Explaining the Decline of Natural Wealth per Capita: A Three-Pillar ESG Analysis of the World Bank Wealth Accounts

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Abstract
Renewable natural capital, one component of the comprehensive wealth whose maintenance per head defines sustainability in wealth accounting, is falling per capita across most of the world. This study asks what the decline records and whether environmental, social and, in particular, governance (ESG) indicators carry information about the asset base once demographic dilution is held constant. Using the World Bank Sovereign ESG Data Portal and the Changing Wealth of Nations accounts for 149 to 151 countries over 1995–2020, it decomposes per capita growth exactly into stock growth and population growth. On a fixed sample of 148 countries, the global stock grew by 5.9 per cent while population rose by 36 per cent, although fisheries, mangroves and timber declined in most countries holding them; within countries, per capita growth is mostly stock change, and across countries, mostly population growth. Joint specifications on a common sample, with pillar equations from six panel estimators as benchmarks, measure what each pillar adds. The environmental pillar carries almost all the incremental within-country information, with climatic stress acting through hydropower. Once demography is held constant, governance adds little information, no more than about two percentage points of explanatory power across countries, and ranking countries by total-stock growth reverses its association with measured sustainability. Per capita criteria should be complemented by total-stock growth and asset-level reporting, since neither measure records stewardship, and governance scores should not be read as proxies for it.

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