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Comparing the methodologies of selected natural capital components of various wealth accounting protocols

Student name: Ms Komal Juneja
Guide: Dr Nandan Nawn
Year of completion: 2021


The escalating effect of anthropogenic actions on the environment has brought our attention to not only various services and goods provided by the environment but also to the pressing need to make the beneficiaries accountable and pay for these services. There has been a common acknowledgement of the inability of GDP to account for natural capital. It has led to the formation of the Inclusive Wealth Index and Comprehensive Wealth Index. Both provide a broader framework by accounting for human, natural and produced capitals. Though various kinds of indicators came in between, only these two indices incorporated these three forms of capital and presented them as a single number. Such inclusion also helps to provide answers to various trade-offs associated with simultaneous gains and losses across the three capital stocks. The net impact in terms of increase or decrease provides a signal to policymakers about whether they should pursue a given policy or not and/or need to make some amendments in the policy. This study aims to compare the natural capital component of both the indices and identify what all should be considered for establishing linkages vis-à-vis selected ‗Sustainable Development Targets (SDTs)‘ and ‗Nationally Determined Contributions (NDCs)‘. The trends between the selected natural capital components of both indices are compared for India. The contrasting trends are attributable to both the scope and the methodology followed by these indices. The study provides a list of SDTs and NDCs that can be directly linked with these trends. A caution is maintained for making various interpretations as these trends are only indicative.

Key Words: Comprehensive Wealth Index, Inclusive Wealth Index, Nationally Determined Contributions (NDCs), Sustainability, Sustainable Development Targets (SDTs)