Authors

Dr. Giles Atkinson
Matthew Agarwala
Dr. Pablo Muñoz

Reference

Atkinson, G., Agarwala, M. and Munoz, P. (2012). Are national economic (virtually) sustainable?: an empirical analysis of natural assets in international trade. In UNU-IHDP and UNEP. Inclusive Wealth Report 2012. Measuring progress toward sustainability. Cambridge: Cambridge University Press.

Key Messages from Chapter

This chapter explores the impact of international trade on sustainable development and the measurement of genuine (or adjusted net) savings at both the global and domestic levels.

The chapter draws crucial distinctions between production- and consumption based approaches to measuring changes in inclusive wealth, as well as between the notions of domestic and global sustainability, where the latter is defined in terms of the global genuine savings rate.

By looking only at per-country inclusive wealth accounting, we potentially weaken our understanding of global performance. The chapter addresses this by examining how changes in resource wealth are embodied in internationally traded goods and services.

Specifically, the chapter uses a disaggregated multi-regional input-output model (MRIO) to measure the value of resource depletion and the social costs of carbon emissions in the context of international trade.

The term “virtual sustainability” is introduced here as a way to consider the implications of trade and the role of consumption in understanding a country’s contribution to global sustainability.

Our empirical findings indicate that the magnitudes of the (change in) natural assets embodied in trade can be substantial, both in dollar value terms and in relation to national economies. This could challenge both the conventional thinking on sustainability and the claims of progress made on this front by individual countries.