Adjusted net savings are equal to net national savings plus education expenditure and minus energy depletion, mineral depletion, net forest depletion, and carbon dioxide and particulate emissions damage. Development relevance: Adjusted net savings measure the change in value of a specified set of assets, excluding capital gains. If a country's net savings are positive and the accounting includes a sufficiently broad range of assets, economic theory suggests that the present value of social welfare is increasing. Conversely, persistently negative adjusted net savings indicate that an economy is on an unsustainable path. Limitations and exceptions: The exercise treats public education expenditures as an addition to savings. However, because of the wide variability in the effectiveness of public education expenditures, these figures cannot be construed as the value of investments in human capital. A current expenditure of $1 on education does not necessarily yield $1 of human capital. The calculation should also consider private education expenditure, but data are not available for a large number of countries. While extensive, the accounting of natural resource depletion and pollution costs still has some gaps. Key estimates missing on the resource side include the value of fossil water extracted from aquifers, net depletion of fish stocks, and depletion and degradation of soils. Important pollutants affecting human health and economic assets are excluded because no internationally comparable data are widely available on damage from ground-level ozone or sulfur oxides. Statistical concept and methodology: Adjusted net savings are derived from standard national accounting measures of gross savings by making four adjustments. First, estimates of fixed capital consumption of produced assets are deducted to obtain net savings. Second, current public expenditures on education are added to net savings (in standard national accounting these expenditures are treated as consumption). Third, estimates of the depletion of a variety of natural resources are deducted to reflect the decline in asset values associated with their extraction and harvest. And fourth, deductions are made for damages from carbon dioxide emissions and local pollution. Estimates of resource depletion are based on the "change in real wealth" method described in Hamilton and Ruta (2008), which estimates depletion as the ratio between the total value of the resource and the remaining reserve lifetime. The total value of the resource is the present value of current and future rents from resource extractions. An economic rent represents an excess return to a given factor of production. Natural resources give rise to rents because they are not produced; in contrast, for produced goods and services competitive forces will expand supply until economic profits are driven to zero. For each type of resource and each country, unit resource rents are derived by taking the difference between world prices (to reflect the social opportunity cost of resource extraction) and the average unit extraction or harvest costs (including a “normal” return on capital). Unit rents are then multiplied by the physical quantity extracted or harvested to arrive at total rent. To estimate the value of the resource, rents are assumed to be constant over the life of the resource (the El Serafy approach), and the present value of the rent flow is calculated using a 4 percent social discount rate.