INCLUSIVEWEALTH OFPAKISTAN:
The Case for Investingin Natural Capitaland Restoration

Report Director:
Pushpam Kumar, United Nations Environment Programme, Nairobi
Authors:
Shunsuke Managi, Urban Institute at Kyushu University
Moinul Islam, Urban Institute at Kyushu University
Bingqi Zhang, Urban Institute at Kyushu University
Amelia Holmes, United Nations Environment Programme, Nairobi
Muhammad Khurshid, former DG, South Asia Cooperative Environment Programme
Reviewers:
Jamil Ahmad, United Nations Environment Programme, New York
Barney Dickson, United Nations Environment Programme, Nairobi
Andrea Hinwood, United Nations Environment Programme, Nairobi
Paulo Augusto Lourenço Dias Nunes, Food and Agriculture Organization of the United Nations, Rome
Susan Mutebi-Richards, United Nations Environment Programme, Nairobi
Unai Pascual, Basque Centre for Climate Change (BC3) , Spain
Doreen Robinson, United Nations Environment Programme, Nairobi
Ashbindu Singh, Environmental Pulse Institute, Washington, D.C.
Francesco Tubiello, Food and Agriculture Organization of the United Nations, Rome
Data collection and support by
Aysha Rabia, B.S. Department of Environmental Sciences, University of Northampton, UK.
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Inclusive Wealth of Pakistan: The Case for Investing in Natural Capital and Restoration
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Inclusive Wealthof Pakistan:
The Case for Investingin Natural Capitaland Restoration

GLOSSARY OF TERMS AND REFERENCES MAY BE INCLUDEDHC

Human CapitalIW

Inclusive Wealth

IWI

Inclusive Wealth Index

NC

Natural Capital

PC

Produced Capital

LIST OF FIGURES
Figure 1: The steps for scaling up and mainstreaming the use of inclusive wealth
Figure 2: TBTT Afforestation, Current Achievement and Future Scenario
Figure 3: Billion Tree Tsunami Targets – Achieved plantation as yet
Figure 4: Contribution of produced capital, human capital and natural capital to the inclusive wealth of Pakistanfrom 1992 to 2019
Figure 5: Composition and share of inclusive wealth of Pakistan in (a) 1992 and (b) 2019; (c) Shares of produced capital,
human capital and natural capital in inclusive wealth from 1992 to 2019.

LIST OF TABLES
Table 1a: Billion Tree Afforestation Project in Khyber Pakhtunkhwa.
Table 1b: Billion Tree Tsunami Targets – Achieved plantation as yet.
Table 2: Growth rate of inclusive wealth, produced capital, human capital and natural capital in Pakistan.
Table 3: Growth rate of renewable and non-renewable resources in Pakistan.
Table 4: Share of produced capital, human capital and natural capital in the inclusive wealth of Pakistan.
Table 5: The shadow prices for ecosystem types.
Table 6: Value of different types of natural resources, based on remote sensing land cover data.
Table 7: Annual growth rate of the natural resources.
Table A1: Land cover types and land-use classification.

4

CONTENTS
Forewords.......................................................................................................................................................................................7
Executive summary......................................................................................................................................................................11
1. Introduction................................................................................................................................................................13
2. Economy of Pakistan..................................................................................................................................................17
3. Environmental pressures in Pakistan.........................................................................................................................21
3.1 Previous trends in natural capital according to IWI.............................................................................................................22
3.2 Pathways to improvements and restoration efforts............................................................................................................22
4.Inclusive wealth of Pakistan at the national level.........................................................................................................27
4.1 Stock of inclusive wealth at the national level.....................................................................................................................27
4.2 Growth of inclusive wealth at the national level...................................................................................................................29
5. Inclusive wealth of Pakistan at the regional level........................................................................................................31
5.1 Inclusive wealth at the grid level...........................................................................................................................................31
5.2 Human capital at the grid level.............................................................................................................................................31
5.3 Produced capital at the grid level..........................................................................................................................................31
5.4 Natural capital at the grid level.............................................................................................................................................32
5.4.1 Renewable natural resources.............................................................................................................................................32
5.4.2 Land cover...........................................................................................................................................................................33
5.4.3 Non-renewable resources..................................................................................................................................................35
5.5 Growth of inclusive wealth overall at the grid level..............................................................................................................35
5.6 Inclusive wealth of Pakistan at the province level...............................................................................................................35
6. Summary of findings..................................................................................................................................................37
7. Conclusion.................................................................................................................................................................39
8. References.................................................................................................................................................................43
9. Annex.........................................................................................................................................................................47

5

FOREWORD

COVID19 has tragically revealed that a business-as-usualapproach will not take us to a world of living in harmony
with nature. We need a fresh approach to measureprogress and sustainability. It is time to adopt a newparadigm that recognizes the comprehensive value ofnature and understands that quality of life and well-being
cannot be measured adequately through gross domestic
product (GDP) alone. Our current linear way of thinking– where we use and discard with a blink of an eye – as thehealth of natural capital like forests, topsoil and marine life
continues to erode – will simply not work anymore. Yet, it
is our collective responsibility to ensure that eachgeneration leaves behind at least as much of a productive
base as it has inherited from its predecessor. How does
one therefore measure a productive base in a way that
ensures sustainability?
Nature is fundamental to the existence and flourishing of anation’s economy. Measuring the stock of wealth in amanner that includes natural capital is key to tracking
sustainability and well-being of the nation. I am delighted
that the Ministry of Climate Change of Pakistan and theUnited Nations Environment Programme have released anassessment of the inclusive wealth of Pakistan between
1990 and 2019. The Report estimates that while wealthand income in Pakistan has increased, its natural capital– as in other parts of the world – has deteriorated.
However, as the Report also notes, the recent restoration
work undertaken by Pakistan has halted the decline innatural capital since 2018.
An economy’s inclusive wealth is such because it
accounts for the value of its stock of assets ofmanufactured capital (roads, buildings, machines,
equipment), human capital (knowledge, aptitude,education, skills), and natural capital (forests, agriculturalland, rivers and estuaries, the atmosphere and the oceans– ecosystems more generally). The value of natural capital
is notoriously difficult to capture but is nonethelessfoundational to an economy’s ability to produce goods andservices for its citizens.
If inclusive wealth, adjusted for population and equitable
distribution, increases as governments try to meet the 17
Sustainable Development Goals (SDGs), then the Goals will
be sustainable. If not, we risk eroding the productive
capacities of nations to achieve sustainable development.
To shift the world in a direction of more sustainablemeasures of wealth and well-being, UNEP continues toimprove the advancement of Inclusive Wealth through abi-annual global analysis. UNEP is also supporting
countries to carry out their own estimates of inclusive

6

FOREWORD

wealth to deepen their understanding of sub-national
national disparities that may exist in the trends of natural,
human and produced capital. An inclusive wealth analysis
allows governments to track whether they are on course tomeet the Sustainable Development Goals. The importanceof this approach has been underscored by the Dasgupta
Review of Economics of Biodiversity undertaken for theUnited Kingdom’s Treasury.
It is heartening to see new investments in natural capital
since 2018 as a result of massive restoration programmes
lead by the Government of Pakistan. A greater emphasis
on investments in nature will support the country on thepath to sustainability, and in addressing the devastating
impacts of climate change, which are more acutely felt by
the most vulnerable communities.
I welcome the launch of this Report as we mark World
Environment Day 2021, with Pakistan as the global host.
The Report makes a powerful case for continued
improvements in our understanding of inclusive wealth,and therefore, on the crucial role of restoration in theeconomic decisions of Pakistan. As we embark on the
United Nations Decade of Ecosystem Restoration aiming
to protect, halt and reverse ecosystem degradation, I hope
this Report will provide a useful compliment to important
restoration efforts underway across the world.

Inger Andersen
Under-Secretary-Generalof the United Nations andExecutive Director of the
UN Environment Programme

7

FOREWORD

Pakistan is fortunate to be custodians of such richdiversity in landscapes, including the towering Pamirs andKarakoram Range, grand plateaus, dramatic Sindh and
Makran coastlines and the Indus River system providing
some of the most fertile land on earth. Pakistan’s thriving
agricultural sector is especially susceptible to increasing
irregularity and uncertainty over climatic conditions.
The threats associated with climate change and rapid lossof biodiversity and ecosystems are rising. It is with thisimpetus that Prime Minister Imran Khan scaled Khyber
Pakhtunkhwa’s response in 2014 to the Bonn Challenge
which saw 872.000 (millions) seedlings planted up to June
2017. This nation-wide initiative was named the Ten Billion
Tree Tsunami Project (TBTTP) and the ongoing objective isto replenish wildlife and forests in Pakistan and improve
protected area conservation. The Ten Billion Afforestation
Project has a total target of 3.296 billion plants to beplanted/ regenerated by the end of Phase - I in June, 2023.
A total of 859.426 million plants were planted/regenerated
over an area of 381,374 hectares between 2018 and April,
2021 all over Pakistan.
These objectives will see large amounts of carbon
sequestered, helping to mitigate climate change andprovide resilient ecosystems that will provide some buffers
against devastating impacts of natural disasters. This is
not to say that the provincial level initiative was without
challenges; serious losses, irregularities and deviations
from federal and provincial components had to beaddressed and need to be improved when scaling up
afforestation. These efforts led to the increase of forest
area in KPK from 20.31% to 26.6% and greatly helped inincreasing the forest cover by 6.3% during 2014-19.
The pilot project Clean Green Pakistan Movement (CGPM),
initiated by the Prime Minister Imran Khan has beensuccessfully implemented in 20 cities of Pakistan in 2020,
and it is now being scaled up in 93 cities of Pakistan
across the country from 2021. In the first phase, Clean
Green Pakistan Index (CGPI) and Champions Program
which was piloted in 20 selected cities of Punjab and KPK
was concluded in October 2020.
It is absolutely necessary that Pakistan follows thesustainability path for the long term wellbeing andsustainability of people. In order to operationalize
sustainable development, we need to measure and monitor
the productive base of the economy and environment.
Measuring natural capital and wealth of the nation easily
comes as the first step towards sustainability.
The Inclusive Wealth Index Framework is the United
Nations Environment Programme’s Flagship indicator for

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FOREWORD

measuring nations’ potential for sustaining their citizens’
wellbeing into future decades. Due to its inclusion ofnatural and human capital into the index (alongside
manufactured capital), it is invaluable as a tool for
Pakistan to understand the benefits of restoration within
the wider context of our natural capital assets.
The Report- Inclusive Wealth of Pakistan: The Case forInvesting in Natural Capital and Restoration, provides stateof art analysis of the productive base of the economy since1990. This report estimates all capital stocks at theregional level for Pakistan, and as such, provides a holistic
measure of sustainability. The findings are concerning andimportant – natural capital is being degraded while othercapital is prioritised. By understanding restoration, among
other assets, in the context of inclusive wealth, it will help
us to realise the objectives and vision of the Ten Billion
Tree Tsunami Programme.
I am so glad to see that the scientific report like this is alsoable to capture the effort of restoration in Pakistan where
since 2018 the natural capital is on rise. This will go a long
way to enhance people’s well-being and prosperity in the
coming years.
I congratulate UNEP for providing this excellent support toPakistan on the eve of the World Environment day.

Malik Amin Aslam
Federal Minister of Climate Change
and Advisor to Prime Minister,
Government of Islamic Republicof Pakistan

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EXECUTIVE
SUMMARY

Climate change, biodiversity loss and emerging
pandemics, such as COVID-19, are urgent reminders thathuman activity is placing increasing pressures on thehealth of our biosphere, with devastating consequences tosociety. To secure a resilient, sustainable future, we mustensure that the health of ecosystems and their capacity toprovide the goods and services we rely on are protected. In
economic terms our collective demand for nature’s goods
and services must not exceed its capacity to provide them.
An historical focus upon national income (GDP) as themain metric for measuring progress has significantly
influenced the widespread environmental decline being
observed across the globe. By taking an approach toeconomic analysis that focuses on wealth (rather thanincome) of nations, it is possible to balance environmental
protection with other factors essential for humanwell-being such as health and infrastructure, to achievesustainable development.
Recent reports, including the UK’s HM treasury’s The

Dasgupta Review: The Economics of Biodiversity (Dasgupta

2021) and Making Peace with Nature (UNEP 2021), suggestthat investment decisions need to be guided by indicators
pertaining to wealth, rather than GDP (income) alone.
UNEP’s Inclusive Wealth (IW) framework demonstrates
that future pathways and possibilities of economic
development depend on the current management of all
forms of capital — produced, natural and human — which
together comprise a country’s wealth. By disaggregating
assets into human, produced and natural capital stocks,
the inclusive wealth framework provides a means forcomparing the relative decline and improvements ofdifferent capital types. These capital assets at the nationaland global scale form the building blocks for achieving
progress on the Sustainable Development Goals (SDGs).
By population Pakistan is the fifth largest nation in theworld. It is endowed with significant wealth in natural
resources across a diversity of landscapes that support
key sectors of Pakistan’s economy, including agriculture,
forestry and fishing. Consequently, Pakistan’s
management of natural capital significantly impacts thehousehold income of communities that rely directly on
natural resources, as well as the overall economy.
The Inclusive Wealth of Pakistan: The Case for Investing in

Natural Capital and Restoration estimates the IW of Pakistanfrom 1992 to 2019 at the national and regional level. The
findings are based on the application of the inclusive
wealth framework from a geospatial perspective.
According to the grid cell level data analysis, from 2000 to
2019, Pakistan’s human capital and produced capital grew
positively because of measures taken by government.

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EXECUTIVE SUMMARY

Impressively, Pakistan’s inclusive wealth increased at an

Three key messages arise from the report’s analysis.

average of 2.3 per cent annually in absolute terms during
the period 1992-2019. Analysis of the individual capital

1. When making policy decisions that promote sustaina-

categories show that human capital and produced capital

bility, it is crucial to understand the trade-offs, whichgrew at a rate of 2.9 per cent and 3.2 per cent respectively,that occur both temporally and across types of asset

while natural capital declined negligibly, around 0.1 perbases (i.e. capital stocks). In a world of scarce resourc-

cent. Natural capital in Pakistan decreased in the areas

es and ever-increasing demand, trade-offs are inevita-

where the reserve of fossil fuels decreased and whereble, and difficult decisions must be made when setting

natural land cover was converted to other uses, particularly

policy goals.

in the process of urbanization. However, natural capitalincreased in areas where bare lands have been converted
to vegetated land.

2. When weighing decisions on investment and navigating
trade-offs, social prices of assets, including natural
capital, must be understood in addition to market prices.

There have been exciting recent developments in

Many of the assets that are critical for maintaining the

Pakistan’s management of natural capital. Afforestation

productive base of Pakistan’s economy are either not

across the country as part of the Ten Billion Tree Tsunami

priced or are priced at much lower levels than is reflec-

Programme (TBTTP) is expected to boost the nation’s

tive of their value to the national economy or for humanrenewable natural capital resources, particularly in thewell-being. This is especially true for natural capital,

decades to come. The TBTTP, initiated by Prime Minister

which has historically suffered from systematic under-

Imran Khan upon his election, has helped to make Pakistan

valuation in cost-benefit and other economic analyses.

a global pioneer in forest restoration by combining
community participation, green job creation and strong

3. Inclusive Wealth of Pakistan is a great leap forward

political commitment. Overall objectives of the initiative, as

towards measuring the contribution of natural resources

stated by Pakistan’s Ministry of Climate Change, were toand systems like expanded forest area, and the healthimprove the quality and extent of protected areas,

and well-being of human societies. With the combina-

encourage eco-tourism and promote community

tion of the systematic measurement of natural assets,

engagement and job creation.

natural capital accounts and the continued focus on
restoration as a priority within economic policy, Pakistan

To ensure that inclusive wealth continues to growis well-placed to be a pioneer in both restoration

sustainably, Pakistan’s policymakers should invest

initiatives and the incorporation of natural capital in theadequate resources to ensure positive growth of naturalcountry’s wealth management. Both are cornerstones ofcapital continues. That investment should be mindful of

the Sustainable Development Goals (SDGs).

inclusive of renewable and non-renewable resources, aswell as less tangible ecosystem services, such as soil
quality and water availability. Both are particularly
important to Pakistan, which, though mostly arid, relies on
agricultural production to support the nation’s economy.
The analysis in The Inclusive Wealth of Pakistan: The Case forInvesting in Natural Capital and Restoration has provided
Pakistan with a holistic, wealth-based framework formeasuring economic progress. It highlights successes inhuman and natural capital investment, including the
TBTTP, which are key to measuring the sustainable
development of Pakistan’s society and economy.

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12

1. INTRODUCTION

1. INTRODUCTION

The COVID-19 pandemic is a stark reminder that humans,
animals and the natural environment are intimately
connected. Anthropogenic drivers such as land conversion,
deforestation, urbanization, climate change and pollution
combine to exert ever greater pressure on the vitalfunctions of our biosphere, with devastating consequences
for society. It is increasingly acknowledged that postCOVID economic recovery policies cannot take a ‘businessas usual’ approach, as doing so will further degrade
ecosystems and exacerbate existing risks associated withcarbon emissions, biodiversity loss, emerging infectious
diseases and land degradation. As governments introduce
stimulus packages to support job creation, reduce poverty
and boost economic growth, we need to support efforts to‘build back better’ that aim to reduce the impact of futuredisasters and shocks. Resilience-based recovery ensuresthat the health of ecosystems and their capacity to provide
essential resources is protected, without undermining
people’s well-being (Organisation for Economic Cooperation and Development [OECD] 2020). To build backbetter, policy formation should focus on green investments,
renewable energy, gender equality, ecosystem restorationand the transition to circular economies.
Nations need a guiding compass that will assist them inmaking rational trade-offs between competing objectives.
A UK Government report argues that because the global
economy has grown at the expense of natural capital,
which has been severely degraded, what we have routinely
celebrated as ‘economic growth’ – gross domestic product(GDP) – is no longer an appropriate proxy for progress(Dasgupta 2021). GDP is a measure of economic quantity,
not economic quality or welfare, let alone social orenvironmental well-being (Costanza et al. 2009). Policy andinvestment decisions made in the post-COVID recovery
process should therefore be guided by indicators of wealthrather than income (GDP) alone.
The methodologies and frameworks around wealthaccounting have advanced significantly in the past decade.
They include the United Nations Environment Programme(UNEP)’s Inclusive Wealth Index (IWI) (see Box 1) and theWorld Bank’s Changing Wealth of Nations, which havedemonstrated that it is possible to assess changes innatural capital, human capital and produced capital acrossall countries, regardless of their income level. Importantly,
the inclusive wealth paradigm shows that future economic
possibilities depend on the current management of all
forms of capital, or wealth. For a country to increase its
inclusive wealth, it must effectively manage human healthand skills, manufactured physical infrastructure (e.g.
transport, housing, utilities and information andcommunications technology (ICT)), natural resources13

(renewable and non-renewable) and ecosystem health

BOX 1(including air quality and climate, biodiversity, soil andoceans), social cohesion and trust, as well as the quality of

INCLUSIVE WEALTH INDEX OVERVIEW

democratic institutions. Together, these assets form thebuilding blocks needed to progress towards the SDGs.

The Inclusive Wealth Index (IWI) was inaugurated
A notable strength of the IWI as a measure of progress isin 2012 with the launch of the Inclusive Wealththat it includes natural capital in its estimations.

Report (IWR) at the United Nations Conference on

Allocating monetary values to the components of natural

Sustainable Development (Rio+20). The IWR 2012

capital however is a notoriously complex and difficultcompared the relative increase or decline oftask. Fortunately, the available support has beennatural capital against the performance of two

constantly improving, with the United Nations launchingother capital stocks: produced capital and human

the System of Environmental Economic Accounting

capital. The results showed that changes in

Ecosystem Accounting (SEEA EA) in 2021. SEEA EA

natural capital can significantly impact a nation’s

establishes a suite of internationally comparable

economic productive base, from which GDP, orindicators for ecosystem function and provisions that

income, flows, and that it is therefore possible tocan be used in natural capital accounting.

trace changes in components of wealth by country
and link these to economic progress (United
Nations University International Human Dimensions Programme and United Nations Environment Programme [UNU-IHDP and UNEP] 2012).
The second and third iterations of the IWR,
published in 2014 and 2018, expanded the scopeof the study significantly, to cover 140 countries.
The main focus of IWR 2014 was on estimating
the education component of human capital. In
IWR 2018, health was included in the calculationof human capital, and fisheries were added to thestocks of natural capital (UNU-IHDP and UNEP
2014; Managi and Kumar eds.2018). The IWRs
provide valuable insights into countries’ investment strategies on education, health and environmental improvements, while the index helps to

Photo: Unsplash/Paul Jai

guide sustainable, multi-faceted development.

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1. INTRODUCTION

Influential, paradigm-shifting reports, including themainstreaming the use of inclusive wealth. It should be

Dasgupta Review (Dasgupta, 2021), Shaping the Trends ofnoted that substantial investments are required to improve,

Our Time (United Nations Economist Network [UNEN] 2020)

expand and fulfil the potential of inclusive wealth statistics.

and Making Peace with Nature, explicitly call for the IWI to

One key priority would be greater funding for offices ofbe utilized to move beyond GDP in the post-pandemic era.

national statistics and investments to automate and

The message is clear: to adequately capture the costs ofdigitalize inclusive wealth data collection by using

environmental degradation, the inclusive wealth measure

improved remote sensing, machine learning and artificial

should be used to give more accurate appraisals of holistic,

intelligence for environmental statistics. Existing measuressustainable economic progress (UNEP 2021). At theof social and human capital still suffer from poor coveragenational level, a large number of countries have embraced

and conceptual simplification. For example, the education

the wealth measurement. Countries including India,

component of human capital for an individual may look

Morocco, Canada and China have produced their estimatesvery different depending on his or her gender. The

of national and regional wealth following UNEP’s IWI

foundational values of natural capital, such as a stableapproach. Additionally, Thailand, St Lucia, Barbados,climate, which underpins the Holocene epoch, are those for

Botswana and Vietnam began working with the index inwhich it is hardest to capture values (Dasgupta, 2021).

2020.

However, precisely because they are difficult to measure,these fundamental assets of human and natural capital

Key arguments for scaling up and mainstreaming the use

deserve more, not less, attention in official statistics.

of inclusive wealth:a. Statistical infrastructure actively shapes the future.
Economic statistics are more than a benign measurement tool, they influence and guide policy. This has been
the case from the 1940s, when the success of the
Marshall Plan was measured by growth in GDP, to thepresent day, when this national objective tends to beprioritized above all else.
b. Inclusive wealth statistics can help guide policy efforts
towards enhancing the capacity of nations to deliver the2030 Agenda. Sustainable development encompasses a

FIGURE 1

The political and public mandate to‘build back better’ after the pandemic
The 2030 Agenda articulates the outcomesthat recovery must delivera

broader set of guiding objectives than economic growth
and requires a more inclusive statistical infrastructure
than the one currently used to reflect it. There is an urgent

Inclusive wealth shows the means or capacityof nations to deliver those outcomesneed for countries to compile inclusive wealth statistics
at the national and regional levels so that post-pandemic
recovery can be holistic and well-directed.
c. Inclusive wealth statistics present an opportunity to
explicitly define the recovery from COVID-19 in terms ofAchieving the 2030 Agenda requires astatistical infrastructure capable ofmeasuring both the means (inclusive
wealth) and the outcomes (SDGs)

sustainable development, the Paris Agreement, and the‘Beyond GDP’ initiative. The global challenges we face
today cannot be solved by GDP growth alone; instead,inclusive, multi-faceted measures are required. The IWI

Figure 1: The steps for scaling up and mainstreaming theuse of inclusive wealthlooks at a country’s well-being through a sustainability lensand measures its wealth in terms of social, environmental
and economic assets, the three key pillars of sustainability.
It looks, therefore, at the social value, rather than the dollar
price, of all of a country’s assets, including natural, humanand produced capital. Consequently, the IWI is uniquely able
to capture a nation’s capacity to create and maintain thewell-being of its people over time.
Figure 1 summarizes the steps for scaling up and

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16

2. ECONOMY OF PAKISTAN

2. ECONOMY OF
PAKISTAN

Pakistan’s economy has been growing slowly over the lasttwo decades, with annual per capita GDP growth at around
2 per cent (less than half the South Asian average growth).
However Financial Year 2020 (FY2020) witnessed
remarkable turnaround resulting in sustained adjustment
in current account deficit and continued fiscal prudence.
During July-March, FY2020, fiscal deficit decreased to 4.0
percent of GDP, while current account deficit reduced by 71
percent during July-April, FY2020 (Economic Survey ofPakistan, 2019-20). In addition, the exchange rate
remained stable and FDI growth showed improved ranking
in the World Bank’s ease of doing business index, alongwith a stable credit outlook to B3 from negative by
Moody’s (Economic Survey of Pakistan, 2019-20).
Consistent with global trends, the lockdown measures
introduced to tackle the COVID-19 pandemic in Pakistancaused a sharp slowdown in economic activity, with theeconomy contracting by around 1.5 per cent during thefinal quarter of Fiscal Year 2020 (FY20). Job and income
losses affected half the working population, with theburden falling mostly on those in informal and low-skilledemployment. A devastating flow-on effect was that,
according to estimates, poverty increased from 4.4 percent to 5.4 per cent in FY2020, affecting more than 2
million people (World Bank 2021).
In response, immediate relief of Rs.12000/per month wasgiven to 12 million poor families under EHSAS social
protection programme. As well, stimulus packages
equivalent to 2.9 per cent of GDP were implemented by theGovernment. These enabled a fragile recovery in the latter
half of 2020, which was assisted by increased community
mobility, consumption, record remittance inflows andslight increases in produced capital investment. Althougha current account deficit of US$2 billion was recorded in
the June-December period of 2019, a surplus of US$1.1
billion was recorded for the same period in 2020. This was
the first half-yearly surplus in almost a decade and was
attributed to remittances inflows more than offsetting thewider trade deficit (World Bank 2021). During July-April
2019-20 exports were US$19.7 billion compared to 20.1
billion for the same period last year, and remittances
increased to US$18.8 billion from US$17.8 billion for thecorresponding period. Foreign exchange reserves also
indicated a positive increase during 2019-20 (Economic
Survey of Pakistan, 2019-20).

17

Pakistan’s economy has three main sectors; Agriculture,
Industry and Services sectors. Agriculture sector grew by
2.67 per cent during FY 2020, Industry has shown negative
growth in mining and quarrying (-8.82), large scale
manufacturing (-7.78). Services sector also exhibited adecline at the rate of 0.59 per cent mainly due to wholesale and retail trade, transport, storage andcommunication subsectors. However housing, General
Government Services and other private services
contributed 4.02 per cent, 3.92 per cent and 5.39 per centrespectively (Economic Survey of Pakistan, 2019-2020).

18

Photo: Unsplash/Haseeb Jamil

2. ECONOMY OF PAKISTAN

19

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20

3. ENVIRONMENTAL PRESSURES IN PAKISTAN

3. ENVIRONMENTAL 		
PRESSURES
IN PAKISTAN

By population, Pakistan is the fifth largest nation in theworld, and it is endowed with significant wealth in natural
resources. The diversity of landscapes and ecosystems inPakistan is tremendous, extending from the Karakoram
and Himalayan ranges in the north to the Sindh coastal
zones in the south, which support a thriving fishingindustry. Pakistan is generally very arid and relies upon asingle river system, the Indus. The floodplains and water
available from the Indus are critically important for thecountry’s agricultural sector, which accounts for over 21
per cent of GDP and employs 45 per cent of the labour
force (UNEP 2013). The rangelands, which cover the
majority of the mountainous landmass, support Pakistan’s
flourishing livestock industry. Pakistan’s diverse biomes
provide vital ecosystem services for the nation, including
robust soil quality, water availability, cultural values andprimary resources such as timber, fuel and minerals.
In Pakistan, as around the world, numerous drivers ofenvironmental decline are at work. The focus on narrow
metrics such as GDP instead of on the quality of pathways
to sustainable development is one such driver. In general,
environmental considerations have not been properly
integrated into planning and development strategies(UNEP 2014), though in recent years there has been a new
focus on protecting Pakistan’s natural wealth. The large
and growing population of Pakistan exacerbates many
existing pressures on environmental resources. Since
1947, Pakistan’s population has increased at an averagerate of 2.7 per cent per annum, resulting in an estimatedpopulation of 225.2 million in 2021 (Pakistan Bureau of
Statistics [PBS] 2021). Human activity and greaterurbanization and industrialization have brought economic
benefits for citizens, but they have also resulted inwidespread degradation of land, deforestation, intensified
water scarcity and loss of biodiversity. Coastal areas ofPakistan have especially suffered from environmental
degradation through, for instance, overfishing, salt
intrusion, and land reclamation. Deforestation is acountrywide concern and has severely degraded not justthe coastal but also the mountainous and riverine regions.
The chronic pressures of pollution, overexploitation of
species, and a lack of knowledge and conservation
practices at the household level are compounded byclimate change, resulting in widespread threats tolivelihoods and economic and socio-political tensions(International Union for Conservation of Nature [IUCN]
2017 and UNEP 2013).
Although Pakistan’s contribution to global CO2 emissions
is only around 0.5 per cent of the annual total, it remains
one of the nations most vulnerable to the ramifications ofclimate change. Climate change impacts are already21

appearing across the country, with glacial melt in the
Hindu Kush-Himalaya region, higher temperatures andincreased variability in monsoon patterns adversely
affecting agricultural production and food security.
Increased flood and drought incidence and saline water
intrusion from sea level rise will only compound theseeffects. Public health risks increase as the environmental
burden of disease may rise with water-borne diseases
associated with flooding, heat stress from risingtemperatures, and malnutrition associated with foodinsecurity (UNEP, 2019).

3.2 PATHWAYS TO IMPROVEMENTS ANDRESTORATION EFFORTS
The objectives of environmental improvement andeconomic growth are interconnected by necessity. It has
been shown time and again that it is not possible to simply‘grow out’ of environmental or social problems by focusing
on economic growth alone. The World Bank (2006) foundthat focusing on prevention and mitigation ofenvironmental degradation was much more cost-effective
than allowing environmental neglect and hoping that GDP
growth would improve environmental and social indicators.

3.1 PREVIOUS TRENDS IN NATURAL CAPITALACCORDING TO IWIThe term ‘natural capital’ is used to describe the world’s
stocks of natural assets, which include geology, soil, air,water and ecosystems generally (World Forum on Natural
Capital 2021). The depreciation and degradation of natural
capital is closely related to the negative externalities
resulting from the development of various sectors of theeconomy, particularly non-renewable resources.
According to the most recent iteration of UNEP’s IWR(2018), many countries in Asia have been experiencing
declines in natural capital 1, and Pakistan is no exception.
From 1990 to 2014, Pakistan suffered an average decline ofnatural capital per capita of 5 per cent, the steepest fall of
the 26 Asian countries included in the IWI calculations(Managi and Kumar (eds.) 2018). A closer look at specificcomponents of natural capital shows some components
declining while others improve. For Pakistan, IWR 2018shows a steady increase of agricultural land area, with anaverage annual growth rate of 0.58 per cent. However, italso shows a sharp decline in forest cover, which is evenstarker if per capita loss is considered: from the baseline,
cover had declined by 5 per cent in 1990, by 12.1 per cent in
1995, by 17.8 per cent in 2000, by 23.5 per cent in 2010 andby 35.9 per cent in 2014 (Managi and Kumar (eds.) 2018).
Particularly in the renewable category of natural capital,
Pakistan has seen remarkable improvement in recent years,
and these trends, drivers, and policy initiatives will be
discussed in the following sections.

An example of this paradigm is that, in 1990, despite
enjoying better economic growth, Pakistan had a higher
deforestation rate than other countries in the same income
group. In recent years, Pakistan has recognized that thecost of inaction is greater than that of ecosystem
restoration itself and has implemented ambitious andsuccessful strategies for halting and reversing the patternsof decline in natural capital. Having been elected Prime
Minister in 2018, Imran Khan launched the Ten Billion Tree
Tsunami Programme (TBTTP), which is the 4th largest
afforestation and restoration initiative in the world, thereby
establishing Pakistan among global pioneers in forest
restoration. The programme is evidence of strong politicalcommitment and will involve community participation andgreen job creation. This is one of the world’s mostambitious afforestation efforts and will initially be
implemented over five years.
Momentum for the TBTTP arose from the province ofKhyber Pakhtunkhwa, which in 2014 became the first entity
worldwide to complete the Bonn Challenge, a global effort
to restore 350 million hectares of degraded and deforested
land by 2030. Moreover, it did so in half the planned timeand on half the initial budget (Khan et al. 2017). This
achievement was largely possible due to the joint efforts ofthe province’s communities and the Khyber Pakhtunkhwa
forest department (IUCN 2017). According to the UN Foodand Agriculture Organisation, these efforts led to anincrease of 6.3 per cent of forest cover in KPK province,from 20.31 million Ha to 26.6 million from 2014 to 2019.
The total area planted or regenerated under this project isaround 593 292 ha. (Food and Agriculture Organization of
the United Nations [FAO], 2020). The BTAP (in Khyber
Pakhtunkhwa) has greatly helped in modeling one of the
major restoration programmes not only in Pakistan but
also globally. This has not only halted but reversed thedeforestation trends in the fragile mountain ecosystem in
the northwestern part of the country considered as the1

22

In the current inclusive wealth methodology, the calculation of natural
capital takes into account both renewable resources (agricultural land,
forests and fisheries) and non-renewable resources (fossil fuels andminerals) (Managi and Kumar (eds.) 2018).

major source of fresh water supply and hostingbiodiversity hotspots.

3. ENVIRONMENTAL PRESSURES IN PAKISTANThe TBTTP is extensive, and its plans include restoring
mangroves and forests, as well as planting trees in urban
settings, including schools, colleges, public parks andgreen belts. Pakistan has launched an Ecosystem
Restoration Fund to support nature-based solutions toTable 1a:Billion Tree Afforestation Project in Khyber Pakhtunkhwa
Years

Number of plants(million)

Area (Ha)2015-16

139.7

53904

environmentally resilient, ecologically-targeted initiatives

2016-17990.97488480covering afforestation and biodiversity conservation. With2017-18

77.33

50908

far-reaching programmes such as the TBTTP, Pakistan is

Total

1208

593,292

climate change and facilitate the transition towards

demonstrating how nature-based initiatives can provide
solutions to multiple objectives, such as ensuring
sustainable livelihoods and food and water security andSource: Khyber Pakhtunkhwa Forest Department, 2020

FIGURE 2

reducing poverty (Perring, Erickson and Brancalion 2018).
The overall objectives of this initiative, as stated by
Pakistan’s Ministry of Climate Change, are to revive forest
and wildlife resources, improve conservation of existing

TARGETS AND ACHIEVEMENTS OF TBTT PROJECT
1000

protected areas, encourage eco-tourism and promote
community engagement and job creation. The programme
will also create powerful entry points for improving genderequality and bringing greater visibility to the contributions,in terms of labour and knowledge, that women make to
Pakistan’s agricultural sector (FAO 2015). Importantly, the
TBTTP will help to mitigate the impact of climate change
through forest carbon sequestration and by preventing
land and soil degradation (IUCN 2020). Moreover, the neem

800
600
400
200
0
KPK

PunjabSindh

Baluchistan AJK

GBtree (Azadirachta indica) is one of the main species chosen
for afforestation; products made from these trees are
known to offer multiple benefits, being used in medicines(Al-Hashemi and Hossain 2016) and for disease control incrops, such as chickpeas, that are critical for food security(Khan et al. 2020).
The TBTTP has also had a very positive impact onTarget (June 2023)
Number of plants Planted/Regenerated/Distributed
Till April 2021

Figure 2:
TBTT Afforestation, Current Achievement
and Future Scenario

employment in Pakistan, with an estimated 85,000 jobs
being created through paying unemployed community
members of the community to work in tree nurseries.
Additionally, Prime Minister Khan announced in 2020 thatover 7,300 square kilometers within 15 national parks willbe established in the near future, creating 5,000 jobs in theprocess (Farand 2021). A summary of restorationachievements of both the KPK Province-level and nationallevel restoration projects are seen in Tables 1a, 1b, andFigures 2a and 2b.

23

The Ten Billion Tree Project has a total target of 3.296

Pakistan’s marine conservation strategies are also gaining

billion plants to be planted/ regenerated by the end of

momentum with Astola - the largest of the nation’s

Phase – I in June, 2023. A total of 859.426 million plants

offshore islands - declared the nation’s first Marine

were planted/ regenerated over an area of 381,374

Protected Area (MPA) in 2017. Many other projects

hectares between 2018 and April, 2021 all over Pakistan. It

facilitated by local and national government entities in

is anticipated that the regeneration involving one billion

partnership with IUCN Pakistan have had notable

plants will be completed by June 2021. The restoration andachievements such as improving education and capacity-

plantation targets disaggregated by region is presented inbuilding of fisher folk and tourism operators and sea-turtle

Table 1b and Figure 3.

conservation along the Karachi coast to tackle illegal
wildlife trade (IUCN, 2017). The government of Sindh also
funded an IUCN project that tackles the sea intrusion and

Table 1b:
Ten Billion Tree Tsunami progress across provinces
Provinceerosion through ecosystem-based solutions, including
planting 50,000 hectares of mangroves and inland
protective plantations, as well as sustainable livelihood

Target number ofplants distributedand planted
by June 2023
(in millions)

Number of plants
distributedand planted
as of April 2021
(in millions)

Area(Hectare)

KPK

1000

310.94278450estimated 477.22 km2 in 1990 to 1463.59 km2 in 2020,

Punjab466

66.67524393

with a 3.74 per cent annual rate of change. Overall, there

Sindh

1000

359.9825139

has been 300 per cent increase in mangrove cover since

Baluchistan

100

5.552

1912

1990 i.e. by 986.36 km2, in addition to a marked

AJK

560

105.09

47857

GB

170

11.19

3623

NSSU/MoCC

0.25

-

-

Movement (CGPM) has been successfully implemented in

3296.25

859.426

381,374

20 cities in 2020, and it is now being scaled up in 93 cities

Total

Source: (TBTTP, Ministry of Climate Change Pakistan)creation for coastal communities (IUCN, 2017). Pakistan
has initiated a major mangrove restoration program, andso far mangrove cover in Pakistan has increased from anenhancement in tree canopy density (Gilani et al., 2020).
Furthermore, the pilot project Clean Green Pakistanof Pakistan across the country in 2021 (MoCC, 2019). In
the first phase, the Clean Green Pakistan Index (CGPI) andthe Champions Program, which was piloted in 20 selected
cities of Punjab and KPK, was concluded in October 2020.
The Prime Minister of Pakistan chaired an encouragement

FIGURE 3

award ceremony, at the Prime Minister’s Office.

AREA (HA)
5000004000003000002000001000000

2015-16

2016-172017-18

2016-172017-18

NUMBER OF PLANTS (MILLION)
1000
800
600
400
200
0

24

2015-16

Photo: Unsplash/Muhammad Khubaib

3. ENVIRONMENTAL PRESSURES IN PAKISTAN

25

4

26

4. INCLUSIVE WEALTH OF PAKISTAN AT THE NATIONAL LEVEL

4. INCLUSIVE WEALTH
OF PAKISTAN AT THE
NATIONAL LEVEL

4.1 STOCK OF INCLUSIVE WEALTH AT THE
NATIONAL LEVELThis section investigates the inclusive wealth estimates ofPakistan at the national level. As discussed earlier,inclusive wealth comprises three different categories ofcapital assets: natural capital, human capital and produced
capital. Assets in all three categories provide the inputs for
production and are therefore referred to as the productive
base of the economy. Produced capital is perhaps theeasiest to conceptualize, as it encompasses assets that
economists have historically referred to as ‘capital’. It
includes investment in roads, ports, cables, buildings,
machines, equipment and other physical, manufactured
infrastructure. Human capital refers to the population(both the size and composition) and to the knowledge andskills acquired by education. Some wealth estimates
include heath metrics in human capital accounts, but thescope of this paper allows for education-related humancapital only. Natural capital is estimated according to
subsoil non-renewable resources, forests and agriculturalland. Conceptually, ecosystem services such as
microclimates, biodiversity and cultural values contributeto natural capital too but are excluded from this report due
to data availability constraints.
Here we lay out the methodology and data used tocompute inclusive wealth. We are interested in the change
of intertemporal well-being at:'
𝑉𝑉(𝑡𝑡) = & '𝑈𝑈(𝐶𝐶! )𝑒𝑒 "#(!"%)
𝑑𝑑𝑑𝑑
𝑉𝑉(𝑡𝑡) = &% 𝑈𝑈(𝐶𝐶! )𝑒𝑒 "#(!"%) 𝑑𝑑𝑑𝑑%'
Assuming equivalence
and well-being,
this)𝑒𝑒 "#(!"%)
𝑉𝑉(𝑡𝑡) = &between
𝑈𝑈(𝐶𝐶!wealth𝑑𝑑𝑑𝑑%
is measured by wealth in practice. Denoting produced,

human, and natural capital as K,H, and N, the change ininclusive wealth W is expressed by:

𝑑𝑑𝑊𝑊(𝐾𝐾, 𝐻𝐻, 𝑁𝑁, 𝑡𝑡)
𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑 𝜕𝜕𝜕𝜕
+ 𝑝𝑝𝐻𝐻 𝑑𝑑𝑑𝑑 + 𝑝𝑝𝑁𝑁 𝑑𝑑𝑑𝑑 + 𝜕𝜕𝜕𝜕𝑑𝑑𝑊𝑊(𝐾𝐾,𝑑𝑑𝑑𝑑𝐻𝐻, 𝑁𝑁, 𝑡𝑡) = 𝑝𝑝𝐾𝐾 𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑
= 𝑝𝑝𝐾𝐾+ 𝑝𝑝𝐻𝐻+ 𝑝𝑝𝑁𝑁 𝑑𝑑𝑑𝑑 + 𝜕𝜕𝜕𝜕
𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑 𝜕𝜕𝜕𝜕

𝑑𝑑𝑊𝑊(𝐾𝐾, 𝐻𝐻, 𝑁𝑁, 𝑡𝑡)
𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑 𝜕𝜕𝜕𝜕
= 𝑝𝑝𝐾𝐾+ 𝑝𝑝𝐻𝐻+ 𝑝𝑝𝑁𝑁+
𝑑𝑑𝑑𝑑 and p_K are𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑 shadow𝑑𝑑𝑑𝑑
where p_K,p_H
the marginal
prices 𝜕𝜕𝜕𝜕ofproduced, human and𝜕𝜕𝜕𝜕 natural capital,𝜕𝜕𝜕𝜕 respectively.
𝜕𝜕𝜕𝜕 They
𝑝𝑝𝐾𝐾 ≡ 𝜕𝜕𝜕𝜕, 𝑝𝑝𝐻𝐻 ≡ 𝜕𝜕𝜕𝜕 , 𝑝𝑝𝑁𝑁 ≡ 𝜕𝜕𝜕𝜕,are formally definedby:
𝑝𝑝𝐾𝐾 ≡ 𝜕𝜕𝐾𝐾 , 𝑝𝑝𝐻𝐻 ≡ 𝜕𝜕𝜕𝜕 , 𝑝𝑝𝑁𝑁 ≡ 𝜕𝜕𝜕𝜕 ,
𝜕𝜕𝐾𝐾
𝜕𝜕𝜕𝜕
𝜕𝜕𝜕𝜕
𝜕𝜕𝜕𝜕
𝜕𝜕𝜕𝜕
𝜕𝜕𝜕𝜕
𝑝𝑝𝐾𝐾 ≡, 𝑝𝑝𝐻𝐻 ≡, 𝑝𝑝𝑁𝑁 ≡,𝐼𝐼𝐼𝐼𝐼𝐼 𝜕𝜕𝐾𝐾
= 𝑝𝑝+ 𝐾𝐾 + 𝜕𝜕𝜕𝜕𝑝𝑝, 𝐻𝐻 + 𝑝𝑝-𝜕𝜕𝜕𝜕
𝑁𝑁
𝐼𝐼𝐼𝐼𝐼𝐼 = 𝑝𝑝+ 𝐾𝐾 + 𝑝𝑝, 𝐻𝐻 + 𝑝𝑝- 𝑁𝑁
𝐼𝐼𝐼𝐼𝐼𝐼 = 𝑝𝑝+ 𝐾𝐾 + 𝑝𝑝, 𝐻𝐻 + 𝑝𝑝- 𝑁𝑁

27

𝑑𝑑𝑊𝑊(𝐾𝐾, 𝐻𝐻, 𝑁𝑁, 𝑡𝑡)
𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑 𝜕𝜕𝜕𝜕
= 𝑝𝑝𝐾𝐾+ 𝑝𝑝𝐻𝐻+ 𝑝𝑝𝑁𝑁
+
𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑
𝑑𝑑𝑑𝑑 𝜕𝜕𝜕𝜕
given a forecast of how produced, human and naturalfrom 9 per cent in 1992 to 11 per cent in 2019. Figure 5(c)capitals, as well as other flow variables, evolve in the futureshows the yearly share of natural capital, human capitalin an economy. Practically,shadow
act as a weight𝜕𝜕𝜕𝜕𝜕𝜕𝜕𝜕 prices𝜕𝜕𝜕𝜕and produced capital in inclusive wealth from 1992

𝑝𝑝𝐾𝐾 ≡to each, 𝑝𝑝 ≡ resulting, 𝑝𝑝 ≡ the, measure offactor attached𝜕𝜕𝐾𝐾 𝐻𝐻capital,𝜕𝜕𝜕𝜕 𝑁𝑁 in𝜕𝜕𝜕𝜕to 2019.

wealth, or IWI:

𝐼𝐼𝐼𝐼𝐼𝐼 = 𝑝𝑝+ 𝐾𝐾 + 𝑝𝑝, 𝐻𝐻 + 𝑝𝑝- 𝑁𝑁

FIGURE 5
IW COMPOSITION IN 1992
9%

In practice, we can use W and IWI interchangeably,
although they can differ in that IWI also uses shadow
prices (prices that are calculated for non-market goods
and services) on the margin. In addition, the unit of IWI is28%

in monetary (US$) terms, rather than utility units. This63%

does not affect sustainability assessment.
The contribution of produced capital, human capital andnatural capital to the inclusive wealth of Pakistan isreported in Figure 4. From 1992 to 2019, the contribution ofhuman capital to inclusive wealth increased gradually.

PC share

HC shareNC share(a) Composition of inclusive wealth in 1992

However, the relative contribution of natural capital tooverall estimates of wealth declined during this same
period, which is a concern as this trend is likely to

IW COMPOSITION IN 201911%

undermine Pakistan’s potential for sustainable
development. This change in the relative contribution of

15%

natural capital can be seen by comparing Figure 5(a) and
Figure 5(b). Due to the progress of economic activities
related to industrialization, produced capital slowly
increased during this period, although its contribution

74%

remained lower than that of natural or human capital.

FIGURE 4

PC share

HC shareNC share(b) Composition of inclusive wealth in 201

4000

3000
100%

2500
2000

80%

1500

60%

2010

2015

2019

Figure 4: Contribution of produced capital, human capitaland natural capital to the inclusive wealth of Pakistan from1992 to 2019
Human capital was the largest contributor to the inclusive
wealth of Pakistan due to the consistent increase inaverage years of education attained. The contribution ofhuman capital to inclusive wealth increased modestly,

28

20%
0

PC share

HC share

2019

NC

2005

2015

HC

2000

2010

1995

2005

PC

1992

2000

0

40%

1995

500

1992

1000

Shares in percentage

Billion dollars (2005 constant)

3500

NC share(c) Share of capitals in inclusive wealth from 1992 to 2019

Figure 5: Composition and share of inclusive wealth ofPakistan in (a) 1992 and (b) 2019; (c) Shares of produced
capital, human capital and natural capital in inclusive
wealth from 1992 to 2019.

4. INCLUSIVE WEALTH OF PAKISTAN AT THE NATIONAL LEVEL

4.2 GROWTH OF INCLUSIVE WEALTH AT THE
NATIONAL LEVEL

In the current inclusive wealth methodology, theGrowth in inclusive wealth is a key indicator of progress

non-renewable resources (fossil fuels and minerals). Table

calculation of natural capital includes both renewable
resources (agricultural land, forests and fisheries) andtowards sustainable development. Along with inclusive
wealth as a comprehensive measure, the growth rate ofproduced capital, human capital and natural capital must
be individually monitored and understood to design
sector-specific policies in line with sustainability goals.
Table 2 shows the growth rates of Pakistan’s inclusive
wealth, produced capital, human capital and natural capitalfrom 1992 to 2019. Overall, Pakistan’s inclusive wealthgrew over the period, with human capital and produced

3 represents the growth rate of renewables and nonrenewables from 1992 to 2019. The positive growth rate ofrenewable resources in absolute terms is a promisingindicator for the sustainable development of Pakistan.
However, the population growth rate exceeds the growth ofrenewables, and therefore when the per capita metric isused, negative growth in renewables is observed. It is aconcern that growth is negative for non-renewable natural
capital in both absolute and per capita terms.

capital as the main driving forces.

Table 2:Growth rate of inclusive wealth, produced capital, humancapital and natural capital in Pakistan

Table 4:
Share of produced capital, human capital and natural
capital in the inclusive wealth of PakistanYear

PC share

HC shareNC share

Year

IW

PC

HC

NC

1992

9%

63%

28%

1992-1995

1.8%

4.6%

2.3%

-0.1%

1995

9%

64%

27%

1995-2000

2.6%

3.4%

3.4%

0.1%

2000

10%

67%

24%

2000-2005

2.5%

2.7%

3.3%

0.1%

2005

10%

69%

21%

2005-2010

2.1%

3.6%

2.5%

0.1%

2010

10%

70%

19%

2010-2015

2.7%

2.1%

3.5%

-0.4%

2015

10%

73%

16%

2015-2019

2.0%

3.7%

2.2%

-0.4%

2019

11%

74%

15%

Table 3:Growth rate of renewable and non-renewable resources
in Pakistan

Relative contributions of produced capital, human capitaland natural capital to Pakistan’s inclusive wealth arepresented in Table 4. Human capital was the driving force
of inclusive wealth from 1992 to 2019, and in 2019 theYear

Renewables

Renewables
per capita

Nonrenewables

Nonrenewables
per capita

19921995

0.07%-2.66%-0.87%-3.57%

19952000

0.46%-2.31%-1.03%-3.76%

20002005

0.41%-1.95%-1.29%-3.60%

policies that should see huge resources invested to ensure20052010

0.53%-1.71%-1.89%-4.08%

increasing forest cover and indirectly improving

20102015

0.02%-2.01%-2.22%-4.21%

20152019

0.04%-2.08%-2.66%-4.73%

share of natural capital in inclusive wealth was larger thanthat of produced capital. However, the trend of rapid
decline that characterized natural capital up until 2019 isworrying. To maintain sustainable growth of inclusive
wealth, Pakistan’s policymakers have already implemented
positive growth in natural capital, particularly in terms ofagricultural natural capital through afforestation-led
ecosystem services.

29

5

30

5. INCLUSIVE WEALTH OF PAKISTAN AT THE REGIONAL LEVEL

5. INCLUSIVE WEALTH
OF PAKISTAN AT THE
REGIONAL LEVELThis section contains an analysis of Pakistan’s inclusive
wealth at the grid-cell and province levels. The findings are
based on the application of the inclusive wealth frameworkfrom a geospatial perspective. To identify the optimal
grid-cell level information, we used a geographic,
information system-based measure of the inclusive wealthof nations designed by Bingqi Zhang, Wataru Nozawa andShunsuke Managi (Zhang, Nozawa and Managi 2020). The
spatial resolution of gridded inclusive wealth data is 30 arc
seconds (approximately 1 km). The inclusive wealth ofPakistan is calculated by using hybrid data comprisingsatellite images as well as regional and national data.

5.1 INCLUSIVE WEALTH AT THE GRID LEVEL
The distribution of inclusive wealth is heterogeneous
across Pakistan. The Punjab and Sindh regions of Pakistan
improved overall in terms of inclusive wealth from 2000¬2019, compared to the other regions of Pakistan. Human
capital was one of the most important contributors to thehigh inclusive wealth in Punjab, Sindh and Khyber
Pakhtunkhwa. Pakistan’s produced-capital assets wereconcentrated in Punjab, Sindh and Balochistan regions,while the share of natural capital in Balochistan’s inclusive
wealth was high compared with the other regions.

5.2 HUMAN CAPITAL AT THE GRID LEVELThe grid-level data analysis shows Punjab, Sindh and Khyber
Pakhtunkhwa all contributed to the increase in humancapital in Pakistan, but Balochistan showed comparatively
little progress on this metric. The investment andimprovement in education in Pakistan across the country isreflected in the overall value increase in human capital.

5.3 PRODUCED CAPITAL AT THE GRID LEVEL
The distribution of produced capital mirrors the patterns inhuman capital distribution, outlined in section 4.2, in that
produced capital, in terms of absolute and positive growth,is concentrated in Punjab, Sindh and Khyber Pakhtunkhwa,
indicating an increased focus on infrastructuredevelopment in these areas. The personal capital of
Balochistan is also growing, but at a slower rate than theother provinces. This is to be expected, given that
Balochistan accounts for only around 6 per cent of the
population (PBS 2017). Overall, the patterns of produced
capital distribution show a promising trajectory for
Pakistan’s development.

31

5.4 NATURAL CAPITAL AT THE GRID LEVEL
Box 2 outlines the valuation methodology. The data shows
natural capital values to be especially high in the southerncoastal regions, where the mangrove ecosystems make asignificant contribution to inclusive wealth due to thebenefits they provide, including breeding grounds for thefishing sector, carbon sequestration, buffering against
extreme weather events, and erosion reduction.
5.4.1 Renewable natural resources
In Pakistan, the renewable resources component of natural
capital accounted for 77 per cent in 1992 and 85 per cent in2019. The contribution that renewable resources make toTable 5: The shadow prices for ecosystem types
Land-use types

Parallel biome typeper km2 wealthof ES (in US$)

Forests in thetropical zone

Tropical forest

3.0765

Forests north of thetropical zone

Temperate/boreal
forest

1.7934

Grasslands andshrublands

Grass/rangelands

2.3816Mangroves

Tidal marsh/
mangroves

110.8169

Wetlands

Swamps/floodplains

14.6814

Waterbodies

Lakes/rivers

7.1528Cultivated lands

Cropland

3.1824

wealth tends to directly depend on the land cover dynamics
and how they change over time. The following section(4.4.2) provides additional information about the land cover.
Table 6 presents the value of different types of natural
5.4.2 Land cover

resources in Pakistan, based on remote sensing land coverOver the period of 1992-2019, 7 per cent of Pakistan’sdata. This study calculates the total value of the land,

land area was converted to a different type of land cover.

based on coverage information at the grid-cell level. Land

The urbanization of natural land (mainly between 2000

cover data from the European Space Agency’s Climate

and 2010) was a strong trend, and 6 per cent of cropland

Change Initiative on Land Cover (http://www.esa-

alone was converted for urban use from 2000-2010.

landcover-cci.org/?q=node/164) is used for high resolution

Wetlands accounted for the largest share of the value(300m spatial resolution) information. This data informs

attributed to Pakistan’s renewable resources, due to thethe valuation of the selected ecosystem products andcomparably high ecosystem service value of mangrove

services. The natural resource values are calculated for the

ecosystems (Box 2).

period 1992-2019 based on the unit values of land types
and their coverage. The values of natural resources in Table
6 are represented in millions of US$. The values of cropland
are significantly higher than other land-use types,

BOX 2

THE VALUATION OF NATURAL RESOURCESBASED ON REMOTE SENSING LAND
COVER DATA
Following the procedure presented by de Groot etal. (2012), this study uses a benefit transfer
method to obtain values for each biome includedin the Ecosystem Service Value Database (ESVD).
The analysis also links each type of biome with aparallel or equivalent land cover type (Li, Fang andWang 2016). Table 5 shows the shadow prices, i.e.
prices that are calculated for non-market goods
and services, for all land cover types, taking all
types of ecosystem services into account,
including provisioning services such as food andtimber production.guide sustainable, multi-faceted development.

32

particularly forests. The low valuation of forests has been aconcern and, recently, the subject of policymaker’s
attention, particularly with regard to the TBTTP.

5. INCLUSIVE WEALTH OF PAKISTAN AT THE REGIONAL LEVEL

Table 6:
Value of different types of natural resources, based onremote sensing land cover data
In millions US$

2

Code

Land-use1 classification

1992

2000

2010

2019

10

Cropland

44,926.94

45,679.08

45,618.29

45,002.04

11

Cropland

5,641.52

5,991.23

6,580.94

6,613.72

12

Cropland

148.49150.82150.94150.6920

Cropland

194,119.51

195,445.70

195,642.64

194,333.20

30

Cropland

12,322.64

12,630.52

12,794.06

12,585.14

40

Cropland

31,800.16

31,736.80

31,244.09

30,748.69

50

Forests

395.33389.34395.21401.6960

Forests

3,606.36

3,487.83

3,522.57

3,965.98

61

Forests

561.08545.18547.26546.6470

Forests

15,248.78

14,083.68

14,194.14

14,639.26

71

Forests

1.95

1.95

1.59

1.59

72

Forests

0.24

0.24

0.24

0.24

80

Forests

12.23

13.21

13.45

13.69

81

Forests

1.10

1.10

1.10

1.10

90

Forests

5.50

5.50

5.50

5.62

100

Forests

7,381.03

7,072.42

6,915.24

6,919.64

110

Grasslands

8,459.53

8,499.16

8,571.70

8,527.91

120

Shrublands

6,692.25

3,842.80

3,515.47

3,605.26

121

Shrublands

1.34

1.34

1.34

1.34

122

Shrublands

54,734.31

54,210.05

54,182.77

54,129.93

130

Grasslands

169,632.13

175,531.14

198,012.10

199,396.89

150

Sparse vegetation

26,635.56

27,434.06

28,238.81

29,016.15

160

Wetlands

8.19

8.31

8.31

8.31

170

Wetlands

1,919.56

1,939.75

2,103.17

2,119.07

180

Wetlands

5,992.70

6,315.14

6,507.79

6,507.67

190

Urban land

554.72681.072,989.74

4,791.88

200

Bare lands

249,833.12

245,248.45

219,893.21

217,515.06

201

Bare lands

5,590.39

5,638.34

5,195.54

5,183.06

202

Bare lands

6,451.40

6,678.92

6,719.04

6,701.06

210

Water bodies

7,011.50

6,426.45

6,123.34

6,257.03

220

Permanent snow
and ice

14,131.14

14,131.14

14,131.14

14,131.14

For classification detail, please see Table A1.

33

Table 7 shows the annual growth rate of natural resourcesin different time periods. From 2005 to 2019, the trend inforest growth was positive, but there was negative growthin agriculture (cropland) from 2010 to 2019 due tourbanization and other economic changes. The growth rateof grassland and sparse vegetation increased from 1992 to2019 and, after a downward trajectory (until 2010), thegrowth rate of shrubland and water bodies began torecover. Conversely, wetland cover grew positively from1992 to 2015 but has since declined.
Table 7: Annual growth rate of the natural resources
Agriculture

ForestGrassland

Shrubland

Sparsevegetation

Wetland

Waterbody

1992-1995

0.1%

-0.2%

0.0%

-0.3%

0.0%

0.2%

-0.5%

1995-2000

0.2%

-1.1%

0.7%

-1.0%

0.6%

0.7%

-1.5%

2000-2005

0.0%

-0.1%

1.3%

-0.1%

0.5%

0.3%

-0.1%

2005-2010

0.0%

0.2%

1.1%

-0.0%

0.1%

0.6%

-0.9%

2010-2015

-0.1%

0.0%

0.0%

0.0%

0.1%

0.0%

0.3%

2015-2019

-0.2%

1.0%

0.2%

0.0%

0.6%

-0.0%

0.2%

Photo: Unsplash/Shakeel Ahmad

Period34

5. INCLUSIVE WEALTH OF PAKISTAN AT THE REGIONAL LEVEL

5.4.3 Non-renewable resources$15 million per km2). The inclusive wealth of Khyber

Pakistan’s non-renewable resources are predominantly

Pakhtunkhwa is estimated at between US$2 million andnatural gas, oil and coal; these resources make a significant

US$5 million per km2. Balochistan province has a relatively

contribution to the nation’s natural capital stocks. The

low inclusive wealth in comparison, with only approximately

north of Sindh and some areas of Punjab are rich in natural

US$0.5 million to US$2 million per km2, at least partly due

gas while the southern part of Sindh and northern part of

to its relatively small population.

Punjab account for the majority of oil fields. The coal fields
in different geographic regions of Pakistan are mainly

The distribution of human capital among Pakistan’s four

located in Sindh and Balochistan.

provinces shows significant heterogeneity. Punjab is themost advanced province in Pakistan with regards to humancapital, with stock of approximately US$5 million to US$15

5.5 GROWTH OF INCLUSIVE WEALTH OVERALL AT
THE GRID LEVEL

million per km2. Sindh and Khyber Pakhtunkhwa are thesecond and third wealthiest provinces in terms of humancapital stocks, while Balochistan shows the least

Most of the regions of Pakistan experienced positive

development in this area.

growth in inclusive wealth in the period of 2000-2019.
Punjab in particular experienced high growth in inclusive

Looking at the stock of produced capital at the province

wealth, with Sindh and Balochistan also seeing

level, the highest values are found in Punjab and Sindh,considerable growth in the same period.

reflecting relatively higher levels of industrialization andurbanization. The value of produced capital stock in Punjab

From 2000 to 2019, Pakistan experienced growth in humanis approximately US$0.5 million to US$1 million per km2,

and produced capital, with the strongest growth in Punjab

while in Khyber Pakhtunkhwa it is approximately US$0.1

and Sindh. Natural capital values in Pakistan decreased inmillion to US$0.5 million per km2.

areas where the reserve of fossil fuels decreased and where
natural land cover was converted to other uses, such as

Sindh, thanks to its vast area of coastline and the highsettlement areas. Growth increased, however, in areas

value of mangrove forests, has the highest stock of natural

where bare lands were converted to vegetation cover,capital of all the provinces. The southern part of thisincluding shrubland and forest area. There was a decreaseprovince is particularly rich in biodiversity and thus

in natural capital in Punjab and Sindh, but a slight increase

contributes significantly to the overall natural capital of

in Balochistan. Regarding the renewables component ofPakistan. The value of natural capital in Sindh isnatural capital, the TBTTP project is set to replenish forest

approximately US$0.6 million per km2.

and wildlife resources in the near future; tangible plans arein place and actions have started to increase vegetation
cover. This tremendous effort has the potential to improve
the overall condition of the existing protected areas,
encourage eco-tourism and drive job creation throughecosystem restoration.

5.6 INCLUSIVE WEALTH OF PAKISTAN AT THE
PROVINCE LEVELThis subsection explains the distribution of inclusive
wealth, human capital, produced capital and natural capital
among the different administrative provinces of Pakistan.
The country has four provinces and one federal territory.
The four provinces are Balochistan, Punjab, Sindh andKhyber Pakhtunkhwa. The federally administered area is
Islamabad Capital Territory. Pakistan also administers two
autonomous territories of Pakistan-administered Kashmir.
In terms of the stock of inclusive wealth at the provincelevel in Pakistan, Punjab and Sindh have high values ofinclusive wealth in absolute terms (from $5 million to

35

6

36

6. SUMMARY OF FINDINGS

absolute terms during the period 1992-2019. From 1992 to
2019, Pakistan’s IW grew at an annual rate of 2.3 per cent.
Analysis of the individual capital categories shows thathuman capital and produced capital grew at a rate of 2.9
per cent and 3.2 per cent respectively, but natural capitaldecreased at an annual rate of 0.1 per cent. Because of thehigh growth rate of population of 2.4 per cent, IW per capita
slightly decreased at the national scale. HC per capita andPC per capita increased at an annual rate of 0.5 per centand 0.8 per cent, but NC per capita decreased at a rate of
2.5 per cent. However, the last five years have shown
evidence of an environmental turnaround, with forests,
grassland, sparsely vegetated areas and water bodies all
growing in area since 2015. This is likely boosted by
Pakistan’s effort on restoration policy and tree plantation
schemes as part of the Ten Billion Tree Tsunami
Programme.

Photo: Unsplash/Shakeel Ahmad

6. SUMMARY
OF FINDINGS

Pakistan has experienced growth in inclusive wealth in

37

7

38

7. CONCLUSION

7. CONCLUSION

The potential for Pakistan’s economy to expand anddevelop sustainably largely depends upon the
management of, and investment in its natural capital (NC).
Therefore, maintaining the quality and quantity of allcomponents of natural capital (particularly land-based
restoration for its multiple benefits) should be a priority forpolicymakers. From this report, there is clear evidence
showing that over the past several decades, substantial
growth has been observed in Inclusive Wealth. However, as
this accumulation of wealth has been occurring, natural
capital depreciation has been observed. By using the
Inclusive Wealth Index Framework that includes natural
capital as a prominent feature of capital stocks, we areable to identify specific trends such as the concerning
trends of decline in natural capital, and the effects that
restoration policies such as the TBTTP has upon thetrends of natural capital.
Alhough the estimates of natural capital show a period of
decline from 1990-2019, the data also suggests that theeffort by the government especially since 2014 has paid arich dividend, such that natural capital in the forms offorest, wetland and natural areas are on rise. The trend
also promises to continue as a result of various restoration
programmes including the TBTTP.
Specifically, the Inclusive Wealth estimates for Pakistanoffer policymakers a framework for addressing three main
issues. First, when making policy decisions that promotesustainability, it is critically important to understand thetrade-offs that occur temporally, and across different
types of asset bases (capital stocks). In a world of scarce
resources and an ever-increasing set of demands, tradeoffs are inevitable. Difficult decisions have to be madewhen prioritizing goals. Secondly, when weighing up
decisions on investment and navigating these trade-offs,
understanding the social prices and market prices andtheir deviations is essential. Many of the assets that are
critical for maintaining the productive base for the
economy of Pakistan are either not priced or are priced atmuch lower levels than is reflective of their value to thenational economy and human wellbeing. This is especiallytrue for natural capital, which has historically sufferedfrom systematic undervaluation in cost-benefit and othereconomic analyses. For example, natural assets such as
inland forests and mangroves have been valued to an
extent, but only really in terms of the products they provide
for the market like timber and fish biomass. In reality,
these ecosystems offer a much larger suite of services
such as water purification, water cycle, water regulation,oxygen generation, carbon sequestration, medicinal
knowledge, biodiversity and soil quality, among manyothers. Pricing these benefits is much more difficult –39

though not impossible – and therefore tend to beneglected in policy decisions where these values areoverlooked or not made explicit. Third, the asset side of thenational balance sheet is now expanded to include humancapital and natural capital. This is great leap forward
towards measuring the contribution to natural resources
and systems (such as expanded forest area throughrestoration initiatives) to the health and existence ofhuman societies. With the combination of systematic
measurement of natural assets using natural capital
accounts, and the continued focus on restoration as apriority within economic policy, Pakistan is well-placed to
be a pioneer in restoration initiatives, regional-level natural
capital accounting, and national wealth management, allthree of which are cornerstones of the SDGs.

40

Photo: Unsplash/Faseeh Shahzad

7. CONCLUSION

41

8

42

8. REFERENCES

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de Groot, R., Brander, L., van der Ploeg, S., Costanza, R.,
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pakistan-explores-debt-nature-scheme-accelerate-10-billion-tree-tsunami/. Accessed 20 April 2021.
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Food and Agricultural Organization of the United Nations(FAO) (2015). Women in Agriculture in Pakistan. Islamabad.
Government of Khyber Pakhtunkhawa, Forestry Department, (2020). Billion Tree Afforestation Project.
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iucn_pakistan.pdf
IUCN (2020). IUCN, FAO and WWF Pakistan join handswith Ministry of Climate Change to monitor the largest
afforestation programme in Pakistan, 22 September.
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Khan, I.H., Javaid, A., Al-Taie, A.H., Ahmed, D. (2020). Useof Neem leaves as soil amendment for the control of collar
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8. REFERENCES

45

9

46

9. ANNEX

9. ANNEX

A1. DATA SOURCES
National level• Human capital: World Bank and Pakistan Bureau of
Statistics• Produced capital: World Bank
• Fossil fuels: United States Geological Survey and British
Petroleum (BP) statistics
Grid-cell level• Gridded population data: Worldpop (100m resolution)
https://www.worldpop.org/geodata/listing?id=78• Night-time light data: NASA (U.S. Air Force Defense
Meteorological Satellite Program (DMSP) radiancecalibrated data, Visible Infrarad Imaging Radiometer
Suite (VIIRS) night-time lights) https://payneinstitute.
mines.edu/eog/nighttime-lights/• Land cover data: European Space Agency Climate
Change Initiative Land Cover products (listed in Global
Forest Watch) http://www.esa-landcover-cci.
org/?q=node/164

47

Table A1: Land cover types and land-use classification
Code

Land cover typeLand-use classification

10

Rain-fed cropland

Cropland11

Rain-fed cropland

Cropland12

Rain-fed cropland

Cropland20

Irrigated cropland

Cropland30

Mosaic cropland (>50%) /natural vegetation (tree, shrub, herbaceous cover) (<50%)

Cropland40

Mosaic natural vegetation (tree, shrub, herbaceous cover) (>50%) /cropland (<50%)

Cropland50

Tree cover, broadleaved, evergreen, close to open (>15%)

Forests

60

Tree cover, broadleaved, deciduous, close to open (>15%)

Forests

61

Tree cover, broadleaved, deciduous, close to open (>15%)

Forests

70

Tree cover, needleleaved, evergreen, close to open (>15%)

Forests

71

Tree cover, needleleaved, evergreen, close to open (>15%)

Forests

72

Tree cover, needleleaved, evergreen, close to open (>15%)

Forests

80

Tree cover, needleleaved, deciduous, close to open (>15%)

Forests

81

Tree cover, needleleaved, deciduous, close to open (>15%)

Forests

90

Tree over, mixed leaf type (broadleaved and needleleaved)

Forests

100

Mosaic tree and shrub (>50%) / herbaceous cover (<50%)

Forests110

Mosaic herbaceous cover (>50%) / tree and shrub (<50%)

Grasslands

120

Shrubland

Shrublands

121

Shrubland

Shrublands

122

Shrubland

Shrublands

130

Grassland

Grasslands

150

Sparse vegetation (tree, shrub, herbaceous cover)Sparse Vegetation

160

Tree cover flooded, fresh or brackish water

Wetlands

170

Tree cover flooded, saline water

Wetlands

180

Shrub or herbaceous cover, flooded, fresh-saline or brackish water

Wetlands

190

Urban

Urban land

200

Bare areas

Bare lands

201

Bare areas

Bare lands

202

Bare areas

Bare lands

210

Water bodies

Water bodies

220

Permanent snow and ice

Permanent snow and ice• Coal distribution:
Sohail, M.T., Huang, D., Bailey, E., Akhtar, M.M., Talib, M.A.
(2013). Regulatory framework of mineral resources
sector in Pakistan and investment proposal to Chinesecompanies in Pakistan. American Journal of Industrial
and Business Management 3(5) 514-524. https://doi.
org/10.4236/ajibm.2013.35059.
• Oil and Natural gas distribution: PRIO Petroleum Dataset
v.1.2. https://www.prio.org/Data/Geographical-and-Resource-Datasets/Petroleum-Dataset/Petroleum-Dataset-v-12/48

9. ANNEX

A2. DATA NOTES• National data from 1990 to 2014 were drawn from IWR
2018 data and consistent data for human capital,
produced capital and fossil fuels from 2015 to 2019 were
updated by the data sources listed above.
• The gridded population data have been adjusted to beconsistent with the total number at district level according to the survey data by Gridded Population of the World
version 4 (GWPv4).
• Gridded inclusive wealth data only date back to 2000
because gridded population data are only available from2000.
• National data date back to 1992 rather than 1990
because land cover data are only available from 1992.
• Global Forest Watch also provides high resolution forest
data (30m resolution with coverage rate) but as they are
only available for 2010, they are not suitable fortime-consistent analysis.

A3. METHOD NOTES
1. The gridded human capital data is calculated bymultiplying gridded population count and national per
capita human capital. The spatial disparity of humancapital therefore mainly represents the spatial distribution of population.
2. The national produced capital data in 2000 is directly
disaggregated into grids in proportion to night-time lightvalue. The gridded produced capital data in 2010 iscalculated by adding the gridded 2020 data and thegrowth of produced capital between 2000 and 2010,
disaggregated into grids in proportion to night-time lightdata value during this period. The data in 2019 are
estimated in the same way.
3. Detailed distribution maps for fossil fuels are unavailable. The national value is therefore distributed uniformly
among field polygons.
4. The calculation method for renewable resources isdifferent from that of the IWR. Renewable resources arecalculated by the valuation of their ecosystem services
and products.

49

50

Photo: Unsplash/Kamran Ch

This report will be launched
on June 5 in celebration of the2021 World Environment Day
hosted by Pakistan.
World Environment Day is
the United Nations flagshipday for promoting worldwide
awareness and action for
the environment.
This World Environment Day, join
#GenerationRestoration to revive
and protect our ecosystems.