IEEP Patrick ten Brink Presentation on Beyond Gdp Indicators at the EEB SDS Seminar 16 Nov 07

Slide 1: Is there a suitable overall indicator for Sustainable Development – to supplement GDP? What are the possible candidates? Patrick ten Brink Head of Brussels Office IEEP (Part of Beyond GDP team, but this presentation does not represent an official position) EEB Seminar Reviewing the EU SDS Brussels Friday 16th November 2007 `

Slide 2: Presentation Structure Background: Some interesting Facts & the Beyond GDP context for this presentation (see www.beyond-gdp.eu) Indicators to measure progress, true wealth & wellbeing – what is out there? From candidates to ideas for ways forward - some ideas to add to the debate The Beyond GDP conference an initiative of Commissioner Dimas, and a partnership between the European Commission, European Parliament, Club of Rome, OECD, & WWF. Supported by team: Ecologic, MNP, IEEP & media partners. See www.beyond-gdp.eu This contribution to the debate does not represent any formal position from Beyond GDP

Slide 3: ● ● ● Interesting Facts – Did you know that: On GDP - different roles, different views “Without measures of economic aggregates like GDP, policymakers would be adrift in a sea of unorganized data. The GDP and related data are like beacons that help policymakers steer the economy toward the key economic objectives”. Paul Samuelson, in Samuelson and Nordhaus (1995) Yet Simon Kuznets - GDP's creator – already in 1934 said that “The welfare of a nation can scarcely be inferred from a measurement of national income”. & after almost 30 years further thought, added “Distinctions must be kept in mind between quantity and quality of growth, between its costs and return, and between the short and the long term. Goals for more growth should specify more growth of what and for what.”

Slide 4: On GDP and natural resources A country could cut down all its forests and deplete its natural resources and this would show only as a positive gain to GDP despite of the loss of capital. Source: Millenium Ecosystem Assessment (MA) 2005 see http://www.millenniumassessment.org On GDP and social equity “Progress measured by a single measuring rod, the GNP, has contributed significantly to exacerbate the inequalities of income distribution” Robert McNamara, President of the World bank, 1973 On GDP and learning from business “No one would look just at a firm’s revenues to assess how well it was doing. Far more relevant is the balance sheet, which shows assets and liability. That is also true for a country.” Joseph Stiglitz, 2005 in Foreign Affairs, see http://www.foreignaffairs.org/.html GDP is not enough; we need to go beyond GDP

Slide 5: Beyond GDP: What Questions will the Conference address? What can economic measures such as GDP do best and where are other measures of progress, true wealth and wellbeing needed? What are our societies’ health and wellbeing based on and how can nature be taken into account ? What are our nations wealth based on? What measures are viable, useful complements to GDP – eg ecological footprints, human development index, poverty index, happy planet index or genuine savings approach? Where can we usefully use the complementary measures and hence improve the measurement and reporting of the true wealth and wellbeing of nations? What needs to be done to support the process of moving beyond GDP? Effectively same set of questions as the EEB seminar.

Slide 6: ● ● ● What are the candidates for going beyond GDP? Figure 1: Growth in number of composite indices (UNDP Office of Development Studies, 2006). The indices cover a diverse set of issues including competitiveness, governance, social aspects, human rights, the environment, security and globalization. More and more people are searching for better indicators Source: from MNP (2007)

Slide 7: What indicators are out there? GDP ISEW/GPI Is there a best? Genuine savings index or simply Human Development Index (HDI) Horses for courses ? Human Poverty Index (HPI) Question of ‘fit for purpose’? Happy planet index What purpose ? Footprints (ecological, carbon) & Factor efficiency Does it do the job? EU-SDS indicators Can it be developed to do the job? Structural indicators Recall: The welfare of a nation can Happy and Health life years scarcely be inferred from a + frameworks/approach measurement of national income”. National accounts satellites see www.beyond-gdp.eu for descriptions and links

Slide 8: What indicators are out there? Competing? HDI GSI The World Bank (2005a) Where is the Wealth of Nations? Measuring Capital for the XXI Century. 2005 Human Development Report, UNDP GPI EF Redefining Progress (2006) http://www.rprogress.org/projects/gpi/ Living Planet Report 2004, http://www.panda.org/news_facts/publications/key_publications/living_planet_report/index.cfm

Slide 9: Categorisation of Indicators and SD Pillars Economic GDP ‘All-in-one’ approaches Greening GDP ‘All-together’ Genuine Happy HDI SEEA savings Planet approaches Index EU-SDS ISEW/ indicators GPI NCI Foot- EU-Env. Social print indicators indicators HPI Environmental Social Source: IEEP

Slide 10: Indicators – Some very specific coverage and uses; others combine issues Social Economic NNP HPI HDI GDP Social indicators Happy Genuine Planet savings Index ISEW/ GPI Greening EU-SDS GDP indicators SEEA Foot- EU-Env. indicators print NCI Environmental Source: IEEP

Slide 11: Where are which used ? Should we judge them all in the same way? Measurement Tools: IA, CBA, MCA Robust data on economy, society & environment SEEA + Analysis Reporting to Evaluation of policies scientists / analysts & policy makers Decision making Social EU-Env. indicators indicators Policy making Communicating the facts – still Goal setting Foot- robust data, just the right robust HDI print data in the right form. Press Reporting to the outside world Public discussion Headline indicators Foot- GDP print HDI Source: IEEP A: Don’t judge indicators for public by same criteria as that for analysts

Slide 12: From candidates to ideas for ways forward - some ideas to add to the debate Measurement Eg We need to understand the state of our natural capital, ecosystem functions, services. Reporting Eg Countries should be encouraged to do and public more environmental accounts – stock accounts and flow. Eg need to understand ecosystem functions, services and Analysis contributions to true wealth and wellbeing society better Eg do a climate risk assessment Decision making Eg Revise way structural funds are allocated/dispersed Goal setting Eg Scope for greater use of ecological and carbon footprints Eg Scope for greater use of factor efficiency targets Reporting Eg National climate risk index and national ratings Press Eg scope for footprints, happiness and also impacts of natural hazards on livelihoods; national risk Public discussion Eg scope for footprints, happiness, healthy life years, HDI Personal contribution to debate - does not represent Beyond GDP

Slide 13: Conclusions • Not one ‘best’, but a range of purposes and range of indicators • Range of ways forward – some on measurement, some on analysis, some policy setting etc • Developments in parallel - some make more robust and fit for purpose, some create new. • Need to ensure that what is used is right for what it is used for. • Need to broaden what is measured, understood, used, and debated. • We need measures that build on robust data, useful for policy and understandable by the public. • Many right answers. Need for many actors to take forward What can and will be done ? – debate here, debate on Monday and Tuesday at the Parliament, and after - - commitment across parties for way forward already started.

Slide 14: IEEP is an independent not for profit institute dedicated to advancing an environmentally sustainable Europe through policy analysis, development and dissemination. Thank you Patrick ten Brink Head of Brussels Office IEEP www.ieep.eu EEB Seminar Reviewing the EU SDS Brussels Friday 16th November 2007 `