NC is natural capital – as other economic indicators rise, the environment suffers Courtesy: The World Economic Forum

The Inclusive Wealth Index also helps policy-makers prepare to negotiate for reductions in greenhouse gases as well as for compensations accruing from climate change. Further, past reports have shown conclusively how countries can become unsustainable in absolute terms when population growth is factored into the computation. Understanding the impact population growth has on productive bases is a critical variable that leaders should factor into policy-making.

So analytic progress has been made, but there is still need a need to bring all five elements of prosperity – financial produced, natural, human and social capital – into one framework.

A new Canadian report does this.

Canada’s Comprehensive Wealth project adds one number for evaluation and policy-making on top of GDP: a per capita sum of the five elements of prosperity. It draws on data from Statistics Canada – one of the finest statistical organizations in the world – which measures many elements of prosperity separately, to varying degrees of depth.

The report raises several red flags, most notably that Canadians’ comprehensive wealth only grew at an annual average rate of 0.2% from 1980 to 2015. In contrast, GDP grew at an annual average rate of 1.31% over the same period. In other words, the good GDP results of Canadians don’t have a strong foundation reflecting growth in earning potential, sustainable natural stocks, and diversified financial and produced capital.

There’s room for this study to grow in depth and breadth. The Canadian federal government should direct Statistics Canada to regularly report the country’s comprehensive wealth score.

People deserve an accurate sense of how well their economies are performing, with a view to long-term sustainability. GDP has and always will have valuable short-term insights, but to respond to 21st-century pressures we need a modern economic measure. Canada can lead the world as the first nation to adopt comprehensive wealth, making a commitment to the knowledge that empowers meaningful action.