137

Valuing Humanity’s Life Support Systems:
Inclusive Wealth and Satoyama Landscapes
Anantha Kumar DURAIAPPAH1* and Elorm DARKEY2
1*International Human Dimensions Programme, United Nations University, UN Campus,
Hermann-Ehlers Str. 10, 53113 Bonn, Germany
2
Department of Economics, Juridicum, University of Bonn,
Adenauer Allee 24-42, 53113 Bonn, Germany*e-mail: duraiappah@ihdp.unu.edu

Abstract
We present a new metric known as the inclusive wealth index (IWI) for evaluating progress in humanwell-being. The metric is based on a welfare economic framework but goes just beyond incorporating the economic component of welfare to include natural and social systems. There has been much debate on declining
natural systems and the implications this will have on human well-being. We make a strong case in contradiction to recent literature from the natural sciences in our assertion that humanity’s life support systems include
not just the natural systems but also the social and economic systems. We illustrate how local place-based programs can contribute to maintaining and strengthening these life support systems. The socio-ecologicalproduction of satoyama landscapes in Japan will be used to illustrate this synergy.
Key words: inclusive wealth, satoyama, sustainable development, well-being

1. Introduction
Humanity is no doubt at a crossroads. The recent
experiences of a triage of social, environmental and economic crises across many parts of the world have broughta certain sense of fallibility and vulnerability, not seen
just 40 years ago. The economic crisis that has gripped
many of the past economic giants such as the UnitedStates and much of Western Europe has finally aroused
people into questioning the economic models we haveused over the past six decades. Increasing unemployment
rates, especially among the young, have caused social
tensions to rise in what were termed stable nations only adecade ago. Spain, Portugal, Greece, France, and Italy
just to name a few are all experiencing sluggish economic
growth and are plagued by growing social issues withregard to health and education. This does not bode wellfor many of the developing countries that have been looking to the West for their model of economic growth.
Countries rich in resources such as minerals and petroleum have been doing relatively well but, as these resources become scarce, for how long?
New models are needed and the good news is that thiscall is increasingly coming from the political community,
private sector and the general public. Politicians are increasingly calling for new economic systems as demonstrated by the Sarkozy initiative focusing on evaluating
progress beyond GDP. The recent report by the United
Global Environmental Research
16/2012: 137-144
printed in Japan

Nations Secretary General’s high level panel, “Resilient
People, Resilient Planet” again calls for new economic
systems and goes further by questioning the use of economic production indicators such as gross domestic product to measure human well-being, while urging new
holistic measures that give a broader perspective towell-being. The report was written with the Rio+20
summit in mind.
At the time of writing of the present article, preparations are underway for the Rio+20 summit to be held in
Rio de Janeiro in June 2012. The Rio summit, for those
who are new to the literature on sustainable development,
was held in Rio de Janeiro in 1992 and called the UN
Conference on Environment and Development. One
hundred severnty-two governments participated in thatsummit, of which 108 were represented by their heads ofstate. Three non-legally binding documents were signed,
which included the Rio Declaration on Environment andDevelopment, Agenda 21, and the Forest Principles. In
addition two legally binding documents were agreed on,
regarding the establishment of the Convention on Biological Diversity and the Framework Convention on
Climate Change. The Rio+20 summit is being called the
UN Conference on Sustainable Development.
The notion of sustainable development, however, is
not new, but has been around for decades (Duraiappah,
2003). The most recent concept and definition of it can betraced back to 1983, when then Secretary General of the©2012 AIRIES138

A. K. DURAIAPPAH and E. DARKEY

United Nations, Javier Perez de Cuellar, appointed Gro
Harlem Brundtland from Norway to head a special
commission to address the rapid deterioration of thehuman and ecological environments. The resolution
establishing the commission by the General Assembly in
A/RES/38/161 (United Nations General Assembly, 1983)
stipulates the following terms of reference:(a) To propose long-term environmental strategies forachieving sustainable development to the year 2000 andbeyond;(b) To recommend ways in which concern for theenvironment may be translated into greater co-operation
among developing countries and between countries atdifferent stages of economic and social development andlead to the achievement of common and mutually
supportive objectives which take account of theinterrelationships among people, resources, environmentand development;(c) To consider ways and means by which theinternational community can deal more effectively withenvironmental concerns, in the light of the otherrecommendations in its report;(d) To help define shared perceptions of long-term
environmental issues and of the appropriate efforts
needed to deal successfully with the problems ofprotecting and enhancing the environment, a long-term
agenda for action during the coming decades, andaspirational goals for the world community.
In 1987, the commission published, “Our Common
Future.” The report emphasized the notion of sustainable
development and defined it as “development that meetsthe needs of the present without compromising the needsof the future” (World Commission on Environment andDevelopment, 1987). Although the terms of reference
given to the commission at first sight might seem to be
narrowly confined to the environment, the commission
members had the foresight to understand the importanceof addressing these issues within an integrated framework, bringing together the social, economic andenvironmental spheres to address the notion of sustainability. At the end of the day, it is the welfare of humans
that we are concerned about, not just the present generation but future generations as well.
The commission calls for a new era of economic
growth that is socially and environmentally sustainable.
The report does an excellent job of informing us of thestate of the planet, emphasizing the need for urgent action,and explaining what needs to be done and where action isrequired both across regions as well as in key focus areas.
The report, however, falls short on providing guidance on
how to measure progress in a quantifiable way that can
provide support to policymakers on where interventions
and responses are needed.
This brings us back to the present. We witness an almost similar process leading to the Rio+20 summit. We
have an influential report similar to the Brundlantd report,“Our Common Future,” being released by the UN
Secretary General, called “Resilient People, Resilient
Planet.” The reports have a common theme. They bothcall for a new era of economic growth although the tonein the recent report conveys urgency and catastrophic
consequences if warnings go unheeded, but anothercommon theme between both reports is the lack of concrete suggestions for solutions. There are of course many
ways to operationalize sustainable development andmove towards a new economic system that endorses andsupports the principles underlying sustainable development. In this paper, we shall concentrate on a key aspectthat if, we believe strongly, not addressed will always bea barrier to a transition to sustainability. Providing overarching principles and definitions for sustainable development is no doubt a move in the right direction. However, not providing a new metric to measure progress
leaves countries with little option but to continue using
gross domestic product (GDP) per capita to track progress. This, in turn, leaves most countries in a dilemma.
GDP per capita measures economic output, while
sustainable development is more concerned about meeting present needs without compromising the needs offuture generations.
The object of this paper is to present a new metricknown as the “inclusive wealth index” (IWI) for evaluating progress in human well-being. The metric is basedon a welfare economic framework but goes beyond justincorporating the economic component of welfare toinclude natural and social systems. There has been muchdebate on declining natural systems and the implications
this will have on human well-being. However, this paper
also acknowledges the importance of social systems aswell in determining well-being. Therefore, we make astrong case in contradiction to recent literature from thenatural sciences that humanity’s life support systems
include not just natural systems but also social andeconomic systems. The second part of the paper thenillustrates how local place-based programs can contributeto maintaining and strengthening these life support
systems. The socio-ecological production landscapes ofJapan will be used to illustrate this synergy between thelocal and national in this paper.

2. We only Manage What We Measure
The affiliation with GDP per capita is understandable.
It is easy to compute, it is based on a rigorous andwell-tested economic theory. Moreover, the data needed
to compute GDP are relatively easy to compile andcountries have been quick to adopt this system of national
accounts. However, to use GDP per capita as a measureof well-being is a mistake. Although some attempts havebeen made by the United Nations to redress this oversightin the form of the Human Development Index, there arestill gaping fallacies in accounting for sustainability.
Let us begin with GDP per capita. Simon Kuznets
developed the gross domestic product in 1934 for theAmerican Congress. He immediately warned against
using it as a measure of social welfare and emphasizedthat the well-being of the citizens of a country should not
be measured by just economic production. However,Inclusive Wealth and Satoyama Landscapes

after the Second World War, GDP came to be the mainstream indicator of success as countries were recoveringfrom the war and busy building up the infrastructure
required for recovering and moving forward. Therefore,
it may have served as a good proxy for economic successin the early years after the war but became more andmore redundant as countries progressed and different
goals and problems emerged.
The first real alternative to GDP emerged in 1990,
when development economist Mahbub ul Haq together
with Amartya Sen developed the Human Deveopment
Index (HDI). The main difference between GDP and HDI
was the inclusion of literacy and life expectancy in withthe gross domestic product to obtain a composite index.
In 2011, gross national income (GNI) was used instead ofGDP. No doubt, HDI made a move in the right direction
by including determinants and/or constituents ofwell-being in the equation. HDI moved the focus fromthe standard of living that many economists said was
depicted by GDP per capita to the quality of life as HDI
was reportedly mentioned to measure.
Both indicators no doubt have a purpose. The problem arises when they are used as indicators for measuring
dimensions they were not designed in the first place tomeasure. Therefore, using GDP or HDI as indicators formeasuring sustainable development is erroneous. Neither
GDP/capita nor HDI inform users on two key components of sustainability. First, there is no explicit attention
to the future. Both indicators are snapshots of the statusof a country at the present. Second, there is no attention
to the environment and the role it plays in economic
production in the case of GDP and to life expectancy inthe case of HDI. Neither indicator therefore gives any
indication if the progress made to date can be maintainedin the future and if the present indicators give the correct
status of the well-being of a country and its citizens in theabsence of environmental factors.
There is no doubt a universal consensus on why it isimportant for indicators of progress to provide indications if trends can be maintained or improved, or have thepossibility of decline over time. However, in the case of
the environment, there is an urgent need to illustrate why
it is important for well-being, and any metric to measureprogress must include it as part of the equation.
The link between the environment and well-being has
been well documented. The Millennium Ecosystem
Assessment (MA) elucidated the links among ecosystemservices and the various constituents and/or determinantsof well-being (MA, 2005). The Biodiversity Synthesis
report from the MA as well as other studies elaborated in
more detail the close interdependencies between changes
in biodiversity, ecosystem services and the various
constituents of well-being and the implications forpoverty and inequality across countries and individuals(Duraiapah et al., 2005; Dasgupta, 2001).
It is therefore not surprising we continue to see
degradation of the natural environment. Because it is notreflected in the indicators we use to guide our economic
decisions, any changes in natural systems are therefore

139

assumed by default benign. It should also not come as asurprise if we continuously hear of the growth versus
environment debate. The fact that we do not recognize
the close inter-dependency among the natural and economic system and only see trade-offs and not synergies
explains this overly simplistic and grossly wrong debate.
The bottom line is we are basically using the wrong
measure for evaluating improvements in well-being andsubsequently guiding policymaking.
2.1 Inclusive wealth and well-being
We begin by drawing on a revised definition ofsustainable development (Dasgupta & Duraiappah,
2012). Equations in this section are adapted from Arrowet al. (2012) and Dasgupta and Duraiappah (2012).
Definition 1. By sustainable development we mean apattern of societal development along which (intergenerational) well-being does not decline.
We therefore state that intergenerational well-being is
captured by Equation 1:
V (t ) =∞∫t [U (C(s))e−δ ( s − t )]ds, δ ≥ 0(1),

where C(t) denotes a vector of consumption flows attime t and δ the discount rate.
Hence U(C(t)) denotes utility (the satisfaction that
one enjoys from consuming goods and services) flow attime t. At any point in time, one can measure how stocks
of assets evolve or vary. In doing this, one is able to determine the productive base of an economy. Formally, we
create an economic forecast by assuming a resource
allocation mechanism.
Let K(t) denote a set of vector stocks of capital assets
at time t. Then for a given K(t), C(t), U(C(t)) andtogether with (1), we can writeV(t ) = V(K (t ), M, t )(2),where V(t) denotes intergenerational well-being at time t,
K(t) denotes a set of vector stocks of capital assets attime t and M denotes an evolving political economy.
Differentiating V(t) with respect to t in equation 2, we
obtain:dV (t ) =ΔV
+ ∑ i [(ΔV (t ) / ΔK i (t ))(dK i (t ) / dt )] ≥ 0
Δt(3)

Equation (3) illustrates the criterion for sustainability.
In other words it shows the sustainability of an
economy’s development.
We proceed in deriving the shadow price. Let ΔV(t)represents a small change in V(t) and ∆Ki (t) represent asmall increase in capital asset i at time t. Using Definition
1 together with Equation 2, we obtain the shadow price ofasset i at time t140

pi (t ) ≡A. K. DURAIAPPAH and E. DARKEY

ΔV (t )
ΔK i (t )for all i(4)

Let Δt represent a small passage of time following t.
To measure inclusive wealth we represent Q(t) as the
shadow price of time that is
Q(t) = ΔV(t)/Δt(5)

Using Equation 6 we can construct an aggregate index
of a country’s stock of capital assets by using the shadow
prices as weights. This index is known as inclusive
wealthW = Q(t )t + ∑ pi (t )K i (t )

(6),

i

where pi (t) refers to shadow prices of capital assets Ki (t).
Institutions are reflected in the pi’s via M (Dasgupta &Duraiappah, 2012).
An important relationship or linkage exists betweenchanges in inclusive wealth at constant prices and intergenerational well-being. (Arrow et al., 2012). To show
this formally, let Δ denote these changes.

⎡ ΔV (t ) ⎤⎡ ΔV (t ) ⎤ΔV (t ) = ⎢Δt + ∑ i ⎢⎥ ΔK i (t )⎥⎣ Δt ⎦⎣ K i (t ) ⎦(7)

By using Equations 4 and 5 we can express Equation
6 as

ΔV (t ) = Q (t ) Δt + ∑ i pi (t ) ΔK i (t )(8)From our derived equations, (6) and (7) are equivalent
to Equation (8), stating that the change in well-being isequal to the change in wealth and this is equal to thechange in the capital asset base or productive base of anation.
2.2 The productive base of a country
The productive base or inclusive wealth of a country
as illustrated by Equation 7 is typically the total value ofthe different capital assets a country owns. The typicalcapital assets commonly known are produced capital,
human capital, natural capital and social capital.
As Fig. 1 shows, the way the different capitals areused is to a large extent determined by the evolving cultural and social norms. Similarly, the human well-being
constituents are also determined by the evolving cultural
norms. The weights society places on these different
capital assets are determined by the relative shadow
prices of each capital asset category and its respective
elements.
Figure 1 also shows that wastes produced by the economic system flow back to the ecological system and cancause degradation to these systems which causes a decline in some of the ecosystem services they provide,
which form part of the natural capital asset base. These
negative externalities are captured through damage
functions on the overall productive base or inclusive
wealth of a country. Damages caused by climate change
are an example of such an impact on the inclusive wealthof a country.
The framework developed for the inclusive wealthaccounts makes a fundamental difference from many
previous studies on natural capital and life supporting
systems found in the natural sciences literature. For
example, the recent article in Nature on planetary
boundaries (Rockström et al., 2009) only points towards
natural systems as the key to life-supporting systems andgoes on to identify critical thresholds and tipping points
beyond which no changes should occur. We, on the other
hand, take a different approach, whereby we suggest thatin addition to natural systems, there is also a need for a

Fig. 1 The productive base and human well-being (Source: UNU-IHDP and UNEP 2012).

Inclusive Wealth and Satoyama Landscapes

critical level of human and produced capital for humanwell-being. We argue that critical levels of each capital
asset must be identified as a system working in a holistic
framework towards the end goal of improving humanwell-being. Therefore, in addition to critical levels ofnatural capital, we argue for critical levels of human andproduced capital necessary for achieving a minimum
level of well-being and maintaining those for the present
and future generations.
2.3 Common assets
The list of types of capital assets can be substantiallylong and in many cases difficult to account for andevaluate. In this paper, we focus on the three maincategories of capital as follows. They are known to berelatively large compared to other forms of capital andwhere we have relatively good data to compute changes
over time.
2.3.1 Reproducible or produced capital (roads,
buildings, ports, machinery, equipment)
In common parlance, including national accounts, thiscategory pretty much exhausts the list of capital assets.
When national income accountants and internationalorganizations speak of investment, they usually mean theaccumulation of reproducible capital. Reproducible
capital is frequently called “manufactured capital.”
2.3.2 Human capital (education, skills, tacitknowledge, health)This category is embodied in people. As teachers are
painfully aware, human capital is not transferable
without cost from one person to another.
Education, skills, and health are ends as well as means.
They have intrinsic worth, but are also of indirect value(investment in human capital raises a person’s productivity).
2.3.3 Natural capital (local ecosystems, biomes,
subsoil resources)
Natural capital refers to stocks of nature which
produce a range of ecosystem services. Ecosystemservices are the benefits ecosystems provide for humanwell-being. Today it has become commonplace thatnature should enter explicitly in economic calculations.
2.4 Inclusive wealth estimate
In this section, we present results from the forthcoming first publication of the Inclusive Wealth Report for 20
countries on their inclusive wealth over a period of 19
years (UNU-IHDP & UNEP, 2012). These 20 countries
were chosen in a manner such that they represent about
58% of the world’s population and 72% of the world’s
GDP as of 2010. As natural capital is a major focus in thisfirst Inclusive Wealth Report, we selected countries
where nature plays an important role in their economies,
as with oil in Ecuador, Nigeria, Norway, Saudi Arabia
and Venezuela; minerals in Chile; and forests in Brazil.
We also sought to include major economies on all of thecontinents. To calculate the inclusive wealth of a country,
one obtains data for each of the forms of the capital assets
discussed. Some variables for which these capital assets
are calculated include education and wages for humancapital, and renewable and non-renewable natural resources such as forest resources, fossil fuels and minerals
for natural capital. IWI as shown in column (1) of Table 1
is computed by first adding the various capital growth
rates. Column (3) indicates IWI per capita, that is, howmuch wealth each person in a country receives when the
total inclusive wealth is divided among the entire
population, all other things being equal. In other words
we account for the effects of population growth on theoverall inclusive wealth. Column (4) indicates thepercentage changes in IWI due to effects of population
growth. All countries except Russia have a positive
Inclusive Wealth Index as shown in Table 1. This meansthat keeping the population constant, 19 of the 20 countries are on a sustainable track. The picture changes when
we include population growth rates and compute the percapita statistics. Five additional countries have negative
IWI. This suggests that these countries have population
growth rates greater than their IWI growth rates, implying a dwindling productive base to maintain the growing

Table 1 Average annual IWI growth rates (in %) for the period 1990-2008.
IWI
Population
IWI per capita
Countries \ Indicators
(1)
(2)
(3)
Australia
1.41
1.29
0.12
Brazil
2.3
1.38
0.91
Canada
1.41
1.03
0.37
Chile
2.56
1.35
1.19
China
2.92
0.83
2.07
Colombia
1.62
1.7
-0.08
Ecuador
2.14
1.76
0.37
France
1.95
0.51
1.44
Germany
2.06
0.23
1.83
India
2.66
1.74
0.91
Japan
1.1
0.19
0.91
Kenya
2.85
2.79
0.06
Nigeria
0.53
2.44
-1.87
Norway
1.33
0.67
0.66
Russia
-0.5
-0.19
-0.31
Saudi Arabia
1.57
2.72
-1.12
South Africa
1.57
1.64
-0.07
United Kingdom
1.26
0.38
0.88
United States
1.74
1.04
0.69
Venezuela
1.7
1.99
-0.29
Source: UNU-IHDP and UNEP, 2012.

141% change due to population
(4)
91.49
60.43
73.76
53.52
29.11
104.94
82.71
26.15
11.17
65.79
17.27
97.89
452.8350.38
38
171.34104.4630.16
60.34
117.06

142

A. K. DURAIAPPAH and E. DARKEY

population of these countries. The countries which saw
the biggest change in IWI because of population growth
were Nigeria, Saudi Arabia and Venezuela. Countries
with relatively high population growth rates such as
Nigeria, and Saudi Arabia, which had rates of above 2%
per year, saw their IWI go from positive to negative while
Colombia, South Africa, and Venezuela also saw their
IWI go negative, but their already low IWI growth rates
are acknowledged. Russia, on the other hand, experienced a negative population growth rate but still returneda negative IWI growth rate because of a relatively large
negative IWI rate prior to taking into account its population growth rate. Looking more closely at the group ofindustrialized countries, Australia, Canada and even to acertain extent the United States had much of their growth
in inclusive wealth dampened by relatively high population growth rates. They have two options. The first would
be to reduce their population growth rate further but thiscan only be suggested after taking into consideration the
population dynamics of the country, total population, andpopulation density. These countries have relatively small
populations in comparison to the land area they have,suggesting a further reduction in their population growthrate that incidentally is below the replacement rate of 2.1
might not be the best strategy. This might actually
jeopardize the overall inclusive wealth growth rate of thenation as it might hamper the build- up of produced andhuman capitals, which are also essential determinants ofwell-being. Therefore, if population levels in thesecountries are to be maintained at their present levels, thenthese countries have not been building up their productive base over the past 19 years to maintain these population levels. We shall look in more detail at how thesecountries have been developing their capital asset base in
Chapter Three. Figure 2 provides more detailed information on the change in the natural capital composition.
As Fig. 2 illustrates, only a few countries like Japan, theUnited States and France have been able to increase theforest component of their natural capital base while mostother countries have seen declines. We shall show in thefollowing chapter why this has been the case for Japan.

3. The Satoyama, Natural Capital and the IWI
In this Chapter, we will look at Japan in particular andexplore the reasons the forest stock in Japan has been
increasing and the role it has played in increasing the IWIof the country. This paper will introduce the term
“satoyama” and illustrate the critical role it has playedover the past two decades in maintaining a positive IWI
for Japan. The lessons learnt from the landscapes can be
useful for other countries trying to increase their productive base over time.
“Satoyama” is a Japanese term for landscapes thatcomprise a mosaic of different ecosystem types, including secondary forests, agricultural lands, irrigation ponds
and grasslands, along with human settlements. Numerous
groups and individuals have attempted to define“satoyama” from their own background and interests,
and some refer to it as ecosystems; coppices andCropland and Pasture land

ForestFisheries

Fossil Fuels

MineralsPopulaon

Natural capital per capita

Fig. 2 Composition of natural capital asset categories.
Source:UNU-IHDP and UNEP, 2012.

Inclusive Wealth and Satoyama Landscapes

secondary forests, while others refer to it as traditional
rural landscapes (Takeuchi, et al., 2003). Theselandscapes have been formed and developed throughprolonged interaction between humans and ecosystems,
and are most often found in the rural areas of Japan. It isestimated that the satoyama comprises more than 40% ofJapan’s total landmass (Ministry of the Environment,
Japan, 2001). For instance, satoyama land in Ishikawa
Prefecture accounts for more than 60%-70% of the total
prefectural land area (Ishikawa Prefecture, 2004) and in
Chiba it is estimated that approximately 58% of the landis satoyama (Chiba Prefecture, 2008).
Satoyama landscapes in the past produced much of
the food, fuelwood, timber and water for local communities. They also provided a way of life, illustrating
the symbolic interaction between humans and the natural
system. In many ways, they demonstrate how society inthe past used land in a sustainable manner to produce
goods which society had reason to value. The mosaic
approach adopted by the satoyama implies a rich diversity of ecosystem types, with each system having a great
variety of flora and fauna.
The satoyama possesses numerous significant values
which are derived from their ecological, social, culturaland economic functions through the use of the ecosystemservices flowing within these areas. Besides its role as ahome for humans, the satoyama pools the various ecosystems–including agro, forestry, wetlands, grasslands,marine and coastal ecosystems–and biodiversity, toprovide ecosystem services that contribute to humanwell-being. For instance, the ecosystems in the satoyama
provide direct use values such as food, fiber, fuelwood
and water among others. At the same time, the satoyama
also produces a number of indirect use values that include
flood and water regulation, water purification, cultural
services and pollination among many others. Then there
are optional values, which might include the maintenanceof the satoyama for future generations as a source of theircultural heritage.
The values of these ecosystem services that contributeto human well-being differ across different social groups.
For example, local communities value many of the direct
uses, like rice production, fish production and water
regulation, much higher than urban residents, who might
be able to acquire these services from other sources.
Urban residents, on the other hand, might place highvalues on the indirect uses such as climate regulation andcultural services. These different values of ecosystemservices held by different social groups influence theperceptions and attitudes towards the satoyama and its
use in preserving biodiversity and the sustainable supply
of different ecosystem services. Recognizing and respecting these differences in perceptions and attitudes isimportant if satoyama landscapes are to be used to reduce
the rate of loss in biodiversity and maintain a sustainablesupply of ecosystem services.
A recent comprehensive assessment of the satoyama
found that satoyama landscapes have been on the decline
over the past two decades (Duraiappah et al., 2012). The

143

key drivers of this decline have been urbanization, theaging population and under-use of land for agriculture
and forestry. Therefore, although the area undersatoyama-type systems has been declining, the acreage
under forests has been on the rise and this has contributed
to the increase in the inclusive wealth of Japan as shownin the previous Chapter. This results in an interesting
paradox. On one hand, the decline in satoyama landscapes has caused a drop in biodiversity and many
regulating services valued by individuals and society atlarge in Japan (Iida &Nakashizuka, 1995; Kameyama
et al., 1994). On the other hand, the increase in unmanaged forests has caused an increase in the natural
capital wealth of Japan as computed by the potential
timber and non-timber forest products the forests are able
to supply. The key word here is “potential.” It would
seem that the value we had used to compute the natural
capital wealth might have been overestimated because of
the higher values used for forest products while the actual
value placed on natural systems by Japanese society
seems to be on the landscape itself and the values it
provides. This may imply the actual wealth of Japanmight be lower than computed and might actually resultin a lower IWI than that reported by the IWR 2012
(UNU-IHDP & UNEP, 2012).
Although “satoyama” is a Japanese term, these mosaic
types of ecosystems where human-nature interaction iscentral are not unique to Japan alone. Such landscapes
are found throughout many regions of the world, though
the issues might vary from one area to another. Given thefeatures of the satoyama and satoumi, which typicallyembody a symbiotic relationship between ecosystems
and humans to produce a bundle of ecosystem services
for human well-being, it is an issue not only of significance to the local region, but also of international
importance.
English does not have a word corresponding to“satoyama.” However, this idea is widely recognized in
Asian countries. For example, there are words such as“mauel” in Korean and “kebun-talun” or “pekarangan”
in Indonesian. Yabu (2009a, 2009b) has reported in‘Satochi-Satoyama Culture (Volume I and II)’ that ecosystems and livelihoods present in agricultural villages in
China and Korea are surprisingly similar to those of thesatoyama in Japan. Yabu (2009a, 2009b) suggests that“satochi-satoyama culture” could provide a basic
foundation to conceptualize the sustainable use of biodiversity and ecosystem services and be considered thenatural wealth of a country.
Lessons learnt from the Japanese experiences insatoyama landscapes which emphasize the sustainable
use of ecosystems for the delivery of ecosystem services
for human well-being might offer a unique land management system, which could produce both conservationand development benefits for society. In some countries,
it might be seen purely as a cultural heritage, while inothers, it might offer opportunities that could contributeto both economic and human development.

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A. K. DURAIAPPAH and E. DARKEY

4. Lessons Learnt and Conclusion
The experience of Japan with regard to its management of its natural capital and its contribution to theinclusive wealth of the country can provide some lessons
for many developing and developed countries. First, it
has maintained a positive IWI over the past 19 years.
Second, it has increased its natural capital per capita
growth rates over the past 19 years. Third, much of thegrowth in natural capital has been driven by an increase
in its forest stocks.
Although Japan’s IWI growth rate is approximately
the same as its IWI?? growth rate, its performance has
been described as poor and in a bad state of affairs ascompared to other countries. However, based on IWI,
Japan is performing relatively much better than mostother industrialized countries because of its relatively
better build up of natural capital, which in turn has been
driven by an increase in its forest stocks. The sustainability of its productive base would seem from thepreliminary results to be much more secure than in othercountries which have both increasing populations anddeclining natural capital.

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Anantha Kumar DURAIAPPAH
Prof. Anantha DURAIAPPAH is Executive Directorof the International Human Dimensions Programme on Global Environmental Change(IHDP) in Bonn, Germany. He is an experienced
environmental-development economist whose
work largely focuses on equity of access and useof ecosystem services. Prof. Duraiappah received his PhD in economics
from the University of Texas in Austin, USA, and currently holds a visiting
professorship at Beijing Normal University, China. He has publishedbooks on environmental and developmental issues as well as numerous
articles in peer-reviewed journals, and is presently an Associate Editor for
The Journal of Human Development and Capacity. Professor Duraiappah
initiated the idea of the Inclusive Wealth Report (IWR) and is now theReport Director for that. In his previous post as Chief of the Ecosystem
Services and Economics Unit of the United Nations Environmental
Programme (UNEP), Prof. Duraiappah was involved in the initiation of theIntergovernmental Platform on Biodiversity and Ecosystem Services(IPBES) and has since then played a pivotal role in its approval process.

Elorm DARKEY
Elorm DARKEY is currently completing his
Master’s studies in Economics at the University of Bonn, Germany. He obtained his
degree in a combined major in Economics andMathematics from the University of Ghana.
After completing his undergraduate studies, heserved as a teaching assistant at the Regional Maritime University in
Ghana. Having previously served as an intern with the Science Management Unit at UNU-IHDP by providing analytical support for databases andresearch activities, Elorm is currently supporting the same unit as a Project
Assistant of the Inclusive Wealth Report. His primary research interest lies
in welfare economics and he finds environmental and sustainability issues
a vital component of well-being.

(Received 6 June 2012, Accepted 23 July 2012)