--- canonical_url: "https://csls.ca/research/the-role-of-natural-capital-in-explaining-the-rise-and-fall-of-global-productivity-growth/" title: "The Dog That Didn’t Bark: The Role of Natural Capital in Explaining the Rise and Fall of Global Productivity Growth" author: name: "shomp" url: "https://csls.ca/author/shomp/" date_published: "2025-12-10T10:00:00+00:00" date_modified: "2026-07-16T15:31:56+00:00" post_type: "research" summary: "The global productivity slowdown may have an overlooked cause: the depletion of natural capital." post_tag: - "biodiversity" - "climate change" - "environmental degradation" - "global productivity" - "multifactor productivity" - "natural capital" - "productivity growth" country_focus: - "Multi-country" province_region: - "National" research_category: - "Productivity" research_theme: - "Productivity and Economic Measurement" - "Sector/Industry Analysis" featured_image: "https://csls.ca/wp-content/uploads/2025/12/research-us-manufacturing-1.webp" status: "publish" --- # The Dog That Didn’t Bark: The Role of Natural Capital in Explaining the Rise and Fall of Global Productivity Growth Canonical URL: https://csls.ca/research/the-role-of-natural-capital-in-explaining-the-rise-and-fall-of-global-productivity-growth/ # The Dog That Didn’t Bark: The Role of Natural Capital in Explaining the Rise and Fall of Global Productivity Growth [Download full PDF report](https://csls.ca/pdf/csls2025-07.pdf) Cite this report × Cite this report as: Caron, Christina. 2025. “The Dog That Didn’t Bark: The Role of Natural Capital in Explaining the Rise and Fall of Global Productivity Growth.” CSLS Research Report 2025-07. Ottawa: Centre for the Study of Living Standards. https://csls.ca/research/the-role-of-natural-capital-in-explaining-the-rise-and-fall-of-global-productivity-growth/ ## Author: - Christina Caron Centre for the Study of Living Standards (CSLS) ## Report 2025-07 December 2025 144 pages ## Related research [Productivity: Key to Economic Success Centre for the Study of Living Standards (CSLS) March 1998 | Report 1998-01 | 99 pages](https://csls.ca/research/productivity-key-to-economic-success/) [The Canada-U.S. Income Gap Centre for the Study of Living Standards (CSLS) June 2000 | Report 2000-01 | 6 pages](https://csls.ca/research/the-canada-u-s-income-gap/) [Raising Canadian Living Standards: A Framework for Discussion Centre for the Study of Living Standards (CSLS) October 2002 | Report 2002-td | 56 pages](https://csls.ca/research/raising-canadian-living-standards-a-framework-for-discussion/) [Productivity Growth in Service Industries: A Canadian Success Story Someshwar Rao, Andrew Sharpe, Jianmin Tang February 2004 | Report 2004-01 | 58 pages](https://csls.ca/research/productivity-growth-in-service-industries-a-canadian-success-story/) [New Estimates of Labour, Capital and Multifactor Productivity Growth and Levels for Canadian Provinces at the Three-digit NAICS Level, 1997-2007 Andrew Sharpe, Eric Thomson June 2010 | Report 2010-06 | 113 pages](https://csls.ca/research/new-estimates-of-labour-capital-and-multifactor-productivity-growth-and-levels-for-canadian-provinces-at-the-three-digit-naics-level-1997-2007/) [A Synthesis of the CSLS Provincial Productivity Reports, 1997-2007 Ricardo de Avillez, Christopher Ross April 2011 | Report 2011-03 | 153 pages](https://csls.ca/research/a-synthesis-of-the-csls-provincial-productivity-reports-1997-2007/) [A Detailed Analysis of the Productivity Performance of the Canadian Primary Agriculture Sector Centre for the Study of Living Standards (CSLS) August 2011 | Report 2011-06 | 134 pages](https://csls.ca/research/a-detailed-analysis-of-the-productivity-performance-of-the-canadian-primary-agriculture-sector/) [A Detailed Analysis of the Productivity Performance of Canadian Food Manufacturing Christopher Ross August 2011 | Report 2011-07 | 110 pages](https://csls.ca/research/a-detailed-analysis-of-the-productivity-performance-of-canadian-food-manufacturing/) [Sectoral Contributions to Labour Productivity Growth in Canada: Does the Choice of Decomposition Formula Matter? Ricardo de Avillez December 2012 | Report 2012-09 | 34 pages](https://csls.ca/research/sectoral-contributions-to-labour-productivity-growth-in-canada-does-the-choice-of-decomposition-formula-matter/) [A Detailed Analysis of Newfoundland and Labrador’s Productivity Performance, 1997-2010: The Impact of the Oil Boom Etienne Grand’Maison, Andrew Sharpe July 2013 | Report 2013-05 | 173 pages](https://csls.ca/research/a-detailed-analysis-of-newfoundland-and-labradors-productivity-performance-1997-2010-the-impact-of-the-oil-boom/) ## Abstract ## Résumé EN FR Copy link Email LinkedIn This report examines the role of natural capital in economic and productivity growth. It proposes that natural capital should be considered a pivotal explanatory variable in the rise and subsequent decline of global productivity growth over the past five centuries, and presents extensive supporting evidence. Labour productivity and multifactor productivity (MFP) growth rates have been declining in advanced economies for several decades, with significant implications for living standards; the decline in labour productivity growth has extended to emerging economies over the past fifteen years. Global MFP growth has flatlined since 2007 in both advanced and emerging economies. While many explanations for these trends have been advanced, no clear consensus has yet emerged. However, the pervasive and persistent nature of the declines signals that factors of global scope and extended duration are likely implicated. This report presents an alternative explanation for the secular decline in global productivity growth: that erosion of natural capital has been occurring on a sufficiently large scale as to exert significant and growing downward pressure on productivity growth. Accordingly, a fundamental transformation in the economic role of natural capital has taken place, from productivity accelerator from the 16th century through the mid-20th century, to productivity decelerator subsequently. This role has been obscured due to the absence of natural capital from conventional economic frameworks and production functions. Ce rapport examine le rôle du capital naturel dans la croissance économique et la productivité. Il propose que le capital naturel soit considéré comme une variable explicative déterminante dans l’essor, puis le déclin, de la croissance de la productivité mondiale au cours des cinq derniers siècles, et présente des données probantes étoffées à l’appui. Les taux de croissance de la productivité du travail et de la productivité multifactorielle (PMF) déclinent dans les économies avancées depuis plusieurs décennies, avec des répercussions importantes sur le niveau de vie; ce déclin de la croissance de la productivité du travail s’est étendu aux économies émergentes au cours des quinze dernières années. La croissance de la PMF mondiale stagne depuis 2007, tant dans les économies avancées qu’émergentes. Bien que de nombreuses explications de ces tendances aient été avancées, aucun consensus clair n’a encore émergé. Cependant, le caractère généralisé et persistant de ces déclins indique que des facteurs de portée mondiale et de longue durée sont probablement en cause. Ce rapport présente une explication alternative du déclin séculaire de la croissance de la productivité mondiale : l’érosion du capital naturel se serait produite à une échelle suffisamment grande pour exercer une pression à la baisse importante et croissante sur la croissance de la productivité. En conséquence, le rôle économique du capital naturel aurait subi une transformation fondamentale, passant d’accélérateur de productivité du XVIe siècle au milieu du XXe siècle, à décélérateur de productivité par la suite. Ce rôle est resté méconnu en raison de l’absence du capital naturel dans les cadres économiques et les fonctions de production conventionnels. [Download full PDF report](https://csls.ca/pdf/csls2025-07.pdf)