Canadian sustainability indicators (dimou, upward) (final v3.3)
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This document discusses accounting for sustainability in Canada. It defines sustainability, the economy, and accounting/measurement in this context. Several sustainability indexes are reviewed that measure environment, equity, economics, and intergenerational impacts. However, gaps still exist in determining specific sustainability goals. GDP is still widely used due to delays in implementing alternative measures and closing measurement gaps. The recommendation is to select an index that considers all dimensions of sustainability, set goals based on it, and implement policies to continuously measure and improve progress over time.
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Canadian sustainability indicators (dimou, upward) (final v3.3)
- 1. Accounting for the Sustainability of the Canadian Economy Week 7: Issue Seminar Nov 2, 2010 ES/ENVS 5164 (Please Review Speakers Notes) ENVS5164 Environmental and Ecological Economics , Marialena Dimou #208067951, Antony Upward #211135423
- 2. Approach 1. For Canada…what is the meaning of: • Sustainability • Economy • Accounting / Measurement 2. What / how to measure sustainability? • What measures exist? • What are the current gaps? • i.e. how sustainable is Canada today? 3. Why are we still using GDP? 4. Solutions and Conclusions 5. Questions ENVS5164 Environmental and Ecological Economics , Marialena Dimou, Antony Upw 2 2
- 3. What is ‘sustainability’? • What does ‘sustainability’ mean to you? ENVS5164 Environmental and Ecological Economics , Marialena Dimou, Antony Upw 3
- 4. Strong Sustainability • Weak vs. Strong Sustainability • Beyond Strong Sustainability? – Non-anthropocentric ethics and practices, equality among species, reduction of human population... (Thrasymachus' 'might over right' or injustice is justice) • Our View: – Humans need to live within nature's carrying capacity over-time, or else... – Four dimensions must be accounted for: • Environment • Equity • Economics • Time – Inter-generationality ENVS5164 Environmental and Ecological Economics , Marialena Dimou, Antony Upw 4
- 5. Defining Strong Sustainability • “Bruntland”* definition: – A sustainable development is development – That meets the needs of the present generation, – That does not compromise the ability of future generations to meet their own needs • Weak and oxymoronic • Our View – “Extended” Brundtland† adds: – In which each human being has the opportunity to develop itself in freedom, within a well-balanced society and in harmony with its surroundings. • Stronger…but still problematic • Or – Ehrenfeld‡ who starts from a different place: – The possibility that human and other life will flourish on the planet forever • Multi-systemic (environment, economy, equity), inter-generational, aspirational / inspirational? * United Nations General Assembly of the Report of the World Commission on Environment and Development (the Brundtland Commission) “Our Common Future”, 1987 † From Sustainable Society Index (http://www.wikiprogress.org/index.php/Sustainable_Society_Index#History) ‡ Ehrenfeld, J. (2008). Sustainability by design: a subversive strategy for transforming our consumer culture. New Haven: Yale University Press. ENVS5164 Environmental and Ecological Economics , Marialena Dimou, Antony Upw 5
- 6. What is the Economy? • From current common usage – i.e. the monetary / fiscal view of society • Our view…from its etymological roots – i.e. "house hold management" • Presume includes all issues pertaining to the objective of the household - i.e. intergenerational flourishing of its members and the environment that supports its members ENVS5164 Environmental and Ecological Economics , Marialena Dimou, Antony Upw 6
- 7. What is Measurement (aka Accounting) in this Context? • Early approaches were purely economic, i.e. GDP and criticised as such: – Simon Kuznets (1934) “...the welfare of a nation can, therefore, scarcely be inferred from a measure of national income...” • Later approaches add the idea of welfare / happiness – Subjective measure, albeit quantified in economic terms – Economists equate happiness to utility, i.e. revealed preference • Ecological economics – Full integration of environment, equity and economy over time – Debate about if / how to quantify all three in economic terms • Our View: – Balanced measurements of all three over time vital – Economic valuations of • Nature not as precise as biophysical measurements, though latter remains complex and uncertain • Equity add a layer of complexity to an already inexact science ENVS5164 Environmental and Ecological Economics , Marialena Dimou, Antony Upw 7
- 8. Measurement…Bad News… • Measuring is hard – Getting consistent and reliable data is hard • People argue about “right” / “best” ways • Scientific knowledge* incomplete • What to measure • What level a measure have for sustainability – Although we have some good ideas * Natural, Biological, Systems, Social, Economic ENVS5164 Environmental and Ecological Economics , Marialena Dimou, Antony Upw 8
- 9. Measurement…Good News… • A lot of work by a lot of people – Many based on Agenda 21 from Rio UN Earth Summit 1992 • Global – United Nations • Indicators of Sustainable Development 96 indicators in 14 groups covering all three dimensions of sustainability • Statistics Division Handbook “brings together economic and environmental information in a common framework to measure the contribution of the environment to the economy and the impact of the economy on the environment “ – World Bank’s “World Development Indicators” • Database of 700 indicators of “the progress of development”, updated annually for 200 countries • 54 indicators available for Canada across all three dimensions of sustainability. • No single index…yet…plans announced last week – WikiProgress / Sustainable Society Index • 6 themes covering all three dimensions • Canada – Lots of criticism of GDP – Lots of work on non-Economic measures – Fewer trying to integrate economic and non-economic – Bias of current Federal Government is evident in (lack of) progress in last 5 years ENVS5164 Environmental and Ecological Economics , Marialena Dimou, Antony Upw 9
- 10. Ranking and Discussion of Sustainability Indexes* 1 Sustainable Society Index (SSI) Review of Canadian Index of Wellbeing (CIW) Sustainability Indicies 3 Happy Planet Index (HPI) Open Spreadsheet 4 Genuine Progress Indicator (GPI) for Details – 2nd Tab 5 Index of Economic Well Being 6 Genuine Savings Rate 7 Weighted Index of Social Progress (WSIP) 8 Gross National Happiness (GNH) 9 Ecological Footprint 10 Environmental Performance Indicator (EPI) 11 Canadian Environmental Sustainability Indicators (CESI) 12 ESDI Canada (Development of CESI) 13 GDP (at PPP) 14 Net Domestic Product 15 Economic Well Being 16 Human Development Index (HDI) * Highly subjective: sorted by intergenerational, environment, social/equity ENVS5164 Environmental and Ecological Economics , Marialena Dimou, Antony Upw 10
- 11. What Are the Gaps? • To have a gap we need to have a target order to assess the current state! – Even if it just “more is better” (i.e. GDP) • None of the measurement schemes appear to put much weight on proposing values of their index or underlying measures which would, if achieved, lead to a sustainable world ENVS5164 Environmental and Ecological Economics , Marialena Dimou, Antony Upw 11
- 12. Our Analysis – Why Are We still Using GDP? - Choose B - Measures To Pay + Attention To Execute (Selectively!) Plan to + Close Gaps B + + Get Develop R Take GDP Gets Plan Actions to (more) Measured & Paid R Close Gaps “Scared” Measurements Measures Attention To + - + + Criticise + + Understand Measures Gaps to Goals Specific Result: The combination of the wide Goals choice of measures (each backed by special interest groups), and the Inter-Generational Increase GDP delays in the loops lead us back to Sustainability the measure we know which also Based loosely on Herzi (2006) happens to be “easy” to calculate “Biosphere Flourishing” and understand - GDP ENVS5164 Environmental and Ecological Economics , Marialena Dimou, Antony Upw 12
- 13. Our recommendation to Canada • Pick a measure – Picking one is more important than which one! – Pick one that includes: intergenerational, includes environment, social and economic dimensions • Sustainable Society Index (SSI) • Happy Planet Index (HPI) • Genuine Progress Indicator (GPI) • Necessary but not sufficient – Set goals / policy objectives based on the measures • Will require move to steady state via de-growth – Implement the policy, measure, improve over time ENVS5164 Environmental and Ecological Economics , Marialena Dimou, Antony Upw 13
- 14. Questions ENVS5164 Environmental and Ecological Economics , Marialena Dimou, Antony Upw 14
- 15. Bibliography • See spreadsheet for references to sources for Indexes reviewed • Bartelmus, Peter (2010). "The Use and Usefulness of Sustainability Economics". Ecological Economics 69 2053–2055. • Birney, Anna, Charlotte Salazar, and Jen Morgan (2008) “How Do We Enable Systems Change for a One Planet Future?” The Journal of Corporate Citizens no.30, p. 23-36. • Ehrenfeld, J. (2008). Sustainability by design: a subversive strategy for transforming our consumer culture. New Haven: Yale University Press. • Hezri, Adnan A.; Dovers, Stephen R. “Sustainability indicators, policy and governance: • Issues for ecological economics” Ecological Economics, 60, p.86-99 • Kuznets, Simon, 1934. "National Income, 1929-1932". 73rd US Congress, 2d session, Senate document no. 124, page 7. http://library.bea.gov/u?/SOD,888 • Kuznets, Simon. "How To Judge Quality". The New Republic, October 20, 1962 • Nielson, H.R. (2010). “The joint discourse 'reflexive sustainable development': From weak towards strong sustainable development”. Ecological Economics 69, 495- 501. • Pearce, David et al. (1989). “Blueprint for a Green Economy”. London, Earthscan p.1-27. • Rees, William. (1997). “Let's just assume we're sustainable”. Dollars and Sense 211 May-June. • Smith, Joseph Wayne and Gary Sauer-Thompson (1998). “Civilization's Wake: Ecology, • Economics and the Roots of Environmental Destruction and Neglect”. Population and Environment: A Journal of Interdisciplinary Studies 19 no.6, July. • Zadek, S. (2004). “The civil corporation: the new economy of social citizenship”. Earthscan, London ENVS5164 Environmental and Ecological Economics , Marialena Dimou, Antony Upw 15
Editor's Notes
- As we started to work on this issue seminar we needed to unpack the title of the issue seminar and define each word for ourselves - sustainability, economy, accounting/measurement. So starting with sustainability… -Ask students for their perspectives and ideas re 'sustainability' -In a few words, what does 'sustainability' or 'sustainable' mean to you? What words or concepts do you think of when you hear 'sustainability'?
- Thanks for your ideas…here’s what we thought…. -weak sustainability development is condition of the world today (Nelson, 2) -utility non-declining over time, maximization; neither nature nor culture has intrinsic value, rather is instrumental to achieving utility; well-being measured via utility; cost-benefit analysis determines greatest benefit vs cost, e.g. Social benefits of polluting lake must exceed social costs (anthropocentric); only monetary valuations of natural capital, assume adequate -natural capital and human-made capital substitutable (Zadek) -weak sust: -goal=utility; nature and economy=substitutable -strong sust: -autonomous goals=economy and nature; natural and human-made capital=complementary -live within nature's limits; at least sustain minimum capital -deontology, teological or virtue ethics, non-anthropocentric ethics (though the latter is 'very strong' sustainability) -ethical and political issue, where economic system gives too much power to wealthy minority and corporations, to the detriment of the majority of people and the environment/natural capital; governments are weak-willed, unorganised, corrupt; populace misinformed, distracted with basic survival needs, ignored by powerful agents (wealthy) -interdisciplinary issue: sust is about life, & life affects all aspects of life, all disciplines; science, ecology, philosophy, sociology, psychology, education, labour, health, to name a few... oh yeah, and economics Based on our examination of sustainability we concluded…last major bullet
- We then went looking for definitions of sustainability that met our view of what sustainability needs to be: Brundtland: rather weak sustainability—(1) Anthropocentric (where is nature in this definition? Where is bioequity?); (2) Western-centric (who is able to flourish—is it really all humans or only the select wealthy in the wealthy nations? (3) There is no mention of redistribution of wealth here), and focuses too much on economic growth—definitely no mention of degrowth or transition to steady-states in dvpd countries--especially in practice We concluded that either extended Bruntland or Ehrenfeld could be helpful: -Extended Brundtland in SSI: “surroundings” is vague—are they talking about human-made or natural capital? Suggests interchangeability in underlying ethic/policy. Also, 'freedom' is a libertarian ideal, i.e. Used in capitalist 'free'-market ideology, so something to be wary of -Ehrenfeld, like most ecological economists, addresses ecology, society, and economics, intergenerational; 'flourishing' suggests hopeful potential, quality over quantity, which suggests limits to growth & bioequity; complementary capital
- Next we needed to define economy: -Economy in most of the world=capitalist free-market system; but economy is not just about money—includes and affects all aspects of life (love is free!) -Economic system creates barriers to sustainability : -Current dominant view of economic, enviro, societal issues is laissez-faire, lack regulations—emerges from conception of separation of culture and nature, enviro issues become externalities, if internalised, only monetary valuations; -focus on utility/instrumental value of natural capital, rather than intrinsic (or non-monetary valuations, e..g aesthetic, spirtitual); drive for profit causes neglect of cost-benefit analysis, e.g. Pollute lake even when enviro and social costs higher than benefit, b/c economic profit goes to few, while costs get spread around—rent to few elite/already wealthy b/c have $ capital to invest etc -profit, allocation/unequal distribution vs morality, no ethics in system -economic growth paradigm—economy must keep growing, increasing throughput, despite limits to natural capital/Earth finite system--'full world'/spaceship vs empty world/cowboy -promotes (excessive) consumerism, wastefulness, exploitation of natural capital, disrespect towards other species -technological optimism—false/excessive faith in human ingenuity/human-made capital; relates to perception of natural and human-made capital as interchangeable -discounting encourages max extraction as fast as possible -atomistic, competitive actors—competition precludes altruism (paradox: actors interdependent yet self-interested/ lack altruism!) “ Our view is to take a definition of economy from it etymological roots…2 nd bullet… which broadens the issue of “accounting for sustainability of the Canadian Economy” from fiscal to include all dimensions of sustainability which we believe are important.
- Lastly we needed to define accounting, or as we started to think of it, measurement. We found this term more inclusive of accounting – since accounting tends to carry a lot of purely fiscal baggage. GDP Never intended to be used as a general measure of human progress. It is prone to productivism or consumerism, over-valuing production and consumption of goods, and not reflecting improvement in human well-being. Simon Kuznets (1962) “Distinctions must be kept in mind between quantity and quality of growth, between costs and returns, and between the short and long run. Goals for more growth should specify more growth of what and for what. Adding welfare / hapiness - from Wikipedia - http://en.wikipedia.org/wiki/Gross_national_happiness Modern classical economics no longer attempts to quantify happiness or satisfaction through measurements in consumption and profits. Instead, modern neoclassical framework argue that individual's preference is revealed through choice. Therefore, if an individual decided to purchase an apple over orange, the satisfaction one derived from apple is revealed to be greater than an orange. Similarly, modern economics also consider that work/leisure balance is also matter of individual choice. The idea that modern neoclassical economics define happiness on the basis of consumption is widely disputed. The basis of utility has been defined as revealed preference. The assumption within neoclassic economics that satisfactions are highly subjective found expression in the work of Vilfredo Pareto, whose definition of optimal allocation in the nineteenth century was a crucial contribution that allowed further development of the mathematical precision of the discipline. Pareto argued that because satisfactions are subjective, we cannot know for certain that we have increased the amount of satisfaction in the system if we take a dollar from a billionaire and give it to a starving person to buy food; for all we know, the billionaire might have derived as much satisfaction from that dollar as the starving person does in spending it on food. This counter-intuitive result is the cornerstone of Pareto Optimality: a system is in Pareto Optimality when no one can be made better off (in their own estimation) without making someone worse off (in their own estimation). In practice, "better off" and "worse off" are defined by consumption: by definition, it is always better to consume more. Thus, Pareto Optimality led to the bias in standard economics toward perpetual growth models—models that are increasingly being called into question, as being impractical (and dangerously destructive) in a finite world.[ citation needed ] Our view is that any measure of sustainability needs to include all three dimensions of sustainability + time. We don’t believe purely economic valuations are sufficient, i.e. natural capital (and ecosystems) complex, dynamic, emergent qualities—interconnected rather than mechanistic perspective held by neo-classical economics; so, uncertainty regarding how to measure, even in biophysical units
- OK, we now had our view of the issue we were examining! We had defined sustainability, economy and measurement (accounting). Next we then needed to find what measurements are out there, and assess their "fit" to ""our view". During this process we uncovered some generic problems with measurement (slide 8) which we wanted to share. See slide:
- But it certainly wasn’t all gloom and doom…we were very surprised to find how much applicable work has been done and is being done actively around the world. We learned there are a lot of measurement schemes out there. A lot of work by a lot of people http://www.beyond-gdp.eu/factsheets.html provides an extensive (25+) different measurement schemes! Global UN Indicators of Sustainable Development - http://www.un.org/esa/sustdev/isd.htm (many links to various social and economic indicator projects) UN Nations Statistical Divison Handbook on National Accounting: Integrated Environmental and Economic Accounting – “brings together economic and environmental information in a common framework to measure the contribution of the environment to the economy and the impact of the economy on the environment “ (http://unstats.un.org/unsd/envaccounting/seea.asp) World Bank’s “World Development Indicators” is a database of 700 indicators which measure “the progress of development”, updated annually for 200 countries. (http://en.wikipedia.org/wiki/World_Development_Indicators, http://ddp-ext.worldbank.org/ext/DDPQQ/member.do?method=getMembers&userid=1&queryId=135) Announcement from World Bank from Eric by email The Sustainable Society Index (http://www.wikiprogress.org/index.php/Sustainable_Society_Index) uses these statistics to measure sustainability. Canada Criticisms of GDP “The GDP and Alternative Economic and Social Indicators”. http://dsp-psd.pwgsc.gc.ca/Collection-R/LoPBdP/BP/prb0022-e.htm Non-economic measures: Canadian Council on Social Development Social Indicators Repository: www.ccsd.ca/repos.html (and many others) Bias: e.g. it is NGO’s who are taking the leadership position on integrated view of Canadian Sustainability Indicators
- We then looked at 16 schemes which we found from the perspective of our "our view“ of economy, sustainability and accounting/measurement. Review spreadsheet Hence, we ranked the schemes by their ability to measure sustainability intergenerationally, environmentally, socially, and fiscally (i.e. classical economics). Walk through spreadsheet and summary on slide.
- We then asked ourselves what are the gaps between Canada's current state and the measures...and realized we couldn't answer this question because we actually don't have targets!
- We then thought about why, if there are so many schemes which are obviously better at measuring sustainability than GDP why are we using GDP? Given the sustained criticisms of GDP we found we were curious why it is still the primary way of accounting for the Canadian economy? We used a Causal Loop Diagram to try and build a model to explain why we might be still using GDP rather than switching to something more robust and complete.
- So, finally, based on what we’ve learned we wanted to present to you our recommendation based on the sustainability measurements we found, and our analysis….. Live within natural capital's capacity Scientists and economists join forces; interdisciplinary work/solutions Beyond GDP... SSI instead? Ecological Footprint? Consume and pollute (much) less; quality not quantity; 'Sustainable degrowth'/ degrowth that transitions to steady-state More efficient technology (less polluting technology) Develop ecologically sound ethics, e.g. Respect all species, equality—now and future generations Beyond cost-benefit: Acknowledge non-monetary valuations of nature, e.g. Communal, aesthetic and spiritual—overestimates are good! Complexity, dynamic, interconnected emergent qualities of natural capital that lead to uncertainty; need precautionary approach b/c much/most (?) natural capital is irretrievable if critical stock lost Decrease global population? How? Redistribution of $ wealth Sustainability Agree to disagree—and act now!--Consensus and compromise?