Measuring Sustainable Development

Measuring Development

• GDP is not a suitable measure of welfare/wellbeing as it only measures the market value of final goods and services produced and sold in a specific time period.
• GDP does not account for:
  • Non-market goods and services (e.g. housework)
  • Distribution of income (inequality)
  • Type of goods and services produced (e.g. cigarettes, weapons)
  • Production methods (working conditions, working hours)
  • Degradation of natural capital and externalities

Beyond GDP

• There is a need for alternative indicators of welfare that show a more complex picture of development.
• Examples of indicators based on GDP:
  • Human Development Index (HDI)
  • ISEW, GPI
• Sustainability indicators:
  • Human Development Index (HDI)
  • SDG Index

Human Development Index (HDI)

• Composed of:
  • 1/3 life expectancy
  • 1/3 education (2/3 literacy rate, 1/3 number of years in education)
  • 1/3 GDP

ISEW, GPI

• Corrects GDP's weaknesses
• Very complex, often requires unavailable data

SDG Index

• Based on the UN SDGs
• Uses 119 SDG-indicators with widely available data
• Standardizes indicators (scores between 0-100) and aggregates them
• Gives equal weight to the 17 goals
• SDG Index and scores on goal 12&13 are negatively correlated

Environmental Dimension

• The environmental Kuznets-curve suggests that economic growth is initially bad for the environment, but after reaching a certain level of welfare, countries will devote more resources to solving environmental problems.
• However, the curve may not be true in reality:
  • Only works for some types of pollution (those immediately harmful to health)
  • No turning point or turning point at a much higher level of income for other types of pollution (e.g. GHG emissions, waste)
  • Unclear if the planet can survive until all countries reach the turning point
  • May not work on a global level due to rich countries "outsourcing" polluting activities to other countries

Ecological Footprint

• Measures the land area needed to support a given population on a given living standard for an unlimited amount of time
• Includes:
  • Area needed to produce goods consumed
  • Area needed to assimilate pollution and waste generated
• World average: 2.75 ha
• Available biocapacity/person: 1.63 ha

Happy Planet Index

• HPI = wellbeing (subjective life satisfaction) * life expectancy / avg. per capita ecological footprint
• An interesting idea that combines wellbeing and ecological footprint.