 percent of this rate.
5. Protected areas: valued at their opportunity cost and income from ecotourism.
6. Human resources: include valuing financial returns of labor.
The World Bank assessment found that the Middle East has a total wealth of $150,000 per capita, coming fourth in regional classification after North America ($326,000), Pacific OECD ($302,000) and Western Europe ($237,000).
In the Middle East, human resources comprise $65,000 (43 percent), Produced assets comprise $27,000 (18 percent) while natural resources, mainly oil, comprise $58,000 (39 percent).
In North America human resources constitute 76 percent while natural resources constitute 5 per cent. Western Europe is even more drastic with natural resources comprising only 2 percent in comparison to 74 percent for human resources.
Specifically to Jordan the per capita wealth is $1020. Of this value pastureland comprises $260 (26 percent), Cropland comprises $360 (35 percent), Protected Areas comprise $100 (9 percent) while subsoil assets comprise $300 (29 percent).
This estimation might not sound exciting for most environmentalists and is considered highly hypothetical and based on assumptions, but it is a first step towards a more straightforward and simple economic evaluation of environmental resources and wealth of countries. The accelerating trends of globalization and free trade have put a certain pressure on countries to check for their share in environmental degradation in economic figures.
The missing theme in this World Bank estimation is the economic value of the need to rehabilitate polluted sites. In several cases around the world pollution incidents have occurred due to lack of proper planning and large amounts of money was spent on rehabilitating polluted areas.
It is well understood globally that classical economic indicators are falling short of providing a real estimate of sustainable development. The shift towards greener economic indicators will prove very helpful in understanding the full range of environmental economics.
The writer is the Program Development Officer at the IUCN (World Conservation Union) National Office in Amman. ― (Jordan Times)
By Batir Wardam
