- Email: [email protected]
Is measuring genuine progress at the sub-national level useful?
ecological indicators 8 (2008) 573–581
available at www.sciencedirect.com
journal homepage: www.elsevier.com/locate/ecolind
Is measuring genuine progress at the sub-national level useful? Matthew Clarke a,*, Philip Lawn b a b
School of International and Political Studies, Deakin University, 221 Burwood Highway, Burwood, Victoria 3125, Australia Flinders Business School, Flinders University, GPO Box 2100, Adelaide, SA 5001, Australia
article info
abstract
Article history:
The Genuine Progress Indicator (GPI) is a monetary based indicator that has been designed to
Received 22 September 2006
assess the impact of a growing economy on sustainable welfare. The GPI was first empiri-
Received in revised form
cally applied at the national level. The majority of subsequent studies have likewise been
2 August 2007
applied at the national level. However, there is increasing interest in assessing sustainable
Accepted 2 August 2007
welfare at the sub-national level – including states/provinces, counties and cities. The inherent methodological and structural flaws within the GPI when, applied at the national level, are equally if not more apparent when applied at the sub-national level. This paper
Keywords:
considers a number of sub-national applications in order to highlight the difficulties of using
Genuine Progress Indicator
the GPI at this level. Whilst important limitations are found, it is noted that the primary
Sustainability
purpose of the GPI is to initiate debate on what sustainable welfare is and how societies
Well-being
might best maintain or increase it. Having a sub-national GPI encourages this debate and whilst its inherent flaws must be constantly addressed and explicitly acknowledged, they do not make redundant its usefulness in achieving its primary purpose. # 2007 Elsevier Ltd. All rights reserved.
1.
Introduction
The Genuine Progress Indicator (GPI) is a monetary based indicator that has been designed to assess the impact of a growing economy on sustainable welfare. The GPI is comprised of a large number of individual items that account for these wide-ranging impacts of economic growth, including social and environmental benefits and costs as well as those of the standard economic variety. Therefore, whilst the GPI embraces some national accounting values, its full calculation depends on many values that normally escape market valuation. Daly and Cobb (1990) developed the initial methodology of the GPI (originally known as the Index for Sustainable Economic Welfare) based on Nordhaus and Tobin’s (1973) Measure of Economic Welfare, which itself followed Sametz’s
(1968) call for an adjusted GDP measure to account for the externalities caused by economic growth. The GPI emerged as an alternative macroeconomic indicator of sustainable wellbeing following concerns that gross domestic product (GDP) was being uncritically used as an indicator of sustainable well-being. It is generally accepted that economic well-being or welfare equates to the difference between the benefits and costs of economic activity. It therefore follows that the impact of a growing economy on sustainable well-being depends on whether the additional benefits of growth exceed the additional costs. GDP is a monetary measure of the goods and services produced annually by domestically located factors of production (i.e., by the natural and human-made capital located in a particular country). Whilst GDP serves adequately as an
* Corresponding author. Tel.: +61 3 9244 3979; fax: +61 3 9244 6755. E-mail address: [email protected] (M. Clarke). 1470-160X/$ – see front matter # 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.ecolind.2007.08.002
574
ecological indicators 8 (2008) 573–581
indicator of the volume of national economic activity, the following can be said about it in relation to economic welfare: GDP ignores many of the benefits generated by economic activity (e.g., the value of household and volunteer work and the services provided by existing consumer durables). GDP counts the production of additional human-made capital as a current benefit when, in fact, the benefits of newly produced human-made capital – such as durable producer and consumer goods – are enjoyed in future years. GDP counts some of the costs of economic activity as benefits. For example, the cost of defensive and rehabilitative expenditures is counted as a benefit yet it constitutes the opportunity cost of economic activity because the resources used are diverted from potentially benefit-yielding endeavours. GDP fails to involve the necessary subtraction of any natural capital depletion costs, which is important given that income is best defined as the maximum amount that can be produced and consumed in the present without depleting the stock of welfare or income-generating capital (Hicks, 1946). GDP also fails to take into account the welfare impact of a changing distribution of income and the social cost of rising unemployment and increasing foreign debt levels (Robinson, 1962; Easterlin, 1974; Abramowitz, 1979; Daly and Cobb, 1990). These concerns remain valid at the sub-national level when GDP accounts are disaggregated to produce statistics such as gross state product (GSP), which is the sub-national equivalent of the GDP. The GPI was developed to address these failures. Since its inception, the GPI has been applied to a number of developed countries (see for instance, Diefenbacher, 1994; Moffat and Wilson, 1994; Rosenberg and Oegema, 1995; Jackson and Stymne, 1996; Jackson et al., 1997; Stockhammer et al., 1997; Guenno and Tiezzi, 1998; Hamilton, 1999; Lawn and Sanders, 1999; Lawn, 2000) and developing countries (see Clarke, 2004; Castaneda, 1999). The GPI is not without its critics (see Neumayer, 1999, 2000), particularly concerns relating to the lack of a theoretical foundation and the valuation methods used in its calculation (see Lawn, 2003, 2005 for a response). However, the more recent application of the GPI to provinces and states as well as cities gives rise to possibly other questions of the appropriateness of the GPI (as it currently stands) to measure genuine progress at the sub-national level. Application of the GPI at this sub-national level includes studies of the state of Victoria, Australia (Clarke and Lawn, 2005, 2007; Lawn and Clarke, 2006a,b); the state of Vermont, USA and the city of Burlington and county of Chittenden (Costanza et al., 2004); the Canadian province of Alberta (Anielski, 2001); and the Chinese cities of Ningbo, Guangzhou, Yangzhou and Suzhou (Wen et al., 2004). This paper will consider these sub-national applications of the GPI and investigate both the theoretical and methodological issues that arise when adapting the GPI in this manner. The paper is set out as follows: Section 2 will review the strengths and weakness of the GPI. Section 3 reviews the findings of the sub-national GPI applications before Section 4
highlights new difficulties this approach faces. Section 5 concludes the paper.
2.
How genuine is the GPI?
The GPI has a number of strengths and weakness. If policy implications are to be drawn from GPI studies, these strengths and weakness must be considered. This section will briefly review each of them before drawing the conclusion that policy implications based upon GPI results are valuable at the national level and increase the likelihood of countries achieving sustainable development. Consideration of the usefulness of the GPI at the sub-national level is further considered in Section 4.
2.1.
Weakness of the GPI
2.1.1.
Construction, data and methodology
As with other economic measures, the GPI itself is a constructed number. Starting with personal consumption, the GPI is calculated by making certain adjustments that reflect both the costs and benefits of achieving economic growth. These adjustments are based on value judgments. Whilst these value judgments are explicit (and more explicit than the value judgments that underpin standard national accounts, such as GDP), the final GPI estimate is thus dependent upon the analyst’s arbitrary values, choices and preferences for both the methodologies used to estimate the costs and benefits as well as what costs and benefits are included or excluded from the GPI (Clarke and Islam, 2004). Table 1 sets out the basic adjustments used to estimate the GPI.
Table 1 – Typical adjustments for GPI Adjustment Personal consumption expenditure Index of distributional inequality Weighted personal consumption expenditure Cost of consumer durables Services yielded by consumer durables Services yielded by roads and highways Services provided by volunteers work Services provided by no-paid household work Cost of noise pollution Cost of commuting Cost of crime Cost of underemployment Cost of lost leisure time Cost of household pollution abatement Cost of vehicle accidents Cost of family breakdown Net capital investment Net Foreign lending/borrowing Loss of farmland Cost of resource depletion Cost of ozone depletion Cost of air pollution Cost of water pollution Cost of long-term environmental damage Loss of wetlands Loss of old growth forests
Benefit/cost +
+ + + +
ecological indicators 8 (2008) 573–581
By selecting different methodologies to estimate these adjustments, different results can be achieved leading to wholly different analyses and subsequent policy implications. While a standard set of costs and benefits have evolved over time (starting with Nordhaus and Tobin, 1973 and Daly and Cobb, 1990), most GPI studies have slight variations (cf. Daly and Cobb, 1990; Diefenbacher, 1994; Hamilton, 1999; Jackson and Marks, 1994; Lawn and Sanders, 1997; Rosenberg and Oegema, 1995; Stockhammer et al., 1997). In the case of the GPI for Thailand (Clarke, 2004), the cost of corruption and commercial sex work were included as these were seen as specific to the Thai experience. While excluding these two adjustments would not greatly vary the final GPI, different policy implications may follow. Further, due to the methodology selected, other adjustments might be particularly large and overwhelm the remaining adjustments. For instance, in the Thai GPI, the environmental costs are twice as significant as any other sub-system adjustment, and may be solely responsible for driving the divergence between the GDP per capita and GPI per capita indices. Likewise, the selection of what is included in the GPI is also central to the final analysis. This is a significant criticism of the GPI (Nuemeyer, 1999). The decision to exclude or include an adjustment to income is often reliant on the analysts’ opinion on the whether an activity associated with achieving economic growth can be considered a regrettable. Criticism of this approach centres on the exclusions of regrettable defensive and rehabilitative expenditures and whether other goods could be also labelled regrettable, such as food, clothing, transport, driver education and insurance. ‘‘Regret is a word of seismic potency. It can be applied to a thousand facets of the real world’’ (Lebergott, 1993, p. 8). Extending the work of Sen (1993) in which food itself does not provide utility, but the functioning of food does, it may be legitimate to say that food is a regrettable insofar as it must be purchased to facilitate its functioning, in much the same manner that commuting is necessary to acquire income. Likewise, this logic can be extended so that the Second Law of Thermodynamics results in all consumption ultimately leading, not to utility or functioning, but to waste. The GPI results, upon which policy implications are based, are thus heavily indebted to the value judgments of the analyst. As an uncertain and constructed number, a level of hesitancy might therefore accompany consideration of the development policies it suggests. However, whilst the seriousness of this weakness should not be underestimated, it is not enough to condemn the GPI to redundancy. Many of the problems associated with this weakness would be overcome if a standard set of methodologies and adjustments were uniformly undertaken when estimating the GPI for different countries. Perhaps a consistent and agreed upon set of adjustments and methodologies should be developed so that the assumptions of the compiling analyst can be reduced or excluded altogether. Since all the national GPI studies undertaken reasonably approximate oneanother in terms of adjustments and methodologies, this agreement should not be difficult to obtain (see Lawn, 2006). As mentioned, this weakness is not sufficient to dismiss the policy implications of GPI results since, not withstanding the problems associated with their estimation, they highlight the
575
need for alternative development policies based on something other than the primacy of attaining economic growth.
2.2.
Benefits of the GPI
2.2.1.
Systems analysis
The original development of income-adjusted measures of welfare (Sametz, 1968; Nordhaus and Tobin, 1973; Daly and Cobb, 1990) contained an implicit acknowledgement that the economy was part of a larger interrelating system. This general approach highlights the positive and negative consequences that achieving economic growth has on other subsystems within society. This recognition is an important tenet of this framework. Systems analysis must also be considered when drawing policy implications from GPI results. It should be assumed that, just as economic growth impacts on other sub-systems, a focus on the environment can also impinge upon other subsystems. It should also be assumed that these interrelating consequences can have positive or negative welfare implications. Before policies based upon GPI results are adopted and implemented, a thorough systems analysis of their impact must be undertaken.
2.2.2.
Capturing sustainability paths
Sustainability cannot be adequately reflected within an index number, such as GDP. However, as ‘sustainability is a property of the path the economy is on and not of the state of the system at any given time’ (Atkinson et al., 1997, p. 62), indicators such as the GPI can provide insights into this ‘‘sustainability’’ path. Enhancing this sustainability path is a distinct strength of the policies emanating from GPI results. Such policies can improve a nation’s performance in achieving sustainable development.
2.2.3.
Encouraging alternative development prescriptions
In much the same manner as the Human Development Index (UNDP, 1995), the GPI is an alternative measure of development to traditional representative indicators, such as GDP per capita. By defining development more widely than simply income, the value of the GPI in terms of its policy implications lies in its questioning of development orthodoxy and creation of a space in which alternative development prescriptions are encouraged. Given their very nature, it is unlikely that the policy implications suggested by the GPI results will be immediately implemented. However, by proposing wider development prescriptions, the GPI, like the HDI, can impact on the policy debate by encouraging dissent from the orthodoxy. Over the long term, this impact may be significant enough to result in the implementation of more extensive anti-growth policies.
3.
Results of sub-national GPI applications
The results of four sub-national studies will be reviewed in this section – namely, those for the state of Victoria, Australia; the state of Vermont, USA (and the city of Burlington and county of Chittenden); the Canadian province of Alberta; and the
576
ecological indicators 8 (2008) 573–581
Fig. 1 – Index value of per capita GPI – Victoria (Australia), 1986–2003.
Fig. 2 – Index value of per capita GPI – Vermont (USA), 1950–2000.
Chinese cities of Ningbo, Guangzhou, Yangzhou and Suzhou. The purpose of this review is not to make an assessment as to which province or city has the highest level of well-being, as measured by the per capita GPI1, but rather to illustrate the different approaches to the GPI that have been undertaken thus far at the sub-national level. This allows us to make some conclusions as to the usefulness of the GPI at this level.
came at the expense of increasing social and environmental costs.
3.1.
Victoria (Australia)
Clarke and Lawn (2005, 2007; Lawn and Clarke (2006a,b)) undertook a GPI for Victoria for the period 1986–2003. These studies also compare the per capita GPI of Victoria with its per capita gross state product (GSP).2 Between 1986 and 2003, Victoria’s GPI increased by less than 1.5% per annum or just under 22% over the entire study period. Fig. 1 illustrates this annual change by converting the per capita GPI to an index with a base year of 1986. This growth in sustainable well-being should be considered quite modest, especially when compared to the increase in Victoria’s per capita GSP – an overall increase of 45% over the study period or 2.5% per annum. Victoria’s per capita GPI fluctuated throughout the study period. After an initial steep rise in 1987, the per capita GPI varied minimally from year to year to be slightly lower in 1993. However, the per capita GPI fluctuated considerably over the next 7 years. It rose and fell in each alternate year between 1993 and 2000, ending marginally higher in 2000. The per capita GPI then rose in both 2001 and 2002, but fell again in 2003. The 2003 value was slightly lower than its 1999 peak. At the same time, Victoria’s per capita GSP rose steadily with far fewer variations. Beyond 1996, and particularly after 1999, the growth rate of Victoria’s per capita GPI was unable to keep pace with the rate of increase in Victoria’s per capita GSP. This suggests, firstly, that the rapid increase in per capita GSP over the past decade did not translate very effectively into a rise in sustainable well-being. Secondly, it appears that as much as the rise in per capita GSP yielded significant extra benefits to the average Victorian, it
1
As will be discussed in Section 4.1, there are many methodological reasons why inter-spatial comparisons of well-being based upon GPI per capita would be flawed. For further discussion – albeit at the national level rather than at the sub-national – also see Lawn and Clarke (2007). 2 Gross state product (GSP) is the sub-national equivalent of GDP.
3.2.
Vermont, Chittenden county and Burlington (USA)
For the period 1950 to 2000, Costanza et al. (2004) compared the per capita GPI over four geographical scales – namely, the USA as a whole, the US state of Vermont, the Vermont city of Burlington, and Chittenden county within which Burlington is located. Estimates were made for each decade (i.e., 1950, 1960,. . . 2000). We allow Constanza et al. to describe their own results: ‘‘While national GPI per capita pealed in 1970–1980 and has continued down to 1997, all three scales in Vermont have continued upward over the entire interval, although at decreasing rates in the last decade. While Burlington was initially well below the national average GPI per capita in 1950, with Chittenden county and the state as a whole slightly above it, by 2000 all three scales in Vermont were well above the national average GPI per capita’’ (p. 145). In fact, all three GPI scales in Vermont were more than double the national GPI in 2000. Fig. 2 illustrates the increases by highlighting growth each year by converting the per capita GPI to an index with a base year of 1950. This superior performance is attributed to differences in pollution, land loss and natural capital endowments. Pollution, especially for Burlington, was relatively high in the early period under study but improved to be around the national average by the study’s end. The lower land loss is in large part the result of the regrowth of forests, the migration of farming activity out of Chittenden county, and the more recent zoning regulations to protect existing farmland, forests and wetlands. Vermont also has a low population density (around two-thirds of the national average), thus reducing pressure on the environment. Vermont’s low rate of capital depletion can be attributed to its shift from fossil energy to hydro and biomass sources.
3.3.
Alberta (Canada)
The Alberta GPI was prepared for the period 1961–1999 by Anielski (2001). It contains around 50 adjustments broken into economic, social and environmental spheres. Like other GPI studies, the purpose of this research was to provide the ‘‘best evidence of the current and historical condition or well-being of our natural, social, human and economic-manufactured
ecological indicators 8 (2008) 573–581
577
water pollution, etc.) have been growing much faster than consumption expenditure and other positive components of welfare. More generally, it seems Ningbo’s current production processes are threatening future welfare’’ (p. 10).
4. Weakness of the GPI at the sub-national level
Fig. 3 – Index value of per capita GPI – Alberta (Canada), 1961–1999.
capital or assets, as well as identifying emerging liabilities and the distribution of ownership of capital assets in society. The GPI . . . will provide citizens and decision makers with evidence of the longitudinal trends in the well-being or condition and the sustainability of Alberta’s economy, society and environment – human, social natural and manufactured capital – to empower sustainable public policy decision making’’ (Anielski, 2001 p. 1). Fig. 3 illustrates Alberta’s movements in genuine progress by converting its per capita GPI to an index with a base year of 1961. Despite almost constant economic growth within Alberta from 1961 to 1999, Alberta’s GPI had thee distinct phases. For the first 10 years, it fell quite sharply. It then displayed an inverted-U curve over the next 15 years (starting and finishing at almost the exact same level). It remained quite stagnant from around 1985 to 1999.
3.4.
Ningbo, Guanghzou, Yangzhou, Suzhou (China)
Unlike the previous studies, Wen et al. (2004) solely apply the GPI (amongst other measures of sustainability) to cities rather than states or provinces. As with the Alberta study above, no comparison is made to the national GPI. The period of study is an 11-year period: 1991 to 2001. Wen at al. do not provide any description of the selected cities or other information that might provide an explanation of the different trends displayed by the four cities. Of the four cities, Suzhou and Guanzhou has the highest initial per capita GPI. The subsequent paths were roughly similar for the first 6 years with a strong divergence recorded thereafter. Suzhou’s per capita GPI continued to increase sixfold by 2001, whilst the per capita GPI of Guangzhou fluctuated over the study period but overall ended up three times higher than its initial value. Ningbo and Yangzhou’s initial per capita GPI was less than half of what it was for Suzhou and Guangzhou. They also followed similar paths until 1995, after which Ningbo achieved strong growth to finish sixfold higher than its initial value, whilst Yangzhou’s per capita GPI. whilst largely stagnant between 1995 and 2000, finished three times higher than its initial value. As an illustrative exercise, Wen et al. compare the per capita GPI of Ningbo to its per capita GDP. They find that the rate of growth of the per capita GPI is ‘‘lower than the growth rate of GDP per capita at all times, except for in 1993. One potential reason for this pattern could be that the negative components of welfare (e.g., loss of wetlands and costs of
The authors of the studies above do not shy away from the weaknesses of the GPI in terms of its application at the subnational level. This section will review these weaknesses and draw conclusions as to the usefulness of applying the GPI at this level.
4.1.
Construction and data
As discussed in Section 2 above, one of the main concerns with the application of GPI at the national level is a lack of universal agreement as to what should or should not be included. While a broad consensus exists, differing views exist around the periphery. This lack of uniformity also exists at the subnational level. Indeed it may be that it is exacerbated due to data difficulty. Much of the data (and associated methodology) for the national GPI studies comes directly from national statistical offices’ System of National Accounts. These statistics are collected and collated in a uniform way based on various United Nations’ sanctioned codified systems. Yet, the disaggregation of these accounts into sub-national groupings is not covered within these codified systems. Thus data accessibility is limited at the sub-national level (with data limitations increasing as the spatial unit becomes smaller – from state to county to city to neighbourhood). To counter this, researchers must substitute data that does exist for that which is not available or use proxy data or estimate sub-national figures using any number of assumptions. As Costanza et al. (2004) note ‘‘this method obviously does not fully capture the unique qualities present at the smaller scales’’ (p. 149). The result of this is a move away from a standard methodology called for by Lawn (2005, 2006) to a mixed bag of estimates with few points of comparison. The robustness of these estimates is thus open to question. Table 2 highlights how data constraints affect the construction of the GPI by comparing the data and methodology used in Victoria (Clarke and Lawn, 2005) to that of Vermont (Costanza et al., 2004). Numerous points of difference exist. Indeed, there is very little commonality between the methodologies utilised at all. There are 19 adjustments across the two GPI studies that are distinct to each report. Of the 12 shared adjustments, none share the same methodology. This lack of commonality between the two GPIs means that no robust comparison can be made between sub-national provinces as to the level of well-being experienced by the respective populations (also see Lawn and Clarke, 2007). For this reason, no attempt is made in this paper to assess and contrast levels of well-being for citizens of Victoria, Alberta and Vermont based upon the per capita GPI. More importantly, it also means that it is not possible to draw reasonable conclusions as to the sustainability performance at the sub-national level as confidence in the methodologies used to estimate the GPI are not widely
578
ecological indicators 8 (2008) 573–581
Table 2 – Comparison of adjustments and methodologies Item
Vermont
Consumption expenditure
(Per capita personal income) (ratio of personal consumption expenditure to personal income based on national data)
Expenditure on consumer durables Service from consumer durables
(Per capita personal income) (ratio of consumer durables to personal income from national data) –
Adjusted consumption
–
Distribution Index
(Gini coefficient in year 100)/1970 Gini coefficient (Consumption Expenditure)/ (Distributional Index) –
Adjusted consumption (weighted) Welfare generated by publicly-provided service capital Services of household capital Services of highways and streets Value of non-paid household labour Value of volunteer labour Loss of leisure time
Cost of unemployment, underemployment, and labour underutilisation Cost of crime
Cost of family breakdown
Cost of commuting
Cost of automobile accidents
Change in foreign debt position Cost of non-renewable resource depletion
(Cost of consumer durables) (depreciation rate of 12.5%) (Total expenditures for streets and highways) (7.5% annual value) (Hours spent on housework by gender (hourly wage for maids, housecleaners and cleaners) (Volunteer hours) (average hourly wage) (Employment level) (estimated lost leisure hours) (average hourly wage rate) (total number of underemployed persons) (unprovided hours per constrained work) (average hourly wage rate) (Direct cost of crime [out-of-pocket expenditure and the value of stolen property]) + 9indirect [defensive expenditures to prevent or avoid crime]) (Cost of divorce) + (social cost of television viewing)
(Direct costs for vehicle purchase and maintenance) + (cost of public transport) + (indirect cost for lost time) (Direct costs, including property damage and healthcare expenses) + (indirect costs, including lost wages, pain and suffering) – (oil consumption levels in barrel equivalents) (estimated cost of replacing one barrel of oil with a renewable resource)
Victoria Adjusted for all cigarette, tobacco and half of alcohol expenditure. Adjusted for part expenditure (considered defensive) of rent, health, government final expenditure, food, electricity, vehicle operating costs, transportation, communication, hotel, cafes and restaurants, and insurance and other financial services Sum of private expenditure on clothing, footwear, furnishings, household equipment, and vehicle purchases Depreciation value of existing consumer durables (depreciation rate of stock assumed to be 10% per annum) (Consumption expenditure) (expenditure on consumer durables) + (service from consumer durables) change in income distribution over the study period (1986 = 100.0) (Adjusted consumption)/ (distributional index) 100 (Public sector consumption of fixed capital) (0.75) – – Non-paid household labour is valued using the net opportunity cost method Volunteer labour is valued using the net opportunity cost method –
(CU8 number of underutilised labour) (estimated cost per unemployed person) (Various crime indexes) (cost of each crime category)
(Approximate number of dysfunctional families [based on divorce numbers]) (estimated cost per family breakdown) –
–
Change in net foreign liabilities from one financial year to the next Calculated by using the El Serafy (1989) ‘user cost’ formula to determine the amount to set aside to sustain a flow of income equal to that generated by the exhausted resource
579
ecological indicators 8 (2008) 573–581
Table 2 (Continued ) Item Loss of wetlands
Cost of lost agricultural land
Vermont
Victoria
Cumulative totals based on (estimated loss of wetlands) (acre value) (inflation value to reflect scarcity) Cumulative totals based on (urbanization rate) (estimated value of farmland per acre)
Cost of irrigation water use
–
Cost of timber depletion
–
Cost of water pollution
(Total benefit of unimpaired water) (percentage of impaired waters) (World Health Organization noise pollution damage estimate for 1972) (urbanization index values) (Scaled down national air pollution damage estimate) (Pollution Standard Index value) –
Cost of noise pollution
Cost of air pollution
Cost of urban waster-water pollution Cost of household pollution abatement
Cost of long-term environmental damage
Cost of ozone depletion
Loss of forest cover
Net capital investment
(Automobile emission abatement expenditures) + (septic system installation and cleaning costs) + (solid waste disposal costs) Cumulative totals based on (oil consumption levels in barrel equivalents) (per barrel oil tax) Cumulative totals based on (per capita ozone loss) (cost per kilogram) Loss in all forest, calculated by multiplying (change in forest cover) (value estimates for temperate and boreal forests) Scaled down national GPI figures based on population
utilised. This gives rise to speculation that, as a constructed number, the GPI at the sub-national level can be manipulated by the analyst.
4.2.
Input–output questions
If the GPI is to provide an accurate estimate of a society’s sustainability path (Atkinson et al., 1997), it must be thoughtful of the total resources consumed by that society. The present GPI does not fully consider the final place of the consumption of energy, but rather only where it is produced. Within a closed economy, this disjuncture does not matter since production and consumption equate to one another. But in open economies, this can be an important factor affecting a society’s GPI. At the sub-national level, its importance is magnified as
–
Calculated to reflect the amount required to compensate citizens for the cumulative impact of past and present agricultural practices Calculated to reflect the amount required to compensate citizens for the cumulative impact of excessive irrigation water use Calculated by using the El Serafy (1989) formula to determine the cost in circumstances where the rate of timber extraction exceeds the rate of timber regeneration and plantation establishment – –
(1992 cost of air pollution) (air pollution index) (1994 cost of urban waster-water pollution) (waste-water pollution technology index) –
Calculated to reflect the amount required to compensate citizens for the long-term environmental impact of energy consumption –
–
–
there is greater paucity between the place of production and the place of consumption (also see Costanza et al., 2004). The state of Victoria is a useful example. Despite its relatively small geographic size and large population, it is primarily an urbanised state with an economy primarily based on manufacturing and services. It is not a state that requires large scale land clearance for new housing, nor does it have significant mining operations (compared to other states, such as Queensland and Western Australia, respectively). As part of a national economy, however, residents of Victoria benefit from the activities undertaken in these other states. Thus, Victoria’s relatively better performance vis-a`-vis the Rest-ofAustralia may not be due in part to it operating more sustainably, but because it can ‘off-load’ or ‘free-ride’ on the unsustainable activities of other regions. If Victoria was not
580
ecological indicators 8 (2008) 573–581
part of a commonwealth of states, whom cross-subsidise each other in terms of tax receipts and government expenditure, it may well be forced to undertake economic activities characterised by more significant environmental externalities in order to maintain a its present material standard of living. These are likely to have associated negative sustainability consequences for Victoria’s future welfare.
4.3.
Policy implications
From a policy viewpoint, it is clear that sub-national governments (be thy state, county or city) are limited in their capacity to increase their own GPI because a great deal of what impacts on sub-national economies remains the exclusive policy domain of national governments. The following policy imperatives flow from many sub-national GPI studies that, in most cases, can only be implemented by federal or national governing bodies: the introduction of tax incentives and/or subsidies to promote research and development into ‘green’ technologies; better targeted infrastructural investment to assist in the emergence and development of tomorrow’s key industries – i.e., industries that will significantly raise productivity, increase a state’s rate of energy efficiency, and elevate standards of production excellence to new heights; import-replacement policies centred on a competitive industry base and the facilitation of high-tech, valueadding, and resource-saving industries; regulatory reform processes to reduce compliance costs for businesses without forgoing the welfare benefits that regulations are designed to protect; industrial relations reform involving the establishment of genuinely flexible labour markets that provide workers with greater work-leisure-family options while simultaneously protecting full-time work entitlements. Industrial relations reform must also engender greater workplace trust and the establishment of well-defined internal career paths supported by a dual employer–employee commitment to ongoing training; ecological tax reform that would initially involve the manipulation of the tax system to: (a) reward ‘welfareincreasing’ business behaviour (e.g., activities that add greater value in production); (b) encourage the development and uptake of resource-saving technologies; (c) reduce the proportion of private sector investment being directed into non-productive, ‘rent-seeking’ ventures; and (d) penalise environmentally-destructive behaviour (e.g., high energyintensive and polluting activities). Hence, sub-national authorities may only be able to influence the GPI at the periphery since they lack the legislative authority to implement the significant changes required to directly impact on sustainable well-being within their own local communities.
4.4.
Future sub-national GPI studies must explicitly address them. However, these weaknesses are not fatal, nor do they make the sub-national GPI a pointless exercise. The primary purpose of Daly and Cobb’s (1990) original exercise was to highlight the imperfection of GDP at the national level and challenge its uncritical use as a measure of welfare. Daly and Cobb sought to initiate a debate as to how sustainable welfare might and should be measured. While this intention has not been fully realised, the increasingly common application of the GPI across developed and developing countries, and at subnational levels, indicates that the hegemony of GDP is being actively questioned. While it was not the original intention of Daly and Cobb to have the GPI replace GDP as the ‘correct’ measure of sustainable welfare, it was their intention to provoke others to challenge the status quo. In this regard, Daly and Cobb have been very successful. Keeping this original intent in mind, the usefulness of the GPI at the sub-national level thus remains. The usefulness of the sub-national GPI is tied to its ability to initiate policy discussion for future development that may not have occurred in its absence. The purpose therefore of the Alberta GPI was not to replace GSP as a measure of welfare, but to have the work ‘‘. . .open to public scrutiny and debate both at local and national level to discern the potential utility of this new sustainability accounting system as a tool to guide public policy, fiscal policy, monetary policy and budget decision making’’ (Anielski, 2001, p. 2). Of course, work must continue to address the aforementioned data, methodological, and structural flaws so to increase its robustness and acceptance within the public arena. Yet its primary purpose to raise debate remains central and thus its usefulness is real at the sub-national level.
5.
Conclusion
The GPI was first empirically applied at the national level. The majority of subsequent studies have likewise been applied at the national level. However, there is increasing interest in assessing sustainable welfare at the sub-national level – including states/provinces, counties and cities. The inherent methodological and structural flaws within the GPI, when applied at the national level, are equally if not more apparent when applied at the sub-national level. This paper has reviewed a number of sub-national applications in order to highlight the difficulties of using the GPI at this level. Whilst important limitations were found, it was noted that the primary purpose of the GPI was to initiate debate on what sustainable welfare is and how societies might best achieve it. Having a sub-national GPI encourages this debate and, whilst its inherent flaws must be constantly addressed and explicitly acknowledged, they do not make redundant its usefulness in achieving its primary purpose.
references
Is a sub-national GPI useful?
The weaknesses of the GPI at the sub-national level discussed above are significant. They cannot be ignored or overlooked.
Abramowitz, M., 1979. Economic growth and its discontents. In: Boskin, M. (Ed.), Economics and Human Welfare. Academic Press, New York.
ecological indicators 8 (2008) 573–581
Anielski, M., 2001. The Alberta GPI Blueprint: The Genuine Progress Indicator (GPI) Sustainable Well-Being Accounting System. Pembina Institute for Appropriate Development. Atkinson, G., Dubourg, R., Hamilton, K., Munasinghe, M., Pearce, D., Young, C., 1997. Measuring Sustainable Development. Edward Elgar, London. Castaneda, B., 1999. An Index of Sustainable Economic Welfare (ISEW) for Chile. Ecol. Econ. 28, 231–244. Clarke, M., 2004. Widening development prescriptions: policy implications of an Index of Sustainable Economic Welfare (ISEW) for Thailand. Int. J. Environ. Sustainable Dev. 3, 262– 275. Clarke, M., Islam, S., 2004. Economic Growth and Social Welfare: Operationalising Normative Social Choice Theory, (published in Contribution to Economic Analysis series, vol. 262). North Holland, Amsterdam. Clarke, M., Lawn, P., 2005. ‘Measuring Victoria’s genuine progress: A Genuine Progress Indicator for Victoria’. Econ. Papers 24 (4), 368–389. Clarke, M., Lawn, P., 2007. Comparing Australia’s genuine progress to its economic growth performance. Int. J. Green Econ. 1 (3/4), 513–531. Costanza, R., Erickson, J., Fligger, K., Adams, A., Adams, C., Altschuler, B., Balter, S., Fisher, B., Hike, J., Kelly, J., Kerr, T., McCauley, M., Montone, K., Rauch, M., Schmiedeskamp, K., Saxton, D., Sparacino, L., Tusinski, W., Williams, L., 2004. Estimates of the Genuine Progress Indicator (GPI) for Vermont, Chittendon county, and Burlington from 1950 to 2000. Ecol. Econ. 51, 139–155. Daly, H., Cobb, J., 1990. For the Common Good: Redirecting the Economy Toward Community, the Environment, and a Sustainable Future. Beacon Press, Boston. Diefenbacher, H., 1994. The Index of Sustainable Economic Welfare in Germany. In: Cobb, C., Cobb, J. (Eds.), The Green National Product. University Press of America, New York. Easterlin, R., 1974. Does economic growth improve the human lot? Some empirical evidence. In: David, P., Weber, R. (Eds.), Nations and Households in Economic Growth. Academic Press, New York. Guenno, G., Tiezzi, S., 1998. An Index of Sustainable Economic Welfare for Italy, Working Paper 5/98 (Milan: Fondazione Eni Enrico Mattei). Hamilton, C., 1999. The Genuine Progress Indicator: methodological developments and results from Australia. Ecol. Econ. 30, 13–28. Hicks, J., 1946. Value and Capital. Oxford University Press, Oxford. Jackson, T., Marks, N., 1994. Measuring Sustainable Economic Welfare, Stockholm Environment Institute in cooperation with The New Economics Foundation, Stockholm. Jackson, T., Stymne S., 1996. Sustainable economic welfare in Sweden: a Pilot Index 1950–1992 (Stockholm: The New Economics Foundation). Jackson, T.,. Laing, F, MacGillivray, A., Marks, N., Ralls, J., Styme, S., 1997. An Index of Sustainable Economic Welfare for the UK, 1950–1996 (Guildford: University of Surrey Centre for Environmental Strategy). Lawn, P., 2000. Toward Sustainable Development: An Ecological Economics Approach. CRC Press, Boca Raton. Lawn, P., 2003. A theoretical foundation to support the Index of Sustainable Economic Welfare (ISEW), Genuine Progress
581
Indicator (GPI), and other related Indexes. Ecol. Econ. 44, 105–118. Lawn, P., 2005. An Assessment of the valuation methods used to calculate the Index of Sustainable Economic Welfare (ISEW), Genuine Progress Indicator (GPI), and Sustainable Net Benefit Index (SNBI). Environ. Dev. Sustainability 7, 185–208. Lawn, P. (Ed.), 2006. Sustainable Development Indicators in Ecological Economics. Edward Elgar, London. Lawn, P., Clarke, M., 2006a. Measuring Australia and Victoria’s Genuine Progress. Nova Science, New York. Lawn, P., Clarke, M., 2006b. Comparing Victoria’s Genuine Progress with that of the Rest-of-Australia. J. Social Econ. Policy Vol. 10 (2), 115–138. Lawn, P., Clarke, M., 2007. Sustainable Welfare in the Asia-Pacific Region: Studies Using the Genuine Progress Indicator. Edward Elgar, Cheltenham. Lawn, P., Sanders, R., 1997. A Sustainable Net Benefit Index for Australia, 1966–67 to 1994–95, Working Paper in Economics No. 16, Griffiths University, Brisbane. Lawn, P., Sanders, R., 1999. Has Australia surpassed its optimal macroeconomic scale? Finding out with the aid of ‘‘benefit’’ and ‘‘cost’’ accounts and a Sustainable Net Benefit Index’’. Ecol. Econ. 28, 213–299. Lebergott, S., 1993. Pursuing Happiness. Princeton University Press, Princeton. Moffat, I., Wilson, M., 1994. An Index of Sustainable Economic Welfare for Scotland, 1980–1991. Int. J. Sustainable Dev. World Ecol. 1, 264–291. Neumayer, E., 1999. The ISEW: not an index of sustainable economic welfare. Soc. Indicat. Res. 48, 77–101. Neumayer, E., 2000. On the methodology of ISEW, GPI and related measures: some constructive suggestions and some doubt on the ‘‘threshold thesis’’. Ecol. Econ. 34, 347–361. Nordhaus, W., Tobin, J., 1973. Is Growth Obsolete? In: Moss, M. (Ed.), The Measurement of Economic and Social Planning, Economic Growth. National Bureau of Economic Research, New York. Robinson, J., 1962. Economic Philosophy. C.A. Watts & Co., London. Rosenberg, K, Oegema T., 1995. A Pilot ISEW for The Netherlands 1950–1992 (Amsterdam: Instituut Voor Milieu – En Systeemanalyse). Sametz, A., 1968. Production of goods and services: the measurements of economic growth. In: Sheldon, E., Moore, W. (Eds.), Indicators of Social Change. Russell Sage Foundation, New York. Sen, A., 1993. Capability and Well-Being. In: Nussbaum, M., Sen, A. (Eds.), The Quality of Life. Clarendon Press, Oxford. Stockhammer, E., Hochreiter, H., Obermayr, B., Steiner, K., 1997. The Index of Sustainable Economic Welfare (ISEW) as an Alternative to GDP in Measuring Economic Welfare: The Results of the Australian (revised) ISEW Calculation 1955– 1992. Ecol. Econ. 21, 19–34. United Nations Development Program (UNDP)., 1995. The Human Development Report. UNDP, New York. Wen, Z., Zhang, K., Song, G., 2004. Multiple-Indicators approach for monitoring urban sustainable development. In: Paper Presented at CANSEE Annual Conference.
available at www.sciencedirect.com
journal homepage: www.elsevier.com/locate/ecolind
Is measuring genuine progress at the sub-national level useful? Matthew Clarke a,*, Philip Lawn b a b
School of International and Political Studies, Deakin University, 221 Burwood Highway, Burwood, Victoria 3125, Australia Flinders Business School, Flinders University, GPO Box 2100, Adelaide, SA 5001, Australia
article info
abstract
Article history:
The Genuine Progress Indicator (GPI) is a monetary based indicator that has been designed to
Received 22 September 2006
assess the impact of a growing economy on sustainable welfare. The GPI was first empiri-
Received in revised form
cally applied at the national level. The majority of subsequent studies have likewise been
2 August 2007
applied at the national level. However, there is increasing interest in assessing sustainable
Accepted 2 August 2007
welfare at the sub-national level – including states/provinces, counties and cities. The inherent methodological and structural flaws within the GPI when, applied at the national level, are equally if not more apparent when applied at the sub-national level. This paper
Keywords:
considers a number of sub-national applications in order to highlight the difficulties of using
Genuine Progress Indicator
the GPI at this level. Whilst important limitations are found, it is noted that the primary
Sustainability
purpose of the GPI is to initiate debate on what sustainable welfare is and how societies
Well-being
might best maintain or increase it. Having a sub-national GPI encourages this debate and whilst its inherent flaws must be constantly addressed and explicitly acknowledged, they do not make redundant its usefulness in achieving its primary purpose. # 2007 Elsevier Ltd. All rights reserved.
1.
Introduction
The Genuine Progress Indicator (GPI) is a monetary based indicator that has been designed to assess the impact of a growing economy on sustainable welfare. The GPI is comprised of a large number of individual items that account for these wide-ranging impacts of economic growth, including social and environmental benefits and costs as well as those of the standard economic variety. Therefore, whilst the GPI embraces some national accounting values, its full calculation depends on many values that normally escape market valuation. Daly and Cobb (1990) developed the initial methodology of the GPI (originally known as the Index for Sustainable Economic Welfare) based on Nordhaus and Tobin’s (1973) Measure of Economic Welfare, which itself followed Sametz’s
(1968) call for an adjusted GDP measure to account for the externalities caused by economic growth. The GPI emerged as an alternative macroeconomic indicator of sustainable wellbeing following concerns that gross domestic product (GDP) was being uncritically used as an indicator of sustainable well-being. It is generally accepted that economic well-being or welfare equates to the difference between the benefits and costs of economic activity. It therefore follows that the impact of a growing economy on sustainable well-being depends on whether the additional benefits of growth exceed the additional costs. GDP is a monetary measure of the goods and services produced annually by domestically located factors of production (i.e., by the natural and human-made capital located in a particular country). Whilst GDP serves adequately as an
* Corresponding author. Tel.: +61 3 9244 3979; fax: +61 3 9244 6755. E-mail address: [email protected] (M. Clarke). 1470-160X/$ – see front matter # 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.ecolind.2007.08.002
574
ecological indicators 8 (2008) 573–581
indicator of the volume of national economic activity, the following can be said about it in relation to economic welfare: GDP ignores many of the benefits generated by economic activity (e.g., the value of household and volunteer work and the services provided by existing consumer durables). GDP counts the production of additional human-made capital as a current benefit when, in fact, the benefits of newly produced human-made capital – such as durable producer and consumer goods – are enjoyed in future years. GDP counts some of the costs of economic activity as benefits. For example, the cost of defensive and rehabilitative expenditures is counted as a benefit yet it constitutes the opportunity cost of economic activity because the resources used are diverted from potentially benefit-yielding endeavours. GDP fails to involve the necessary subtraction of any natural capital depletion costs, which is important given that income is best defined as the maximum amount that can be produced and consumed in the present without depleting the stock of welfare or income-generating capital (Hicks, 1946). GDP also fails to take into account the welfare impact of a changing distribution of income and the social cost of rising unemployment and increasing foreign debt levels (Robinson, 1962; Easterlin, 1974; Abramowitz, 1979; Daly and Cobb, 1990). These concerns remain valid at the sub-national level when GDP accounts are disaggregated to produce statistics such as gross state product (GSP), which is the sub-national equivalent of the GDP. The GPI was developed to address these failures. Since its inception, the GPI has been applied to a number of developed countries (see for instance, Diefenbacher, 1994; Moffat and Wilson, 1994; Rosenberg and Oegema, 1995; Jackson and Stymne, 1996; Jackson et al., 1997; Stockhammer et al., 1997; Guenno and Tiezzi, 1998; Hamilton, 1999; Lawn and Sanders, 1999; Lawn, 2000) and developing countries (see Clarke, 2004; Castaneda, 1999). The GPI is not without its critics (see Neumayer, 1999, 2000), particularly concerns relating to the lack of a theoretical foundation and the valuation methods used in its calculation (see Lawn, 2003, 2005 for a response). However, the more recent application of the GPI to provinces and states as well as cities gives rise to possibly other questions of the appropriateness of the GPI (as it currently stands) to measure genuine progress at the sub-national level. Application of the GPI at this sub-national level includes studies of the state of Victoria, Australia (Clarke and Lawn, 2005, 2007; Lawn and Clarke, 2006a,b); the state of Vermont, USA and the city of Burlington and county of Chittenden (Costanza et al., 2004); the Canadian province of Alberta (Anielski, 2001); and the Chinese cities of Ningbo, Guangzhou, Yangzhou and Suzhou (Wen et al., 2004). This paper will consider these sub-national applications of the GPI and investigate both the theoretical and methodological issues that arise when adapting the GPI in this manner. The paper is set out as follows: Section 2 will review the strengths and weakness of the GPI. Section 3 reviews the findings of the sub-national GPI applications before Section 4
highlights new difficulties this approach faces. Section 5 concludes the paper.
2.
How genuine is the GPI?
The GPI has a number of strengths and weakness. If policy implications are to be drawn from GPI studies, these strengths and weakness must be considered. This section will briefly review each of them before drawing the conclusion that policy implications based upon GPI results are valuable at the national level and increase the likelihood of countries achieving sustainable development. Consideration of the usefulness of the GPI at the sub-national level is further considered in Section 4.
2.1.
Weakness of the GPI
2.1.1.
Construction, data and methodology
As with other economic measures, the GPI itself is a constructed number. Starting with personal consumption, the GPI is calculated by making certain adjustments that reflect both the costs and benefits of achieving economic growth. These adjustments are based on value judgments. Whilst these value judgments are explicit (and more explicit than the value judgments that underpin standard national accounts, such as GDP), the final GPI estimate is thus dependent upon the analyst’s arbitrary values, choices and preferences for both the methodologies used to estimate the costs and benefits as well as what costs and benefits are included or excluded from the GPI (Clarke and Islam, 2004). Table 1 sets out the basic adjustments used to estimate the GPI.
Table 1 – Typical adjustments for GPI Adjustment Personal consumption expenditure Index of distributional inequality Weighted personal consumption expenditure Cost of consumer durables Services yielded by consumer durables Services yielded by roads and highways Services provided by volunteers work Services provided by no-paid household work Cost of noise pollution Cost of commuting Cost of crime Cost of underemployment Cost of lost leisure time Cost of household pollution abatement Cost of vehicle accidents Cost of family breakdown Net capital investment Net Foreign lending/borrowing Loss of farmland Cost of resource depletion Cost of ozone depletion Cost of air pollution Cost of water pollution Cost of long-term environmental damage Loss of wetlands Loss of old growth forests
Benefit/cost +
+ + + +
ecological indicators 8 (2008) 573–581
By selecting different methodologies to estimate these adjustments, different results can be achieved leading to wholly different analyses and subsequent policy implications. While a standard set of costs and benefits have evolved over time (starting with Nordhaus and Tobin, 1973 and Daly and Cobb, 1990), most GPI studies have slight variations (cf. Daly and Cobb, 1990; Diefenbacher, 1994; Hamilton, 1999; Jackson and Marks, 1994; Lawn and Sanders, 1997; Rosenberg and Oegema, 1995; Stockhammer et al., 1997). In the case of the GPI for Thailand (Clarke, 2004), the cost of corruption and commercial sex work were included as these were seen as specific to the Thai experience. While excluding these two adjustments would not greatly vary the final GPI, different policy implications may follow. Further, due to the methodology selected, other adjustments might be particularly large and overwhelm the remaining adjustments. For instance, in the Thai GPI, the environmental costs are twice as significant as any other sub-system adjustment, and may be solely responsible for driving the divergence between the GDP per capita and GPI per capita indices. Likewise, the selection of what is included in the GPI is also central to the final analysis. This is a significant criticism of the GPI (Nuemeyer, 1999). The decision to exclude or include an adjustment to income is often reliant on the analysts’ opinion on the whether an activity associated with achieving economic growth can be considered a regrettable. Criticism of this approach centres on the exclusions of regrettable defensive and rehabilitative expenditures and whether other goods could be also labelled regrettable, such as food, clothing, transport, driver education and insurance. ‘‘Regret is a word of seismic potency. It can be applied to a thousand facets of the real world’’ (Lebergott, 1993, p. 8). Extending the work of Sen (1993) in which food itself does not provide utility, but the functioning of food does, it may be legitimate to say that food is a regrettable insofar as it must be purchased to facilitate its functioning, in much the same manner that commuting is necessary to acquire income. Likewise, this logic can be extended so that the Second Law of Thermodynamics results in all consumption ultimately leading, not to utility or functioning, but to waste. The GPI results, upon which policy implications are based, are thus heavily indebted to the value judgments of the analyst. As an uncertain and constructed number, a level of hesitancy might therefore accompany consideration of the development policies it suggests. However, whilst the seriousness of this weakness should not be underestimated, it is not enough to condemn the GPI to redundancy. Many of the problems associated with this weakness would be overcome if a standard set of methodologies and adjustments were uniformly undertaken when estimating the GPI for different countries. Perhaps a consistent and agreed upon set of adjustments and methodologies should be developed so that the assumptions of the compiling analyst can be reduced or excluded altogether. Since all the national GPI studies undertaken reasonably approximate oneanother in terms of adjustments and methodologies, this agreement should not be difficult to obtain (see Lawn, 2006). As mentioned, this weakness is not sufficient to dismiss the policy implications of GPI results since, not withstanding the problems associated with their estimation, they highlight the
575
need for alternative development policies based on something other than the primacy of attaining economic growth.
2.2.
Benefits of the GPI
2.2.1.
Systems analysis
The original development of income-adjusted measures of welfare (Sametz, 1968; Nordhaus and Tobin, 1973; Daly and Cobb, 1990) contained an implicit acknowledgement that the economy was part of a larger interrelating system. This general approach highlights the positive and negative consequences that achieving economic growth has on other subsystems within society. This recognition is an important tenet of this framework. Systems analysis must also be considered when drawing policy implications from GPI results. It should be assumed that, just as economic growth impacts on other sub-systems, a focus on the environment can also impinge upon other subsystems. It should also be assumed that these interrelating consequences can have positive or negative welfare implications. Before policies based upon GPI results are adopted and implemented, a thorough systems analysis of their impact must be undertaken.
2.2.2.
Capturing sustainability paths
Sustainability cannot be adequately reflected within an index number, such as GDP. However, as ‘sustainability is a property of the path the economy is on and not of the state of the system at any given time’ (Atkinson et al., 1997, p. 62), indicators such as the GPI can provide insights into this ‘‘sustainability’’ path. Enhancing this sustainability path is a distinct strength of the policies emanating from GPI results. Such policies can improve a nation’s performance in achieving sustainable development.
2.2.3.
Encouraging alternative development prescriptions
In much the same manner as the Human Development Index (UNDP, 1995), the GPI is an alternative measure of development to traditional representative indicators, such as GDP per capita. By defining development more widely than simply income, the value of the GPI in terms of its policy implications lies in its questioning of development orthodoxy and creation of a space in which alternative development prescriptions are encouraged. Given their very nature, it is unlikely that the policy implications suggested by the GPI results will be immediately implemented. However, by proposing wider development prescriptions, the GPI, like the HDI, can impact on the policy debate by encouraging dissent from the orthodoxy. Over the long term, this impact may be significant enough to result in the implementation of more extensive anti-growth policies.
3.
Results of sub-national GPI applications
The results of four sub-national studies will be reviewed in this section – namely, those for the state of Victoria, Australia; the state of Vermont, USA (and the city of Burlington and county of Chittenden); the Canadian province of Alberta; and the
576
ecological indicators 8 (2008) 573–581
Fig. 1 – Index value of per capita GPI – Victoria (Australia), 1986–2003.
Fig. 2 – Index value of per capita GPI – Vermont (USA), 1950–2000.
Chinese cities of Ningbo, Guangzhou, Yangzhou and Suzhou. The purpose of this review is not to make an assessment as to which province or city has the highest level of well-being, as measured by the per capita GPI1, but rather to illustrate the different approaches to the GPI that have been undertaken thus far at the sub-national level. This allows us to make some conclusions as to the usefulness of the GPI at this level.
came at the expense of increasing social and environmental costs.
3.1.
Victoria (Australia)
Clarke and Lawn (2005, 2007; Lawn and Clarke (2006a,b)) undertook a GPI for Victoria for the period 1986–2003. These studies also compare the per capita GPI of Victoria with its per capita gross state product (GSP).2 Between 1986 and 2003, Victoria’s GPI increased by less than 1.5% per annum or just under 22% over the entire study period. Fig. 1 illustrates this annual change by converting the per capita GPI to an index with a base year of 1986. This growth in sustainable well-being should be considered quite modest, especially when compared to the increase in Victoria’s per capita GSP – an overall increase of 45% over the study period or 2.5% per annum. Victoria’s per capita GPI fluctuated throughout the study period. After an initial steep rise in 1987, the per capita GPI varied minimally from year to year to be slightly lower in 1993. However, the per capita GPI fluctuated considerably over the next 7 years. It rose and fell in each alternate year between 1993 and 2000, ending marginally higher in 2000. The per capita GPI then rose in both 2001 and 2002, but fell again in 2003. The 2003 value was slightly lower than its 1999 peak. At the same time, Victoria’s per capita GSP rose steadily with far fewer variations. Beyond 1996, and particularly after 1999, the growth rate of Victoria’s per capita GPI was unable to keep pace with the rate of increase in Victoria’s per capita GSP. This suggests, firstly, that the rapid increase in per capita GSP over the past decade did not translate very effectively into a rise in sustainable well-being. Secondly, it appears that as much as the rise in per capita GSP yielded significant extra benefits to the average Victorian, it
1
As will be discussed in Section 4.1, there are many methodological reasons why inter-spatial comparisons of well-being based upon GPI per capita would be flawed. For further discussion – albeit at the national level rather than at the sub-national – also see Lawn and Clarke (2007). 2 Gross state product (GSP) is the sub-national equivalent of GDP.
3.2.
Vermont, Chittenden county and Burlington (USA)
For the period 1950 to 2000, Costanza et al. (2004) compared the per capita GPI over four geographical scales – namely, the USA as a whole, the US state of Vermont, the Vermont city of Burlington, and Chittenden county within which Burlington is located. Estimates were made for each decade (i.e., 1950, 1960,. . . 2000). We allow Constanza et al. to describe their own results: ‘‘While national GPI per capita pealed in 1970–1980 and has continued down to 1997, all three scales in Vermont have continued upward over the entire interval, although at decreasing rates in the last decade. While Burlington was initially well below the national average GPI per capita in 1950, with Chittenden county and the state as a whole slightly above it, by 2000 all three scales in Vermont were well above the national average GPI per capita’’ (p. 145). In fact, all three GPI scales in Vermont were more than double the national GPI in 2000. Fig. 2 illustrates the increases by highlighting growth each year by converting the per capita GPI to an index with a base year of 1950. This superior performance is attributed to differences in pollution, land loss and natural capital endowments. Pollution, especially for Burlington, was relatively high in the early period under study but improved to be around the national average by the study’s end. The lower land loss is in large part the result of the regrowth of forests, the migration of farming activity out of Chittenden county, and the more recent zoning regulations to protect existing farmland, forests and wetlands. Vermont also has a low population density (around two-thirds of the national average), thus reducing pressure on the environment. Vermont’s low rate of capital depletion can be attributed to its shift from fossil energy to hydro and biomass sources.
3.3.
Alberta (Canada)
The Alberta GPI was prepared for the period 1961–1999 by Anielski (2001). It contains around 50 adjustments broken into economic, social and environmental spheres. Like other GPI studies, the purpose of this research was to provide the ‘‘best evidence of the current and historical condition or well-being of our natural, social, human and economic-manufactured
ecological indicators 8 (2008) 573–581
577
water pollution, etc.) have been growing much faster than consumption expenditure and other positive components of welfare. More generally, it seems Ningbo’s current production processes are threatening future welfare’’ (p. 10).
4. Weakness of the GPI at the sub-national level
Fig. 3 – Index value of per capita GPI – Alberta (Canada), 1961–1999.
capital or assets, as well as identifying emerging liabilities and the distribution of ownership of capital assets in society. The GPI . . . will provide citizens and decision makers with evidence of the longitudinal trends in the well-being or condition and the sustainability of Alberta’s economy, society and environment – human, social natural and manufactured capital – to empower sustainable public policy decision making’’ (Anielski, 2001 p. 1). Fig. 3 illustrates Alberta’s movements in genuine progress by converting its per capita GPI to an index with a base year of 1961. Despite almost constant economic growth within Alberta from 1961 to 1999, Alberta’s GPI had thee distinct phases. For the first 10 years, it fell quite sharply. It then displayed an inverted-U curve over the next 15 years (starting and finishing at almost the exact same level). It remained quite stagnant from around 1985 to 1999.
3.4.
Ningbo, Guanghzou, Yangzhou, Suzhou (China)
Unlike the previous studies, Wen et al. (2004) solely apply the GPI (amongst other measures of sustainability) to cities rather than states or provinces. As with the Alberta study above, no comparison is made to the national GPI. The period of study is an 11-year period: 1991 to 2001. Wen at al. do not provide any description of the selected cities or other information that might provide an explanation of the different trends displayed by the four cities. Of the four cities, Suzhou and Guanzhou has the highest initial per capita GPI. The subsequent paths were roughly similar for the first 6 years with a strong divergence recorded thereafter. Suzhou’s per capita GPI continued to increase sixfold by 2001, whilst the per capita GPI of Guangzhou fluctuated over the study period but overall ended up three times higher than its initial value. Ningbo and Yangzhou’s initial per capita GPI was less than half of what it was for Suzhou and Guangzhou. They also followed similar paths until 1995, after which Ningbo achieved strong growth to finish sixfold higher than its initial value, whilst Yangzhou’s per capita GPI. whilst largely stagnant between 1995 and 2000, finished three times higher than its initial value. As an illustrative exercise, Wen et al. compare the per capita GPI of Ningbo to its per capita GDP. They find that the rate of growth of the per capita GPI is ‘‘lower than the growth rate of GDP per capita at all times, except for in 1993. One potential reason for this pattern could be that the negative components of welfare (e.g., loss of wetlands and costs of
The authors of the studies above do not shy away from the weaknesses of the GPI in terms of its application at the subnational level. This section will review these weaknesses and draw conclusions as to the usefulness of applying the GPI at this level.
4.1.
Construction and data
As discussed in Section 2 above, one of the main concerns with the application of GPI at the national level is a lack of universal agreement as to what should or should not be included. While a broad consensus exists, differing views exist around the periphery. This lack of uniformity also exists at the subnational level. Indeed it may be that it is exacerbated due to data difficulty. Much of the data (and associated methodology) for the national GPI studies comes directly from national statistical offices’ System of National Accounts. These statistics are collected and collated in a uniform way based on various United Nations’ sanctioned codified systems. Yet, the disaggregation of these accounts into sub-national groupings is not covered within these codified systems. Thus data accessibility is limited at the sub-national level (with data limitations increasing as the spatial unit becomes smaller – from state to county to city to neighbourhood). To counter this, researchers must substitute data that does exist for that which is not available or use proxy data or estimate sub-national figures using any number of assumptions. As Costanza et al. (2004) note ‘‘this method obviously does not fully capture the unique qualities present at the smaller scales’’ (p. 149). The result of this is a move away from a standard methodology called for by Lawn (2005, 2006) to a mixed bag of estimates with few points of comparison. The robustness of these estimates is thus open to question. Table 2 highlights how data constraints affect the construction of the GPI by comparing the data and methodology used in Victoria (Clarke and Lawn, 2005) to that of Vermont (Costanza et al., 2004). Numerous points of difference exist. Indeed, there is very little commonality between the methodologies utilised at all. There are 19 adjustments across the two GPI studies that are distinct to each report. Of the 12 shared adjustments, none share the same methodology. This lack of commonality between the two GPIs means that no robust comparison can be made between sub-national provinces as to the level of well-being experienced by the respective populations (also see Lawn and Clarke, 2007). For this reason, no attempt is made in this paper to assess and contrast levels of well-being for citizens of Victoria, Alberta and Vermont based upon the per capita GPI. More importantly, it also means that it is not possible to draw reasonable conclusions as to the sustainability performance at the sub-national level as confidence in the methodologies used to estimate the GPI are not widely
578
ecological indicators 8 (2008) 573–581
Table 2 – Comparison of adjustments and methodologies Item
Vermont
Consumption expenditure
(Per capita personal income) (ratio of personal consumption expenditure to personal income based on national data)
Expenditure on consumer durables Service from consumer durables
(Per capita personal income) (ratio of consumer durables to personal income from national data) –
Adjusted consumption
–
Distribution Index
(Gini coefficient in year 100)/1970 Gini coefficient (Consumption Expenditure)/ (Distributional Index) –
Adjusted consumption (weighted) Welfare generated by publicly-provided service capital Services of household capital Services of highways and streets Value of non-paid household labour Value of volunteer labour Loss of leisure time
Cost of unemployment, underemployment, and labour underutilisation Cost of crime
Cost of family breakdown
Cost of commuting
Cost of automobile accidents
Change in foreign debt position Cost of non-renewable resource depletion
(Cost of consumer durables) (depreciation rate of 12.5%) (Total expenditures for streets and highways) (7.5% annual value) (Hours spent on housework by gender (hourly wage for maids, housecleaners and cleaners) (Volunteer hours) (average hourly wage) (Employment level) (estimated lost leisure hours) (average hourly wage rate) (total number of underemployed persons) (unprovided hours per constrained work) (average hourly wage rate) (Direct cost of crime [out-of-pocket expenditure and the value of stolen property]) + 9indirect [defensive expenditures to prevent or avoid crime]) (Cost of divorce) + (social cost of television viewing)
(Direct costs for vehicle purchase and maintenance) + (cost of public transport) + (indirect cost for lost time) (Direct costs, including property damage and healthcare expenses) + (indirect costs, including lost wages, pain and suffering) – (oil consumption levels in barrel equivalents) (estimated cost of replacing one barrel of oil with a renewable resource)
Victoria Adjusted for all cigarette, tobacco and half of alcohol expenditure. Adjusted for part expenditure (considered defensive) of rent, health, government final expenditure, food, electricity, vehicle operating costs, transportation, communication, hotel, cafes and restaurants, and insurance and other financial services Sum of private expenditure on clothing, footwear, furnishings, household equipment, and vehicle purchases Depreciation value of existing consumer durables (depreciation rate of stock assumed to be 10% per annum) (Consumption expenditure) (expenditure on consumer durables) + (service from consumer durables) change in income distribution over the study period (1986 = 100.0) (Adjusted consumption)/ (distributional index) 100 (Public sector consumption of fixed capital) (0.75) – – Non-paid household labour is valued using the net opportunity cost method Volunteer labour is valued using the net opportunity cost method –
(CU8 number of underutilised labour) (estimated cost per unemployed person) (Various crime indexes) (cost of each crime category)
(Approximate number of dysfunctional families [based on divorce numbers]) (estimated cost per family breakdown) –
–
Change in net foreign liabilities from one financial year to the next Calculated by using the El Serafy (1989) ‘user cost’ formula to determine the amount to set aside to sustain a flow of income equal to that generated by the exhausted resource
579
ecological indicators 8 (2008) 573–581
Table 2 (Continued ) Item Loss of wetlands
Cost of lost agricultural land
Vermont
Victoria
Cumulative totals based on (estimated loss of wetlands) (acre value) (inflation value to reflect scarcity) Cumulative totals based on (urbanization rate) (estimated value of farmland per acre)
Cost of irrigation water use
–
Cost of timber depletion
–
Cost of water pollution
(Total benefit of unimpaired water) (percentage of impaired waters) (World Health Organization noise pollution damage estimate for 1972) (urbanization index values) (Scaled down national air pollution damage estimate) (Pollution Standard Index value) –
Cost of noise pollution
Cost of air pollution
Cost of urban waster-water pollution Cost of household pollution abatement
Cost of long-term environmental damage
Cost of ozone depletion
Loss of forest cover
Net capital investment
(Automobile emission abatement expenditures) + (septic system installation and cleaning costs) + (solid waste disposal costs) Cumulative totals based on (oil consumption levels in barrel equivalents) (per barrel oil tax) Cumulative totals based on (per capita ozone loss) (cost per kilogram) Loss in all forest, calculated by multiplying (change in forest cover) (value estimates for temperate and boreal forests) Scaled down national GPI figures based on population
utilised. This gives rise to speculation that, as a constructed number, the GPI at the sub-national level can be manipulated by the analyst.
4.2.
Input–output questions
If the GPI is to provide an accurate estimate of a society’s sustainability path (Atkinson et al., 1997), it must be thoughtful of the total resources consumed by that society. The present GPI does not fully consider the final place of the consumption of energy, but rather only where it is produced. Within a closed economy, this disjuncture does not matter since production and consumption equate to one another. But in open economies, this can be an important factor affecting a society’s GPI. At the sub-national level, its importance is magnified as
–
Calculated to reflect the amount required to compensate citizens for the cumulative impact of past and present agricultural practices Calculated to reflect the amount required to compensate citizens for the cumulative impact of excessive irrigation water use Calculated by using the El Serafy (1989) formula to determine the cost in circumstances where the rate of timber extraction exceeds the rate of timber regeneration and plantation establishment – –
(1992 cost of air pollution) (air pollution index) (1994 cost of urban waster-water pollution) (waste-water pollution technology index) –
Calculated to reflect the amount required to compensate citizens for the long-term environmental impact of energy consumption –
–
–
there is greater paucity between the place of production and the place of consumption (also see Costanza et al., 2004). The state of Victoria is a useful example. Despite its relatively small geographic size and large population, it is primarily an urbanised state with an economy primarily based on manufacturing and services. It is not a state that requires large scale land clearance for new housing, nor does it have significant mining operations (compared to other states, such as Queensland and Western Australia, respectively). As part of a national economy, however, residents of Victoria benefit from the activities undertaken in these other states. Thus, Victoria’s relatively better performance vis-a`-vis the Rest-ofAustralia may not be due in part to it operating more sustainably, but because it can ‘off-load’ or ‘free-ride’ on the unsustainable activities of other regions. If Victoria was not
580
ecological indicators 8 (2008) 573–581
part of a commonwealth of states, whom cross-subsidise each other in terms of tax receipts and government expenditure, it may well be forced to undertake economic activities characterised by more significant environmental externalities in order to maintain a its present material standard of living. These are likely to have associated negative sustainability consequences for Victoria’s future welfare.
4.3.
Policy implications
From a policy viewpoint, it is clear that sub-national governments (be thy state, county or city) are limited in their capacity to increase their own GPI because a great deal of what impacts on sub-national economies remains the exclusive policy domain of national governments. The following policy imperatives flow from many sub-national GPI studies that, in most cases, can only be implemented by federal or national governing bodies: the introduction of tax incentives and/or subsidies to promote research and development into ‘green’ technologies; better targeted infrastructural investment to assist in the emergence and development of tomorrow’s key industries – i.e., industries that will significantly raise productivity, increase a state’s rate of energy efficiency, and elevate standards of production excellence to new heights; import-replacement policies centred on a competitive industry base and the facilitation of high-tech, valueadding, and resource-saving industries; regulatory reform processes to reduce compliance costs for businesses without forgoing the welfare benefits that regulations are designed to protect; industrial relations reform involving the establishment of genuinely flexible labour markets that provide workers with greater work-leisure-family options while simultaneously protecting full-time work entitlements. Industrial relations reform must also engender greater workplace trust and the establishment of well-defined internal career paths supported by a dual employer–employee commitment to ongoing training; ecological tax reform that would initially involve the manipulation of the tax system to: (a) reward ‘welfareincreasing’ business behaviour (e.g., activities that add greater value in production); (b) encourage the development and uptake of resource-saving technologies; (c) reduce the proportion of private sector investment being directed into non-productive, ‘rent-seeking’ ventures; and (d) penalise environmentally-destructive behaviour (e.g., high energyintensive and polluting activities). Hence, sub-national authorities may only be able to influence the GPI at the periphery since they lack the legislative authority to implement the significant changes required to directly impact on sustainable well-being within their own local communities.
4.4.
Future sub-national GPI studies must explicitly address them. However, these weaknesses are not fatal, nor do they make the sub-national GPI a pointless exercise. The primary purpose of Daly and Cobb’s (1990) original exercise was to highlight the imperfection of GDP at the national level and challenge its uncritical use as a measure of welfare. Daly and Cobb sought to initiate a debate as to how sustainable welfare might and should be measured. While this intention has not been fully realised, the increasingly common application of the GPI across developed and developing countries, and at subnational levels, indicates that the hegemony of GDP is being actively questioned. While it was not the original intention of Daly and Cobb to have the GPI replace GDP as the ‘correct’ measure of sustainable welfare, it was their intention to provoke others to challenge the status quo. In this regard, Daly and Cobb have been very successful. Keeping this original intent in mind, the usefulness of the GPI at the sub-national level thus remains. The usefulness of the sub-national GPI is tied to its ability to initiate policy discussion for future development that may not have occurred in its absence. The purpose therefore of the Alberta GPI was not to replace GSP as a measure of welfare, but to have the work ‘‘. . .open to public scrutiny and debate both at local and national level to discern the potential utility of this new sustainability accounting system as a tool to guide public policy, fiscal policy, monetary policy and budget decision making’’ (Anielski, 2001, p. 2). Of course, work must continue to address the aforementioned data, methodological, and structural flaws so to increase its robustness and acceptance within the public arena. Yet its primary purpose to raise debate remains central and thus its usefulness is real at the sub-national level.
5.
Conclusion
The GPI was first empirically applied at the national level. The majority of subsequent studies have likewise been applied at the national level. However, there is increasing interest in assessing sustainable welfare at the sub-national level – including states/provinces, counties and cities. The inherent methodological and structural flaws within the GPI, when applied at the national level, are equally if not more apparent when applied at the sub-national level. This paper has reviewed a number of sub-national applications in order to highlight the difficulties of using the GPI at this level. Whilst important limitations were found, it was noted that the primary purpose of the GPI was to initiate debate on what sustainable welfare is and how societies might best achieve it. Having a sub-national GPI encourages this debate and, whilst its inherent flaws must be constantly addressed and explicitly acknowledged, they do not make redundant its usefulness in achieving its primary purpose.
references
Is a sub-national GPI useful?
The weaknesses of the GPI at the sub-national level discussed above are significant. They cannot be ignored or overlooked.
Abramowitz, M., 1979. Economic growth and its discontents. In: Boskin, M. (Ed.), Economics and Human Welfare. Academic Press, New York.
ecological indicators 8 (2008) 573–581
Anielski, M., 2001. The Alberta GPI Blueprint: The Genuine Progress Indicator (GPI) Sustainable Well-Being Accounting System. Pembina Institute for Appropriate Development. Atkinson, G., Dubourg, R., Hamilton, K., Munasinghe, M., Pearce, D., Young, C., 1997. Measuring Sustainable Development. Edward Elgar, London. Castaneda, B., 1999. An Index of Sustainable Economic Welfare (ISEW) for Chile. Ecol. Econ. 28, 231–244. Clarke, M., 2004. Widening development prescriptions: policy implications of an Index of Sustainable Economic Welfare (ISEW) for Thailand. Int. J. Environ. Sustainable Dev. 3, 262– 275. Clarke, M., Islam, S., 2004. Economic Growth and Social Welfare: Operationalising Normative Social Choice Theory, (published in Contribution to Economic Analysis series, vol. 262). North Holland, Amsterdam. Clarke, M., Lawn, P., 2005. ‘Measuring Victoria’s genuine progress: A Genuine Progress Indicator for Victoria’. Econ. Papers 24 (4), 368–389. Clarke, M., Lawn, P., 2007. Comparing Australia’s genuine progress to its economic growth performance. Int. J. Green Econ. 1 (3/4), 513–531. Costanza, R., Erickson, J., Fligger, K., Adams, A., Adams, C., Altschuler, B., Balter, S., Fisher, B., Hike, J., Kelly, J., Kerr, T., McCauley, M., Montone, K., Rauch, M., Schmiedeskamp, K., Saxton, D., Sparacino, L., Tusinski, W., Williams, L., 2004. Estimates of the Genuine Progress Indicator (GPI) for Vermont, Chittendon county, and Burlington from 1950 to 2000. Ecol. Econ. 51, 139–155. Daly, H., Cobb, J., 1990. For the Common Good: Redirecting the Economy Toward Community, the Environment, and a Sustainable Future. Beacon Press, Boston. Diefenbacher, H., 1994. The Index of Sustainable Economic Welfare in Germany. In: Cobb, C., Cobb, J. (Eds.), The Green National Product. University Press of America, New York. Easterlin, R., 1974. Does economic growth improve the human lot? Some empirical evidence. In: David, P., Weber, R. (Eds.), Nations and Households in Economic Growth. Academic Press, New York. Guenno, G., Tiezzi, S., 1998. An Index of Sustainable Economic Welfare for Italy, Working Paper 5/98 (Milan: Fondazione Eni Enrico Mattei). Hamilton, C., 1999. The Genuine Progress Indicator: methodological developments and results from Australia. Ecol. Econ. 30, 13–28. Hicks, J., 1946. Value and Capital. Oxford University Press, Oxford. Jackson, T., Marks, N., 1994. Measuring Sustainable Economic Welfare, Stockholm Environment Institute in cooperation with The New Economics Foundation, Stockholm. Jackson, T., Stymne S., 1996. Sustainable economic welfare in Sweden: a Pilot Index 1950–1992 (Stockholm: The New Economics Foundation). Jackson, T.,. Laing, F, MacGillivray, A., Marks, N., Ralls, J., Styme, S., 1997. An Index of Sustainable Economic Welfare for the UK, 1950–1996 (Guildford: University of Surrey Centre for Environmental Strategy). Lawn, P., 2000. Toward Sustainable Development: An Ecological Economics Approach. CRC Press, Boca Raton. Lawn, P., 2003. A theoretical foundation to support the Index of Sustainable Economic Welfare (ISEW), Genuine Progress
581
Indicator (GPI), and other related Indexes. Ecol. Econ. 44, 105–118. Lawn, P., 2005. An Assessment of the valuation methods used to calculate the Index of Sustainable Economic Welfare (ISEW), Genuine Progress Indicator (GPI), and Sustainable Net Benefit Index (SNBI). Environ. Dev. Sustainability 7, 185–208. Lawn, P. (Ed.), 2006. Sustainable Development Indicators in Ecological Economics. Edward Elgar, London. Lawn, P., Clarke, M., 2006a. Measuring Australia and Victoria’s Genuine Progress. Nova Science, New York. Lawn, P., Clarke, M., 2006b. Comparing Victoria’s Genuine Progress with that of the Rest-of-Australia. J. Social Econ. Policy Vol. 10 (2), 115–138. Lawn, P., Clarke, M., 2007. Sustainable Welfare in the Asia-Pacific Region: Studies Using the Genuine Progress Indicator. Edward Elgar, Cheltenham. Lawn, P., Sanders, R., 1997. A Sustainable Net Benefit Index for Australia, 1966–67 to 1994–95, Working Paper in Economics No. 16, Griffiths University, Brisbane. Lawn, P., Sanders, R., 1999. Has Australia surpassed its optimal macroeconomic scale? Finding out with the aid of ‘‘benefit’’ and ‘‘cost’’ accounts and a Sustainable Net Benefit Index’’. Ecol. Econ. 28, 213–299. Lebergott, S., 1993. Pursuing Happiness. Princeton University Press, Princeton. Moffat, I., Wilson, M., 1994. An Index of Sustainable Economic Welfare for Scotland, 1980–1991. Int. J. Sustainable Dev. World Ecol. 1, 264–291. Neumayer, E., 1999. The ISEW: not an index of sustainable economic welfare. Soc. Indicat. Res. 48, 77–101. Neumayer, E., 2000. On the methodology of ISEW, GPI and related measures: some constructive suggestions and some doubt on the ‘‘threshold thesis’’. Ecol. Econ. 34, 347–361. Nordhaus, W., Tobin, J., 1973. Is Growth Obsolete? In: Moss, M. (Ed.), The Measurement of Economic and Social Planning, Economic Growth. National Bureau of Economic Research, New York. Robinson, J., 1962. Economic Philosophy. C.A. Watts & Co., London. Rosenberg, K, Oegema T., 1995. A Pilot ISEW for The Netherlands 1950–1992 (Amsterdam: Instituut Voor Milieu – En Systeemanalyse). Sametz, A., 1968. Production of goods and services: the measurements of economic growth. In: Sheldon, E., Moore, W. (Eds.), Indicators of Social Change. Russell Sage Foundation, New York. Sen, A., 1993. Capability and Well-Being. In: Nussbaum, M., Sen, A. (Eds.), The Quality of Life. Clarendon Press, Oxford. Stockhammer, E., Hochreiter, H., Obermayr, B., Steiner, K., 1997. The Index of Sustainable Economic Welfare (ISEW) as an Alternative to GDP in Measuring Economic Welfare: The Results of the Australian (revised) ISEW Calculation 1955– 1992. Ecol. Econ. 21, 19–34. United Nations Development Program (UNDP)., 1995. The Human Development Report. UNDP, New York. Wen, Z., Zhang, K., Song, G., 2004. Multiple-Indicators approach for monitoring urban sustainable development. In: Paper Presented at CANSEE Annual Conference.