The trade-off between natural capital and human capital in Pakistan

Pakistan is the fifth largest populous nation in the world, and it is endowed with significant wealth in natural resources. During the period 1990–2019, Pakistan suffered an average loss in natural resources per capita. Genuinely sustainable economic growth requires the recognition that long-term prosperity depends upon balancing our demand for nature’s goods and services with its capacity to provide them. This article calculates the natural capital (NC), human capital (HC), produced capital (PC) and inclusive wealth (IW) of Pakistan from 1992 to 2019 at the national level, geographic grid level, and provincial level. The data analysis shows that the growth of NC clearly decreases over the period of the study at all three levels. According to the disaggregated grid cell level data analysis, HC and PC of Pakistan grow positively due to the different measures of government. NC in Pakistan decreases in the areas where the reserve of fossil fuels decreases, and natural land cover is converted to other uses in the process of urbanization. Whether Pakistan’s economy can continue to grow sustainably largely depends upon its NC base. Therefore, maintaining the NC base is a priority for policymakers. The IW estimates for Pakistan offer policymakers a framework to look at three main issues for sustainable development: first, understanding trade-offs across different asset bases and time when making sustainability decisions is critically important; second, understanding social prices and market prices and their deviations; third, the asset side of the national balance sheet is now expanded to include HC and NC.