A More Complete Definition of Wealth

Recent economic research has led to new, more inclusive and useful definitions of wealth. Wealth is not just monetary worth, but the different types of capital that, taken together, sustain a region.

To understand the economy of the Sierra Nevada, it is important to assess and track three types of wealth:

1) Social or human capital
2) Natural or natural resource capital
3) Financial capital

Each must be conserved and increased if the Sierra Nevada economy is to be prosperous, stable, and sustainable. Each form of capital supports the economy, and the diminishment of one undermines the others. Neglect of social capital, such as a failure to provide first-rate education or to reduce poverty, means fewer opportunities for businesses and residents to multiply financial assets. Deteriorating natural assets, such as polluted streams or marred scenery, reduce property values, drive away new businesses, and undermine the quality of life for current residents. Low financial capital, such as insufficient diversification or high unemployment, leads to social instability and a vulnerability to economic cycles.
By understanding and tracking all three forms of capital—social, natural and financial—the Sierra Nevada Wealth Index presents a more integrated, accurate and useful portrait of our region’s economy.