New study to determine impact of natural assets on GDP in the offing

The ministry of Natural Resources has announced that it will soon release the final results from studies on the contribution of natural resources to National GDP, which will inform future public investment into the sector.

This was announced yesterday at the 7th Wealthy Accounting and the Valuation of Ecosystems Services partnership meeting in Kigali, the first of its kind to be held in Africa.

It brought together officials from the World Bank Group and other development partners and delegates from eight countries which adopted the programme namely; Rwanda, Botswana, Indonesia, Colombia, Philippines, Costa Rica, Madagascar and Guatemala.

Dr Vincent Biruta, the Minister for Natural Resources, said the evaluation and measurement known as Natural Capital Accounting (NCA) started in 2015 in Rwanda and   is being carried out on land, water and minerals under a programme supported by the World Bank Group.

He said natural capital accounting on those resources will be integrated into economic analysis, economic planning processes in order to provide broader picture of progress than standard measures such as GDP.

“NCA allows us to aspire to go beyond GDP as the standard measure of economic performance and to integrate understanding about the underlying natural resource wealth and assets that sustain our countries’ income as well as trends in their use and performance,” he said.

The minister said the meeting in Kigali was a good platform where countries would share experiences, discuss measures and agree on the next course of action for the implementation, use and scaling up of Natural Capital Accounting for greater success.

“There is need to strike a balance between development ambitions and effective management of natural resources. Across the globe, natural resources, especially land, water and forests are fast getting depleted and degraded and there is an urgent need to ensure their sustainable use. This is especially the case on the African continent where natural resources continue to be the largest source of revenue for our economies,” he noted.

He stressed that natural capital accounting will be an important input in the next phase of the national economic planning cycle of EDPRS 3 , Vision 2050, Sustainable Development Goals (SDGs) as well as the country’s  green growth ambitions.

Sofia Ahlroth, the Acting Programme Manager for World Bank Group, said: “We need natural resources to achieve our economic development. Economic decisions affect environment and environmental decisions impact on economy. We need to sustain both so as to eradicate poverty by taking into account natural capital accounts.

How capital accounting is conducted

Dr Claudine Uwera, the coordinator of NCA, said results from studies to tabulate the contribution of each natural resource to national development are still being polished.

“We use several technical means. If we valuate land contribution to economy, we measure it per hectare in terms of its use such as livestock, agriculture, forestry, settlement, water and then where we find that it  highly contributes to GDP, provides employment, we recommend allocating more investment,” she said.

She said water in Rwanda is not scarce adding that the issue of scarcity is caused by poor distribution.

“For example,  Botswana  recently developed water accounts which focused on improving data for the mining sector, the major water user. They realised that  mining sector that highly contributes to GDP was being allocated little water use.”

This is an example of how capital accounts can influence decision makers, she said.