Inclusive Wealth:

Toward Local Sustainability Assessment and Policy Application

Abstract

Inclusive wealth, a weighted aggregate of produced, human, and natural capital, has been a focus of attention as an indicator of sustainability of social well-being. To date, the main discussion has been theoretical analysis founded on welfare economic theory and empirical analysis on a national level. There are also expectations for the application of the indicator to policy determination processes for national and local sustainable development. In this paper, we briefly review recent developments on theory and measurement, and then introduce some attempts to apply inclusive wealth to such processes in Japan. In particular, we discuss evaluation of disaster reconstruction, policy making of local governments, and cost benefit analysis and policy evaluation of infrastructure management. For future research, it is also expected to shed light on channels from local social capital to social well-being, as well as to increase application of ex-ante policy evaluation using an inclusive wealth framework.