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

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Abstract
Comprehensive wealth accounting defines net investment in natural capital as the change in the stock, yet country-level ESG research has concentrated on flow measures of environmental pressure and left this outcome unexamined. Drawing on the World Bank Sovereign ESG Data Portal, this paper takes the annual change in renewable natural capital per capita, from the Changing Wealth of Nations accounts, as its dependent variable, for 149 to 151 countries between 1995 and 2020. It is explained three times, through parallel equations differing only in the ESG pillar of origin of their regressors, so that the three sets of determinants are estimated as distinct and comparable effects rather than compressed into a composite index. Each equation is developed through panel econometrics across six estimators, a comparison of six clustering algorithms ranked on eleven internal validity indices, and six supervised learners used to validate the specification rather than to predict. Median renewable natural capital per capita falls by 29.7 per cent and its share of comprehensive wealth halves, yet the aggregate stock is roughly constant: the coefficient on population growth is −0.913, indistinguishable from the value implied by the accounting identity, and becomes insignificant on the total stock. The decline is therefore demographic arithmetic. Climatic stress is the most robust environmental determinant, and its coefficient more than doubles when agricultural land is excluded from the dependent variable. Institutional trajectory dominates institutional level, a distinction recovered independently by the clustering. Relationships differ systematically between the two panel dimensions, and the renewable energy share reverses sign across them.

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