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That's the conclusion of a research paper from the International Institute for Sustainable Development, which pointed to "the depletion of many of Canada's natural resources" as a major source of the problem, along with the increasing flow of money into the housing market instead of other parts of the economy.

Canadians enjoy the highest level of wealth of any people among the G7 countries, but our "unsustainable" way of growing the economy means we're burning through that wealth, and setting ourselves up for harder times ahead.

While most G7 countries have seen their wealth grow by around 1 per cent per year since 1990, in Canada it has been shrinking by about 0.25 per cent per year.

The IISD paper, released last fall, points to data showing that Canada has the highest level of wealth among the dominant G7 economies. But it's also the only country where that wealth has been shrinking in recent decades.

If this keeps up, Canada will lose its status as wealthiest G7 country to Japan within five years, and will be near the bottom by the end of the 2030s, the IISD report predicts.

Part of the reason why Canada's wealth is stagnating is that Canadians are shifting ever more of their money to housing, which — other than providing shelter — is not a very productive part of the economy.

As wealth flows into houses, it fails to flow into financial markets, which helps explain why the Toronto Stock Exchange has seen among the worst returns of any major stock market in recent years.

This trend is "inflating house prices and leaving the rest of the economy reliant on foreign lenders for nearly three quarters of investment flows after 2012," the report noted.

Canada's business investment is increasingly concentrated in just two areas, housing and oil.

"We're putting a lot of eggs into a few economic baskets, and if those baskets go south we could find ourselves in trouble more quickly than we think," said Robert Smith, an Ottawa-based associate with IISD and the lead author of the study.

Smith warned that all of Canada's economy could eventually look similar to Alberta's, where a small number of industries dominate and the local economy swings wildly with the conditions in those industries.

This matters a lot

The amount of wealth a country holds is important, because it plays a huge role in determining how much income you can expect to earn going forward.

Think about it in terms of individuals. Two people with identical skills square off in a challenge to see who can make more money in the next 12 months. One of these is individuals is rich, the other poor. Who has the upper hand?

The same logic applies to national economies.

'Recipe for impoverishment'

If Canada stays on this path, Canadians' incomes will eventually decline, Smith said.

"If the wealth basis is declining, at some point in time real incomes will decline as well. Or you simply continue to eat into your wealth," he told HuffPost Canada by phone.

"But you can't continue to eat into your wealth forever."

He calls Canada's current economic model "a recipe for impoverishment." If you were a money manager and you grew a client's income by eating into their wealth, "you wouldn't be in business very long," Smith quipped.

So why is Canadian wealth decreasing?

To answer that, we have to look first at what constitutes wealth.

The IISD study looked at what is called "comprehensive wealth" — a much broader category than the net worth numbers that Statistics Canada publishes (which for households mainly tell you how much debt Canadians have, and what their houses are worth).

"Comprehensive wealth" includes, but is not limited to:

Financial capital (stocks, bonds, bank deposits and other financial assets)

Human capital (the value of the skills and knowledge that a workforce has)

Natural capital (land and the natural resources on that land)

Produced capital (buildings, machinery and infrastructure)

Not surprisingly, Canada is super strong on "natural capital." Canadians enjoy four times as much per-capita natural capital as the second-place country, the U.S.

But this is also the area where Canada has been losing the most ground. The value of Canada's "natural capital" has fallen by about 17 per cent per person since 1990 "as a result of depletion of many of Canada's natural resources," the report said.

"We're putting a lot of eggs into a few economic baskets, and if those baskets go south we could find ourselves in trouble more quickly than we think."Robert Smith, associate, IISD

In some cases, this "depletion" has been extreme. For instance, Canada has lost 99.4 per cent of its discovered reserves of lead; 92.6 per cent of its zinc reserves, and more than half its silver, copper, nickel, uranium, natural gas and conventional (non-oilsands) oil.

In many cases, "this is real physical depletion," Smith said. "This stuff is gone, we've dug it up, and we'll never dig it up again."

But that's not the whole picture. The available data measures only those resource reserves that are being actively exploited. So a decline may simply mean that resource companies don't see extraction of a certain mineral as economical, or they decided other activities would be more profitable.

Either way, though, those resources no longer exist as part of Canadians' wealth.

Value of Canadians' work is stagnating

Another area where Canada is falling behind is "human capital," that part of wealth created by having a skilled workforce capable of generating income.

"Canada's largest and most important asset — its human capital — did not grow at all from 1980 to 2015," the IISD report noted. "In fact, the average Canadian held just slightly less human capital in 2015 ($496,000) than in 1980 ($498,000)."

Those numbers are in 2007 Canadian dollars.

"You can't continue to eat into your wealth forever."Robert Smith, associate, IISD

One theory that's been suggested for weak human capital is an aging population. Older workers with fewer years ahead of them have less earnings potential than younger ones. But Smith says that doesn't explain Canada's situation, because workforces in other countries are aging as well, and their human capital is growing.

Despite increasing investments in higher education and retraining, "we are still not getting an increased return on those investments," he said.

Smith suggested the problem could be partly "structural." The disappearance of manufacturing jobs, replaced by lower-paying service jobs, reduces the earnings potential of those workers. But again, other countries are also struggling with the disappearance of factory jobs, but aren't seeing this kind of stagnation in human capital.

Start measuring wealth, IISD urges

To address Canada's wealth problem, policymakers need to be aware of its existence, Smith says.

Most developed countries do not regularly measure comprehensive wealth as part of its regular calendar of economic data. In Canada, StatCan has only ever looked at the issue in occasional research papers.

If policy makers around the world looked at wealth as much as they look at GDP (the measure of economic productivity), they would have a much clearer view of things, Smith argued.

For instance, while it would be obvious that U.S. President Donald Trump's tariffs against China are boosting GDP, it would also be obvious that they're destroying wealth.

"The nonsensicalness of Trump's trade approach would become evident," Smith said.

Measuring comprehensive wealth "is not radical or crazy, it's just common sense," Smith said.

CORRECTION:An earlier version of this article stated that the estimates for human capital in Canada were in 2005 U.S. dollars. They are, in fact, in 2007 Canadian dollars.