The Bennett Institute for Public Policy has issued a new report highlighting how different indicators of wealth, including social trust, natural resources and stable climate, are urgently needed for governments to make informed policy decisions.
New report from Cambridge’s Bennett Institute urges transition to economies based on true measure of current and future wealth
Funded by international investment business, LetterOne, the Wealth Economy report argues for economies to move beyond metrics of GDP to a dashboard of six critical assets: physical, financial, intangible, human, natural and social capitals. The new report focused on natural capital, climate and social capital – it has released first findings on the link between social trust and productivity growth, and the countries in line to receive more damages from climate change and resource depletion.
The project is directed by Diane Coyle, Bennett Professor of Public Policy at Cambridge. She comments: “This report makes the case for policymakers to take a broad approach to economic progress by looking at the full range of assets underpinning growth, including social and natural capital. This requires the rapid collection and assembly of comprehensive wealth figures by national statistical offices to provide a coherent and comprehensive dataset capable of informing policymakers. These should be integrated with conventional GDP statistics in the forthcoming revision of the national accounting system. Currently, the condition of vital assets is effectively invisible.”
Climate examples highlighted include Australia and Brazil. Brazil’s production based emissions are only 1.3% of the global total, yet it is expected to suffer 14%-30% of the global damages from climate change. This provides a direct and immediate incentive for Brazil to lobby for strong international action to reduce emissions. Australia faces a similar fate, with per capita damages 12 to 24 times that of the global average citizen.
Research was led by economists Dimitri Zenghelis and Dr Matthew Agarwala.
Dimitri comments: “Now is the time to change the way we view our economies so as to fully account for all the wealth that surrounds us. Over the next 10-15 years, the world is expected to invest about $90 trillion in infrastructure, more than the estimated value of the existing stock. In tandem, it is estimated that between two thirds and four fifths of global proven and possible fossil fuel reserves will need to remain in the ground if the world is to have a 50-80% probability of keeping global warming below 2 °C. This means almost all new fossil fuel related infrastructure will need to be prematurely scrapped or subject to costly retrofitting. Meanwhile, natural capital will be preserved and new assets will be created. Change is already underway, and governments need to be ahead of the curve.”
The Wealth Economy team will be releasing a series of research papers this year on its findings, ahead of the major climate policy events of 2020.
Matthew Agarwala said: “21st century growth will need a broader perspective, encompassing social and environmental impacts at all scales.”
The University of Cambridge is acknowledged as one of the world's leading higher education and research institutions. The University was instrumental in the formation of the Cambridge Network and its Vice- Chancellor, Professor Stephen Toope, is also the President of the Cambridge Network.