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Module 6: Indicators
GDP, NNP, Green NNP and ISEW
Human Development Index
Ecological Footprint,
Material Flow Analysis,
GDP…and some critiques
When an earthquake destroys a city, GDP will increase
Quantity vs. quality
Simple way of measurement:
distribution is not considered
type of “production” is not considered (education or army)
non paid leasure time is not accounted for
Market/non market ratio (% own production, % domestic work) not
accounted
First improvement: Real GDP (Purchasing Power Parity)
From GDP to NNP (net national product)…
Accounts for capital depreciation (but only man-made capital)
NNP = GDP – Km depreciation
While GDP is a measure of flows only, NNP accounts for stocks and flows.
But again, natural capital is not considered (and not even social-human capital)….
…as if national accountants thought nature to be infinite (which was true when the
physical (and monetary) economy was small. But not now….
…to Green NNP
….so the green NNP has been proposed.
Green NNP = GDP – Km depreciation – Kn depreciation + non mkt amenities
(WTP)
Other types of accounting, that measure not in “crematistic” terms, but in physical
terms, are not considered so important and are called “satellite accounting”….
….but “might these “satellites” be bigger than the actual planet?” (Naredo)
ISEW
Daly and Cobb, 1990
Index of Sustainable Economic Welfare.
It is still a monetary based measure
Starting from GDP, a long list of corrections, to get the ISEW
Figures show a growing split between GDP and ISEW
Necessary but not sufficient.
Human Development Index
Is a measure that comprises more indicators, especially from the
human and social scale.
But again, these indicators are western – based: for example
traditional knowledge is not accounted
education is only based on years of school
we could argue that loss of cultural diversity could be GOOD
Ecological Footprint,
How much area should an economy need if all materials and energy used
were coming from only renewable resources?
See report from WWF:
WWF report:
i.e. The living planet 2002
http://www.panda.org/news_facts/publications/general/livingplanet/index.cfm
Is not an absolute measure: it depends from prices and elasticity
It comprises energy flows
Material Flow Analysis,
Paper from EKC vienna
Wuppertal report pag.65 read from pag. 63 to pag. 70
Wuppertal Institute Annual report
http://www.wupperinst.org/Sites/publications.html
Wuppertal paper: green accounting and material flow analysis.
Alternatives or complements?
http://www.wupperinst.org/Publikationen/WP/WP106.pdf
As a summary: “measures” of sustainable development…
Resources
Means,
measures of
opportunity
Economic
system
Goods
(consumption)
Ends,
measures of
utility
SD = non decreasing capital
SD = non decreasing utility
(with different forms of measure)
(with different forms of measure)