Natural Capital, Total Wealth and Sustainable Development in Namibia

Abstract

A country's income and economic well-being depend on its wealth, where wealth is defined in the broadest sense to include produced, natural, human and social capital. Recognising this, international agencies have begun to shift their emphasis from economic development as Gross National Product (GNP) growth to economic development as a process of `portfolio management' that seeks to optimise the management of each asset and the distribution of wealth among different kinds of assets. In resource-rich economies such as Namibia, building national wealth requires that natural capital be transformed into other forms of capital. However, there has been growing concern that economic growth, especially in resource-rich developing countries, has been achieved by liquidation of natural capital without adequate provision for replacement of these assets for future generations. Several studies have attempted to measure total national wealth or changes in wealth but have been seriously hampered by a lack of data, especially for natural and human capital. Using newly available accounts for natural capital in Namibia, total national wealth accounts are constructed and used to assess its development paths, comparing it to its neighbour, Botswana, for which total wealth are also available, albeit not for as long a time series. In Namibia's pre-independence period (before 1990), there was significant liquidation of capital, natural and produced. With new policies and a new investment environment since independence, Namibia has slowly started to rebuild its national wealth although per capita wealth has not recovered to the level of 1980.