Transcript The Value Revolution in Economics

The Value Revolution in
Economics
Wealth, Indicators &
Accounting
Redefining Wealth
Quantitative:
Money & Material
Accumulation
Qualitative:
Well-being
Regeneration
Quantification & Value
• What is measured gets done
• What gets counted is valued;
What is valued gets counted
Indicators
“[If it is to be achieved, the new
economic system] will result from
our becoming better ecological
accountants at the community level.
If we must as a future necessity
recycle essentially all materials and
run on sunlight, then our future will
depend on accounting as the most
important and interesting
discipline.”
Wes Jackson,
Becoming Native to This Place
Indicators & Value
• Expression of potential for a knowledge-based
economy
• Centrality of end-use: requires more
sophisticated monitoring of human need.
– also required by the centrality of creativity to
qualitative economic development.
• Radical potential of eco-literacy:
– Murray: Fordist Waste Economy depended as
much on deskilling of the consumer as deskilling
of the worker.
• Deflating Financialization: potential to replace
money as key determinant of value
– decommodifying money: money as pure
information
Indicators & real wealth
• Qualitative Wealth is far more complex:
requires more quantification
• Qualitative Wealth is place-based or
specific to circumstances
• Qualitative Wealth is needs-based,
requiring examination of consumption.
• Accounting takes place on many levels in
terms appropriate to that level
A Dashboard for the Cockpit
• The ‘Family’ of indicators:
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Urban Metabolism or regional mass balance
Green GDP (e.g. Genuine Progress Indicator—GPI )
Ecological Footprint
Carbon accounting / carbon footprint
Life-cycle Assessment (products, processes, landscapes)
Industry-based accounts: food, building, forestry, etc.
Local Development Standards
5 ‘capitals’: personal, professional, spiritual, environmental
and financial
– Firm sustainability accounting
– Sustainable Community Indicators
– Risk Assessment, EIA, etc.
Indicators & Trends in Regulation
• Raw material for certification
systems
• Regulation as more civil
society-based
• Markets as ‘values-driven’
• FSC wood / LEED building /
etc.
• integrated evaluation /
regulation / marketing
systems
Entrepreneurial Value Creation
Local Food Plus:
valuation
regulation
marketing
education
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The Evolution of Indicators
• Difficulties with many early indicator
sets:
– Wish-lists, divorced from solutions or
relationships
– Either too detailed or too aggregated
/oversimplified
• Next Generation of Indicators:
from “librarians” to “plumbers”
Indicator Design
• organized around a purpose
• highlight important trade-offs
• Varieties: those that…
– cause an outcome (e.g. reduce air
pollution)
– document the outcome (e.g. amount of
smog)
– react to the outcome (air pollution
legislation)
Genuine Wealth Assessment
Life-cycle
Business-related Applications
Internal accounts
Natural Step, ISO 14000, Eco-footprint,
Sustainability Reporting
Government Regulation
Alternative Industry Standards
--LEED green bldg.; FSC wood ; B Corporation ;
Innovative Business Models:
-- B Corporation
-- McDonough/Braungart Protocol
--Local Food Plus
Business Applications-II
• Builds external costs into firm decisions
• Essential to Triple Bottom Line
• SBLS: can be translated into financial
bottom line
• Crucial to Stakeholder relationships
• Made easier by network support:
--market transformation
Business Applications-III
• Sustainability accounting : Global
Reporting Initiative
• Triple Bottom Line accounting
• Social accountability reports
• Outcome-based reporting & mapping
• etc.
Genuine Wealth Applications
• All 5 “capitals”: financial, built, natural,
social, human
• Balance sheet for each
• Full-cost sustainable income statement
• Progress indicators
• Genuine Progress Report
LCA and Product life-cycles:
Environmental Lock-in over a Product’s
Development Cycle