Dynamic Regenerative Wealth Index for Sustainable Economic Systems

Abstract

Conventional wealth metrics, such as GDP, neglect ecological and social dimensions, undermining sustainable economic systems. This study introduces the Regenerative Wealth Framework (RWF), a dynamic model integrating ecological, social, and economic capitals into a holistic metric, the Regenerative Wealth Index(RWI). The RWI evolves as RWIi,t = (1−δ)RWIi,t−1+weEi,t+wsSi,t+wcCi,t, with capitals dynamically adjusting through optimization and feedback mechanisms. We derive optimal weights via a constrained optimization problem, ensuring stability through Lyapunov analysis, and validate the model using data from the World Bank, OECD, and Bloomberg. The RWF extends economic dynamics (Falconioand Manganelli, 2025) by incorporating sustainability, offering applications in finance, business, and policy. It advances socially responsible investment (Dam and Heijdra, 2011) and environmental policy modeling (Babonneau et al., 2025), providing a theoretically grounded framework for sustainable economic systems.

Keywords: Economic Policy, Regenerative Wealth, Economic Dynamics, Sustainable Finance, Social Equity, Circular Economy