- Date submitted: 30 Oct 2011
- Stakeholder type: Major Group
- Submission Document: Download
- Additional Document:
INDICATORS FOR A MORE SUSTAINABLE AND INCLUSIVE WORLD
Joint signature by FAIR and Sbilanciamoci!
The world is faced with more and more urgent major challenges questioning
the living conditions of humanity, first of all the climatic disorders, but also
the lack of very unequally distributed resources, water, food, energy. The
Rio+20 conference offers an opportunity to mobilize, collect and coordinate
national and international wills to move towards the solution of these
To do this, we need multiple indicators, economic, ecological and social
ones, to fight against thirst, starvation, the multiple dimensions of poverty,
environmental pressure, and for the respect of human rights. Widely
available indicators (GDP) or biased ones (ANS, Adjusted Net Savings) are
in fact irrelevant to take these challenges into full account, either to alert the
world opinion, or, finally, to guide and coordinate the national and
international policies needed.
Early in the 2000s, the FAIR (French acronym for Forum for other indicators
of wealth) and Sbilanciamoci collectives have been thinking and acting on
indicators of wealth, inequality, welfare and sustainability. We will mention
quickly the extent of the shortcomings of the dominant indicators (1). Then
we will consider the method to select more relevant indicators in order to
alert the public opinion and to guide national and international policies (2).
Finally, for some global issues, we will suggest first possible indicators in
order to bring them under discussion (3). At the end of this document, we
rapidly develop some complementary points and specify what the FAIR and
Sbilanciamoci collectives are.
1 Inadequate or misleading monetary indicators dealing with global
Monetization, or evaluating with the same monetary unit, seems, at first
sight, to be a very convenient tool for making commensurable goods and
services that enhance the well-being (which is a positive aspect), and
deterioration of the natural heritage or pollution due to production and
transportation (which is a negative aspect). But at the same time it is a
dangerous instrument because it develops the fiction that it is possible to
make equivalent, and thus to add very different dimensions of well-being or
ill-being. Even worse, monetization gives the illusion that it would be
possible to compensate these damages to the environment through
investments or additional consumption. But such valuation conventions are
the basis of the dominant economic indicators, like GDP (and their more or
less green variations) and the ANS, which add quite dissimilar values and
so, may mislead us about the meaning of progress.
The GDP and its growth
Therefore we consider that, whatever the potential statistical usefulness of
GDP in its domain of validity, it should not serve as a benchmark for policy-
making, since it does not make a distinction between useful and harmful
production. Moreover, the GDP indicator has contributed to conceal a
number of major threats, including the environmental degradation that has
spawned the ecological crisis and climate change to which the whole of
humanity is now exposed. We welcome the fact that a number of renowned
economists have underlined several of this indicator?s drawbacks and
expressed their criticisms of the GDP growth objective, which has made a
major contribution over the last few decades to pushing our societies
against the wall which now stands in our way.
The Adjusted Net Savings (ANS) and the "green GDP" expressed in
These indicators may draw the attention of the economists who tend to
evaluate everything in money. We believe that these indicators are
inadequate to face the challenges of sustainability, not transparent and
incomprehensible to non-specialists. They would necessarily lead to the
same mistakes as those resulting from the excessive use of GDP. You
should know that because of the assumption founding these composite
indicators (the total substitutability between the economic, human and
natural capital), countries that follow clearly an environmentally
unsustainable path (China, USA) obtained much better results than poorer
countries with low environmental footprint!
2 How to choose appropriate indicators?
We have to build benchmarks for another world and for the transition. They
must have a high legitimacy and they therefore cannot be defined from
above even by the most renowned experts. We must thus dig in the
participatory and deliberative democracy to define and to choose them. To
do this, the right to speak up has to be given to the citizens involved
(NGOs, trade unions, movements and civil society networks). It is up to
such collectives to say what accounts, what can emancipate, what core
values should underlie politic, economic, social and environmental choices,
and what the indicators must be considered in order to lead us in the right
3 Some first proposals for possible indicators to put in the debate
FAIR and Sbilanciamoci do not intend to propose a list of solutions. This
would be contrary to their approach favoring an indicator democracy. But as
part of the involved civil society, we wish to point out the indicators that in
our opinion deserve attention in the context of RIO + 20 and could be put
? National indicators of greenhouse gas emissions (per capita and total) in
C02 equivalent, using the method of "carbon footprint" of a population,
which accounts for the "carbon imported" by the population (See for
example http://data.worldbank.org/indicator/EN.ATM.CO2E.PC )
? A composite indicator of environmental pressure: the ecological footprint
(per capita and total) for the major renewable resources converted to
"global hectares" or to "global acres" (cf. tables of ecological footprint and
biocapacity, 2007, in
? Indicators of water consumption, according to the "water footprint" method
considering "imported water".
? Indicators of deforestation.
? Physical indicators of biodiversity (see the EU report entitled "Halting the
loss of Biodiversity by 2010: Proposal for a first set of Indicators to monitor
progress in Europe", EEA Technical report No 11/2007" in:
? Indicators of malnutrition and of the degree of populations' food security.
See for example: http://www.combat-monsanto.co.uk/spip.php?article478 .
? Indicators of national energy consumption (per capita and total) and the
degree of energy dependence and sovereignty of the people.
? Indicators of rights and freedoms for all, drawing particularly from the
proposals of the ILO Decent Work.
(http://www.ilo.org/integration/themes/mdw/lang--en/index.htm , and
http://www.emploi.belgique.be/moduleDefault.aspx?id=23882) and from the
ideas of the Stiglitz Commission on this point.
? Indicators of income inequality such as the Gini index and indicators
assessing the level of the informal economy in each country.
? Indicators of inequality and human poverty, including for example the
Inequality-adjusted HDI (IHDI) and the Gender Inequality Index (GII) from
the UNDP (Human Development Reports in the world, see the latest edition
2010, http://hdr.undp.org/en/reports/global/hdr2010/ ).
The FAIR (Forum for Other Indicators of Wealth) Collective gathers some
fifty scholars and activists thinking critically on the issues of the economic
and societal progress indicators. The Stiglitz Commission was set up in
2008 by the French President to explore the limitations of current
measurement indicators of socio-economic performance. FAIR was formed
following the establishment of the Stiglitz Commission in order to ensure
that existing work on these issues is taken into account. It also aims at
ensuring that civil society is broadly involved in the Commission?s
FAIR actors state, in the conclusion of their manifesto translated into
several languages and adopted in early December 2008: « It's by giving
meaning to non economic trades and to "what matters the most for us" that
we will be able to redefine the notion of wealth, to refund sharing rules, but
also how to account or to redistribute in an appropriate way. We will be able
to restore its fair place - not the whole place - to the economy. »
See for more information http://www.forum-fair.org/
Sbilanciamoci is an Italian coalition of 50 civil society organizations working
on economic alternatives, globalization, peace, human rights, environment,
fair trade and ethical finance. Since 2000, Sbilanciamoci has developed an
alternative regional indicator called QUARS and, each year, applies it to
elaborate an annual report reviewing the Italian Budget Law and to develop
alternative proposals about how to use public expenditure for society,
environment and peace arguing for social and environmental priorities.
Sbilanciamoci! promotes national debate through the weekly web journal
See for more information http://www.sbilanciamoci.org/about-us/
An assessment of the Stiglitz Commission Report according to FAIR
The FAIR collective welcomes the publication of the report from the ?Stiglitz
Commission?, formed on the initiative of the President of the French
Republic. Overall, this report sends out a useful signal in as much as it calls
into question the excessive dominance of GDP as an indicator to guide
However, two aspects of the report remain highly problematic. First, the
report?s conception of sustainable development is focused on the specific
needs of future generations while ignoring two essential elements: on the
one hand, the current unbearable social impact of the economic policies in
place and, on the other hand, the demands of governance and democracy
that should be taken into account in global wealth indicators.
The second problem concerns the role played by monetized indicators,
which is excessive in our view. This is particularly the case of a proposed
indicator derived from Adjusted Net Savings (ANS, developed by the World
Bank), which is poorly suited, lacking in transparency and ungraspable for
non-specialists. It would necessarily lead us to fall into the same misguided
ways as those we should be seeking to correct. The report has been
compiled as if the make-up of the Commission had rendered it unable to put
into perspective what monetary accounts can tell us about human progress
More information concerning the FAIR's statement on the Stiglitz
Commission Report in:
SOME ASSESSMENT OF THE ANS AND GREEN GDP ACCORDING TO
The "Green" GDP and other monetized indicators
One of the ways suggested to go beyond GDP is an improvement of the
system of national accounts in terms of social and human progress and
sustainable development objectives. At the forefront of these initiatives,
"green GDP" is an extension of the GDP to which monetarily expressed
variables are added or subtracted.
Although several of these indicators monetarily assess the cost of the
environmental degradation and resources depletion, they are not in
themselves synonymous with sustainability. They do not explicitly indicate
the distance which separates the current situation from a goal of
sustainability. The Adjusted net savings (ANS) claims to bridge this gap.
This sustainability indicator developed by the World Bank aims at
measuring the net change in wealth over a year. Derived from the
traditional measure of gross national savings (share of national income not
consumed during the year), ANS deduces an estimate of the consumption
of fixed capital, the estimate of the depletion of natural resources and
damage due to global pollution. The current expenditures in education are
added to reflect the investment in human capital. As in the Green GDP, the
value of changes in wealth is monetarily valued. For its promoters, a
negative ANS launches a signal of over-consumption of capital in relation to
a goal of sustainability. It is nevertheless a great mistake.
In fact, these indicators assume that the various capitals can be substituted
to one another. In doing so, they are part of a "weak sustainability"
approach, where the physical constraints of the ecosystem, easily violated
by investments and technological improvements, somewhat contribute to
shape collective and individual behavior. Other indicators, like the
Ecological Footprint, are based instead on stronger sustainability
These radically different visions might explain that many advanced
economies accumulate a huge ecological debt, according to their Foot
Print, even though their ANS presents them as sustainable.
What monetary value to assign?
Both the "green GDP" and the ANS share a monetary unit of account.
Summing monetary variables is often presented as a less arbitrary mode of
aggregation than bringing together variables with assigned weights in a
composite heterogeneous variable. Though, monetizing is often more
questionable than explicit and democratic weighting.
First of all, currency means price. But giving a price to goods and services
whose nature is not to be monetary exchange objects (domestic work or
volunteer services, ecosystem services, etc.) is just as arbitrary as to grant
them an explicit weight. Secondly, even in the case of market exchange,
prices do not always take into account the whole costs for the society: for
example, prices of goods that generate negative externalities underestimate
these costs. Thus the economic value poorly or wrongly reflects social
wealth. More fundamentally, can we reduce everything to a quasi-monetary
value, with the risk, especially, of reducing the natural patrimonies of goods,
gifts and activities to paid services? The choice to monetize is not neutral
because in this choice the market is supposed to provide the central point
for determining the monetary value and thus the price of activities and
However, determining the well-being that goods and activities bring to the
society is not the exclusive characteristic of markets! Other methods, much
more democratic, are needed, opening up the possibility of assessing their
positive or negative impacts, including environmental pressures through the
The limits to monetizing the living
The biological richness is largely ignored by our indicators of monetary
wealth. Strictly speaking, as a 2005 United Nations report said, "a country
could devastate its forests and deplete its fisheries resources, this would
only show an increase in GDP despite the obvious loss of natural capital"
(Millennium Ecosystem Assessment, 2005). Some people, like the banker
Pavan Sukhdev (2008), do not hesitate to say that this lack of monetary
value of nature "is one of the underlying causes of its degradation." With
the monetary valuation (PES, Payments for Ecosystem Services), the
ecosystem services become externalities since they provide benefits which
are not paid for. Payments for ecosystem services fail to account for value
in a broader sense, beyond monetary value, and obliterate other social and
ecological qualities. Finally, giving payments for ecosystem services
disregards ecosystems complexity in order to facilitate market transactions
based on a single exchange value (and imposes a market-driven
conservation for biodiversity).
Several studies have provided findings these last years. Following the Stern
Report, which has been trying to assess the global warming medium and
long-term cost, the Sukdhev report (commissioned by the European
Commission), or also the Chevassus-au-Louis report (2009) (commissioned
by the French Government), have recently supplied the news. The Sukhdev
report estimated for example that the current changes of terrestrial and
aquatic ecosystems, as a result of human activity, could eventually cost $
100 billion a year and destroy 27 million jobs.
However, the process of giving a monetary value to nature finds its limits.
The evaluation of actual services provided by nature, such as crop
pollination by bees (that a group of researchers recently estimated at $ 150
billion per year, Gallai and al., 2009), might go on. But the process
becomes more difficult in the case of values less directly related to
production: how much, for example, is the estimated loss of a living species
that has no market value, directly or indirectly? In order to answer this
question, economists often use surveys based on the populations'
willingness to pay: the estimated value is based on the average price that
people interviewed are willing to spend, for example, for preserving a
species or protecting a medium. These valuation methods are the subject of
criticism (Milanesi, 2010).
Many aspects are very difficult (or impossible) to accurately assess with a
monetary approach. This approach may thus be limited, still for a long time,
to a utilitarian approach, focusing on its service to the human economy.
However, the report of the Millennium Ecosystem Assessment (2005) is
unambiguous in this regard: why we want to protect biodiversity will largely
determine the degree of protection that we will choose. Non-utilitarian and
non-monetary values set more ambitious conservation objectives than
utilitarian values do. What we do for biodiversity is therefore a societal
choice, not just an economic choice.
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