Tracing the Evolution of Natural Capital in Global Sustainability Metrics: The Advance of Inclusive Wealth

Natural capital defines planetary boundaries and provides a basis for sustainable development. This study reviews previous theoretical developments and confirms that natural capital accounting within the Inclusive Wealth (IW) framework provides a robust link between current capital assets and intergenerational well-being. This study contributes to the literature by combining theoretical advances with practical applications to address criticisms of empirical practice and improve the reliability and scope of cross-country natural capital accounting. An analysis of natural capital levels and changes in 163 economies over the past 30 years reveals significant regional disparities in the decline of global natural capital. In low-income countries, consumption driven by population growth and primary production patterns is severely depleting renewable natural capital. In middle-income countries, urbanization exacerbates natural capital depletion by substituting other forms of capital for natural capital. The wealth status of major G20 economies points to intensive environmental costs and loss of ecosystem services under technological progress, which ignores public ecosystem externalities. This study demonstrates the urgency of natural capital depletion awareness in the management of all economies and highlights the ability of natural capital accounting within the IW framework to inform policy decisions on sustainable growth.