Report - UNDP Russia

Canada, the USA and Great Britain have positiveAdjusted Net Savings Indexes (Table 8.5), and thefigure for Norway is as high as 9.2%.The Adjusted Net Savings Index hasseveral defects, but its importance is in giving anaggregate estimate of sustainable developmentand showing the need to compensate depletionof natural capital through increase ofinvestments in human and physical capital.The Index shows the need for dramaticincrease of energy efficiency in Russia, whichwould raise the country’s Index score by raisingproductivity and putting limits on extensive,low-margin extraction of energy resources. It isalso advisable for a country to have a specialfund or funds (‘fund of future generations’)such as exist in Norway, the USA some oilproducingcountries, which accumulate fixedcontributions from extraction of finite fuel andenergy resources to secure future economicgrowth. Russia set up such a fund – theStabilization Fund – in 2007. It wassubsequently decided, as part of the transitionto a three-year budget cycle, to divide theStabilization Fund into the Reserve Fund andthe National Wealth Fund. The Reserve Fund ismeant to play a stabilizing role for the Russianbudget when oil prices decline, and theNational Wealth Fund was earmarked as a fundof future generations. Unfortunately, most ofthe money accumulated has been quickly spenton stabilization of the social and economicsituation in the country since onset of the crisis.Box 8.1. Adjusted Net Savings Indexfor Kemerovo RegionThere is huge divergence betweentraditional economic indicators for KemerovoRegion and calculations based on adjusted netsavings, which take account of social andenvironmental aspects (Table 8.6). Depletion ofthe Regions’ natural resources andenvironmental pollution are large enoughproblems to turn strongly positive traditionalindexes negative when adjusted savings areCalculations based on the adjusted netsavings approach have been carried out in a fewRussian regions, including coal mining KemerovoRegion 9 . Both the energy factor and the humanfactor had major impact when calculating theIndex for this Region, which suffers fromenvironmentally determined public healthproblems. Illness due to water and air pollutioncause loss of up to 12% of GRP (Table 8.6).Depletion of resources by coal mining alsoreduces adjusted net savings in Kemerovo to alarge extent. As a result, the Adjusted Net SavingsIndex for Kemerovo Region was around -10% in2001–2005, despite significant growth of GRP(Box 8.1).Popular integral indicators that takeaccount of the energy factor include:Environmentally Adjusted Net Domestic Product,developed by the UN for national accounts; the‘Ecological Footprint’ used by the WWF; and theEnvironmental Sustainability Index, constructedby specialists from Yale and ColumbiaUniversities. The Ecological Footprint (EF) index,measuring pressure on the natural environment,which appears in regular reports of the WorldWildlife Fund, is particularly functional. The EFindex measures energy consumption in terms ofthe area necessary for absorption of respectiveCO 2 emissions and consumption of food andmaterials by people in terms of biologicallyproductive land and sea areas, which are neededfor production of these resources and absorptionof the waste produced. The EF of one personcalculated. Despite strong growth of GRP in2001-2005, corrected net savings in KemerovoRegion were about -10%, signifying powerful‘anti-sustainable development’ trends. Theregional economy is currently living at theexpense of future generations, throughdepletion of energy resources, depopulationand short life expectancy, and accumulatedenvironmental damage in the form of pollutedor disturbed land as well as degradation ofecosystems.9Mekush G.E. Environmental Policy and Sustainable Development. M.: Max Press, 2007151