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SUSTAINABLE DEVELOPMENT AND ENVIRONMENT7

Introduction

The first two chapters have dealt extensively with the measurement of current well-being, either along dimensions that can be summed up in monetary units (chapter 1), or along dimensions that are less amenable to conversion into monetary units (chapter 2).
The sustainability issue that is raised by this last chapter is of a different nature. Sustainability poses the challenge of determining whether we can hope to see the current level of well-being at least maintained for future periods or future generations, or whether the most likely scenario is that it will decline. It is no longer a question of measuring the present, but of predicting the future, and this prospective dimension multiplies the difficulties already encountered in the first two chapters.
Despite these difficulties, many proposals have been made for measuring sustainability in quantitative terms, stemming from seminal work such as Nordhaus and Tobin’s “sustainable measure of economic welfare” in the 1970s, or following the strong impulse given by the Brundtland Report in 1987 and the Rio Summit at the turn of the 1990s. The present chapter will start with a short review of these proposals. We shall see that many of them fail to distinguish clearly between the measurement of current well-being and the assessment of its sustainability. To put it very simply, many proposals try to cover all three dimensions examined by the three subgroups of the Commission, and sometimes try to sum them up in a single number. This is not the way the Commission has structured its approach, and with good reason. We firmly believe that sustainability deserves separate measurement, and we shall focus in this chapter on the sustainability issue stricto sensu.
Such a restriction allows focusing on what the literature calls a “wealth” or “stock-based” approach to sustainability. The idea is the following: the well-being of future generations compared to ours will depend on what resources we pass on to them. Many different forms of resources are involved here. Future well-being will depend upon the magnitude of the stocks of exhaustible resources that we leave to the next generations. It will depend also on how well we maintain the quantity and quality of all the other renewable natural resources that are necessary for life. From a more economic point of view, it will also depend upon how much physical capital—machines and buildings—we pass on, and how much we devote to the constitution of the human capital of future generations, essentially through expenditure on education and research. And it also depends upon the quality of the institutions that we transmit to them, which is still another form of “capital” that is crucial for maintaining a properly functioning human society.
How can we measure whether enough of these assets will be left or accumulated for future generations? In other words, when can we say that we are currently living above our means? In particular, is there any reasonable hope of being able to characterize this with one simple number that could play the role for sustainability that GDP has long played for the measurement of economic performance? One reason for such a quest would be to avoid the multiplication of competing numbers. However, if we want to accomplish this, we need to convert all the stocks of resources passed on to future generations into a common metric, be it monetary or not.
We shall discuss in some detail why such a goal seems overly ambitious. The aggregation of heterogeneous items seems possible up to a point for physical and human capital or some natural resources that are traded on markets. But the task appears much more complicated for most natural assets, due to the lack of relevant market prices and to the many uncertainties concerning the way these natural assets will interact with other dimensions of sustainability in the future. This will lead us to suggest a pragmatic approach that combines a monetary indicator, which could send us reasonable signals about economic sustainability, and a set of physical indicators devoted to environmental issues. We provide some examples of such physical indicators, yet, in the end, the choice of the most relevant ones must be left to specialists from other fields, before submission to the public debate.

Taking Stock

Providing a brief summary of the very abundant literature that has been devoted to the measurement of sustainability or durable development is not an easy task. We will use an imperfect but simple typology that distinguishes (1) large and eclectic dashboards, (2) composite indices, (3) indices that consist of correcting GDP in a more or less extensive way and (4) indices that essentially focus on measuring how far we currently “overconsume” our resources. This last category is itself heterogeneous, since we shall include in it indices as different as the ecological footprint and adjusted net savings, which, as we shall see, convey very different messages.

Dashboards or Sets of Indicators

Dashboards or sets of indicators are one widespread approach to the general question of sustainable development. This approach involves gathering and ordering a series of indicators that bear a direct or indirect relationship to socio-economic progress and its durability. In the last couple of decades, international organizations have played a major role in the emergence of sustainability dashboards, with the United Nations playing a prominent role. In particular, the 1992 Rio Summit adopted Agenda 21, whose 40th chapter invites the signatory countries to develop quantitative information about their actions and accomplishments.
Other international initiatives to build sustainable development dashboards have been taken by the OECD and Eurostat, following the European Council’s adoption of its own Sustainable Development Strategy in 2001. The current version of this dashboard includes 11 indicators for level 1 (Table 3.1), 33 indicators for level 2 and 78 indicators for level 3, with the level 2 and 3 indicators covering 29 sub-themes. Similar national initiatives have accompanied this general movement, albeit in a somewhat scattered way. Local initiatives have also mushroomed over the last decade, some based on the initial impetus from Agenda 21.
 
Table 3.1. Reviewed List of European Sustainable DevelopmentIndicators (level 1)
Source: Eurostat, 2007 (http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-77-07-115/EN/KS-77-07-115-EN.PDF).
ThemeLevel 1 indicators
1.Socio-economic developmentGrowth rate of GDP per inhabitant
2.Sustainable consumption and productionResource productivity
3.Social inclusionAt-risk-of-poverty rate after social transfers
4.Demographic changesEmployment rate of older workers
5.Public healthHealthy life years and life expectancy at birth
6.Sustainable developmentTotal greenhouse gas emissions
Consumption of renewables
7.Sustainable transportEnergy consumption of transport
8.Natural resourcesCommon bird index
Fish catches outside safe biological limits
9.Global partnershipOfficial Development Assistance (ODA)
For the user, the most striking feature of this very abundant literature is the extreme variety of the indicators proposed. Some are very comprehensive—GDP growth retains its place, and is even the first indicator in the European Dashboard—while others are much more specific, such as the percentage of smokers in the population. Some pertain to outcomes, others to instruments. Some can easily be related both to development and to sustainability—literacy performance matters for both current well-being and future growth—but others pertain only either to current development or to long-run sustainability. There are even some items whose link with both dimensions is questionable or at least of indeterminate sign: is a high fertility rate a good thing for sustainability? Maybe yes for the sustainability of pensions, but maybe not for environmental sustainability. And is it always a signal of good economic performance? This probably depends on what we consider “high” or “low” in terms of fertility.
These dashboards are useful in at least two respects. First, they are an initial step in any analysis of sustainability, which by its nature is highly complex and therefore necessitates an effort at establishing a list of relevant variables and encouraging national and international statistical offices to improve the measurement of these indicators. The second one is related to the distinction between “weak” and “strong” sustainability. The “weak” approach to sustainability considers that good performance in some dimensions can compensate for low performance in others. This allows a global assessment of sustainability using mono-dimensional indices. The “strong” approach argues that sustainability requires separately maintaining the quantity or quality of many different environmental items. Following this up therefore requires large sets of separate statistics, each pertaining to one particular subdo-main of global sustainability.
Dashboards nevertheless suffer because of their heterogeneity, at least in the case of very large and eclectic ones, and most lack indications about causal links, their relationship to sustainability and/or hierarchies among the indicators used. Further, as communications instruments, one frequent criticism is that they lack what has made GDP a success: the powerful attraction of a single headline figure allowing simple comparisons of socioeconomic performance over time or across countries.

Composite Indices

Composite indices are one way to circumvent the problem raised by the richness of dashboards and to synthesize the abundant and purportedly relevant information into a single number. The technical report reviews a few of these.
For example, Osberg and Sharpe’s Index of Economic Well-Being is a composite indicator that simultaneously covers current prosperity (based on measures of consumption), sustainable accumulation and social topics (reduction in inequalities and protection against “social” risks). Environmental issues are addressed by considering the costs of CO2 emissions per capita. Consumption flows and wealth accumulation (defined broadly to include R&D stocks, a proxy for human capital and the costs of CO2 emissions) are evaluated according to national accounts methodology. Each dimension is normalized through linear scaling (nine OECD countries) and aggregation relies on equal weighting. But at this stage the “green” dimension of this index is still secondary.
Other examples focus more specifically on the green dimension, such as the “Environmental Sustainability Index” (ESI) and the “Environmental Performance Index” (EPI). The ESI covers 5 domains: environmental systems (their global health status), environmental stress (anthropogenic pressure on the environmental systems), human vulnerability (exposure of inhabitants to environmental disturbances), social and institutional capacity (their capacity to foster effective responses to environmental challenges) and global stewardship (cooperation with other countries in the management of common environmental problems). It uses 76 variables to cover these 5 domains. There are, for instance, standard indicators for air and water quality (e.g., SO2 and NOx), health parameters (e.g., infant death rate from respiratory diseases), environmental governance (e.g., local Agenda 21 initiatives per million people), etc. The EPI is a reduced form of the ESI, based on 16 indicators (outcomes), and is more policy-oriented.
The messages derived from this kind of index are ambiguous. The global ranking of countries has some sense, but it is often considered to present an overly optimistic view of developed countries’ contributions to environmental problems. Problems also arise between developed countries. For instance, the index shows a very narrow gap between the United States and France, despite strong differences in terms of their CO2 emissions. In fact, the index essentially informs us about a mix of current environmental quality, of pressure on resources and of the intensity of environmental policy, but not about whether a country is actually on a sustainable path: no threshold value can be defined on either side of which we would be able to say that a country is or is not on a sustainable path.
On the whole, these composite indicators are better regarded as invitations to look more closely at the various components that underlie them. This kind of function of composite indicators has often been put forward as one of their main raisons d’être. But this is not reason enough to retain them as measures of sustainability stricto sensu which could secure the same standing as GDP or other accounting concepts. There are two reasons for this. First, as with large dashboards, there is the lack of a well-defined notion of what sustainability means. The second is a general criticism that is frequently addressed at composite indicators, i.e., the arbitrary character of the procedures used to weight their various components. These aggregation procedures are sometimes presented as superior to the monetary aggregations that are used to build most economic indices, because they are not linked to any form of market valuation. Indeed, and we shall come back to this point several times, there are many reasons why market values cannot be trusted when addressing sustainability issues, and more specifically their environmental component. But monetary or not, an aggregation procedure always means putting relative values on the items that are introduced in the index. In the case of composite sustainability indicators, we have little understanding of the arguments for putting one relative value or another on all the different variables that matter for sustainability. The problem is not that these weighting procedures are hidden, non-transparent or non-replicable—they are often very explicitly presented by the authors of the indices, and this is one of the strengths of this literature. The problem is rather that their normative implications are seldom made explicit or justified.

Adjusted GDPs

Other candidates for the measurement of sustainability are those that restart from the conventional notion of GDP but try to systematically augment or correct it using elements that standard GDP does not take into account and that matter for sustainability.
Nordhaus and Tobin’s sustainable measure of economic welfare (SMEW) may be regarded as the common ancestor to this strand. They provided two indicators. The first was a measure of economic welfare (MEW) obtained by subtracting from total private consumption a number of components that do not contribute positively to welfare (such as commuting and legal services) and by adding monetary estimates of activities that do contribute positively to welfare (such as leisure and work at home). The second step consisted in converting the MEW into the SMEW by taking into account changes in total wealth. The SMEW measures the level of MEW that is compatible with preserving the capital stock. To convert the MEW into the SMEW, Nordhaus and Tobin used an estimate of total public and private wealth, including reproducible capital, non-reproducible capital (limited to land and net foreign assets), educational capital (based on the cumulated cost of years spent in education by people belonging to the labor force) and health capital, based on a permanent inventory method with a depreciation rate of 20% per year. But they did not in the end include estimates of environmental damage or natural resource depletion.
Two strands have developed from this seminal contribution. The first has tried to enrich Nordhaus and Tobin’s approach, sometimes deviating increasingly from the criterion of accounting consistency. Examples include the Index of Sustainable Economic Welfare (ISEW) and the Genuine Progress Indicator (GPI). These indicators deduct some evaluations of the costs of water, air and noise pollution from consumption and also try to account for the loss of wetlands, farmland and primary forests, and for other natural resource depletion, and for CO2 damage and ozone depletion. Natural resources depletion is valued by measuring the investment necessary to generate a perpetual equivalent stream of renewable substitutes.
In all countries for which both ISEW and GPI are available, their values are very similar and at some point in time start diverging from GDP. This has led some authors to put forward a so-called “threshold” hypothesis, according to which GDP and welfare move in the same direction up to a certain point, beyond which the continuation of GDP growth does not allow any further improvement in well-being. In other words, according to such indicators, sustainability is already far behind us, and we have already entered a phase of decline.
The other strand is more firmly integrated into the realm of national accounting. It is based on the so-called System of Environmental Economic Accounting (SEEA), a satellite account of the Standard National Accounts (SNA). The SEEA brings together economic and environmental information in a common framework to measure the contribution of the environment to the economy and the impact of the economy on the environment. The UN Committee of Experts on Environmental-Economic Accounting (UNCEEA), created in 2005, is now looking to mainstream environmental economic accounting, to elevate the SEEA to an international statistical standard by 2010 and to advance SEEA implementation in countries.
The SEEA comprises four categories of accounts. The first considers purely physical data related to flows of materials (materials drawn into the economy and residuals produced as waste) and energy and marshals them as far as possible according to the SNA accounting structure. The second category of accounts takes those elements of the existing SNA that are relevant to the good management of the environment and makes the environment-related transactions more explicit. The third category of accounts comprises accounts for environmental assets measured in physical and monetary terms (timber stock accounts, for instance).
These first three categories of the SEEA are vital building blocks for any form of sustainability indicator. But what is at stake here is the fourth and last category of SEEA accounts, which deals with how the existing SNA might be adjusted to account (exclusively in monetary terms) for the impact of the economy on the environment. Three sorts of adjustments are considered: those relating to resource depletion, those concerning so-called defensive expenditures (protection expenditures being the most emblematic ones) and those relating to environmental degradation.
It is these environmental adjustments to existing SNA aggregates that are better known under the rather loose expression of “Green GDP,” which is an extension of the concept of net domestic product. Indeed, just as GDP (Gross) is turned into NDP (Net) by accounting for the consumption of fixed capital (depreciation of produced capital), the idea is that it would be meaningful to compute an “ea-NDP” (environmentally-adjusted) that takes into account the consumption of natural capital. The latter would comprise resource depletion (the overuse of environmental assets as inputs to the production process) and environmental degradation (the value of the decline in the quality of a resource, roughly speaking).
Green GDP and ea-NDP remain, however, the most controversial outcomes of the SEEA, and as such are less implemented by statistical offices, because of the many problems that are raised by these two concepts. Valuing environmental inputs into the economic system is the (relatively) easier step. Since these inputs are incorporated into products that are sold in the marketplace, it is possible (in principle) to use direct means to assign a value for them based on market principles. In contrast, as pollution emissions are outputs, there is no direct way to assign a value to them. All the indirect methods of valuation will depend to some extent on “what if” scenarios. Thus, translating valuations of degradation into adjustments to macro-economic aggregates takes us beyond the realm of ex-post accounting into a much more hypothetical situation. The very speculative nature of this sort of accounting explains the great discomfort and strong resistance among many accountants to this practice.
But there is a more fundamental problem with Green GDP, which also applies to Nordhaus and Tobin’s SMEW and to the ISEW/GNI indices. None of these measures characterize sustainability per se. Green GDP just charges GDP for the depletion of or damage to environmental resources. This is only one part of the answer to the question of sustainability. What we ultimately need is an assessment of how far we are from these sustainable targets. In other words, what we need are measures of overconsumption or, to put in dual terms, of underinvestment. This is precisely what our last category of indicators purports to do.

Indicators Focusing on Overconsumption or Underinvestment

Under this heading, we group all kinds of indicators that address the issue of sustainability in terms of overconsumption, underinvestment or excessive pressure on resources. Though such indicators tend to be presented in flow terms, they are built upon the assumption that some stocks that are relevant for sustainability correspond to the measured flows, i.e., stocks that are being transmitted to future generations and determine their opportunity sets. As with GDP and other aggregates, trying to perform this task with a single number requires the choice of a metric and an explicit aggregation procedure for these stocks and their variations.

Adjusted Net Savings (ANS)

Adjusted net savings (also known as genuine savings or genuine investment) is a sustainability indicator that builds on the concepts of green national accounts but reformulates these concepts in terms of stock or wealth rather than flows of income or consumption. The theoretical background is the idea that sustainability requires the maintenance of a constant stock of “extended wealth,” which is not limited to natural resources but also includes physical, productive capital, as measured in traditional national accounts, and human capital. Net adjusted savings is taken to be the change in this total wealth over a given time period, such as a year. Such a concept clearly appears to be the relevant economic counterpart of the notion of sustainability, in that it includes not only natural resources but also (in principle at least) those other ingredients necessary to provide future generations an opportunity set that is at least as large as what is currently available to living generations.
Empirically, adjusted net savings are derived from standard national accounting measures of gross national savings by making four types of adjustment. First, estimates of the capital consumption of produced assets are deducted to obtain net national savings. Second, current expenditures on education are added to net domestic savings as an appropriate value for investment in human capital (in standard national accounting these expenditures are treated as consumption). Third, estimates of the depletion of a variety of natural resources are deducted to reflect the decline in asset values associated with their extraction and harvest. Estimates of resource depletion are based on the calculation of resource rents. An economic rent represents the “excess” return to a given factor of production. Rents are derived by taking the difference between world prices and the average unit extraction or harvest cost (including a “normal” return on capital). Finally, global pollution damages from carbon dioxide emissions are deducted.8 Negative adjusted net savings rates imply that “extended wealth” is in decline, and as such provide a warning of non-sustainability.
How does this indicator compare with standard measures of saving and investment in national accounts? World Bank-computed ANS for developed countries such as France and the United States shows that changes over time are almost exclusively driven by gross savings, while the gap in levels between ANS and gross savings is due mostly to capital consumption and human capital accumulation whereas, according to the index, natural capital changes play only a relatively marginal role. Moreover, the ANS figures show that most developed countries are on a sustainable path, while many emerging or developing countries are not. In particular, according to this measure most natural resource-exporting countries are on a non-sustainable path (Figure 3.1).
This kind of approach appeals to many economists, as it is grounded on an explicit theoretical framework. However, the current methodology underlying empirical calculations has well-known shortcomings: the relevance of the ANS approach crucially depends on what is counted (the different forms of capital passed on to future generations), namely, what is included in “extended wealth,” and on the price used to count and aggregate in a context of imperfect or indeed non-existent valuation by markets—the problem that we already mentioned when discussing the implicit prices used by composite indicators.
Indeed, a major shortcoming of ANS estimates is that the adjustment for environmental degradation is only limited to a restricted set of pollutants, the most significant one being carbon dioxide emissions. The authors acknowledge that the calculations do not include other important sources of environmental degradation, such as underground water depletion, unsustainable fisheries, soil degradation and a fortiori biodiversity loss.
For those natural assets that are taken into account, pricing techniques remain the major issue. For exhaustible resources, the World Bank’s estimates of ANS rely on current prices. In theory, the use of market prices to evaluate flows and stocks is warranted only in a context of perfect markets, which is clearly not the case in reality, and especially not for natural resources, where externalities and uncertainties are paramount. Further, market prices for fossil energy sources and other minerals have tended, in recent years, to fluctuate widely, causing significant swings in measures of ANS based on current market prices and this has very strongly reduced the practical relevance of the ANS for concerned countries.
 
Figure 3.1. Geographical distribution foe adjusted net savings
Source: World Bank, data for 2006.
Reading: Countries are ranked from the most unsustainable (in white) to the most sustainable (in dark). Non-sustainability can be due either to the overextraction of exhaustible resources or to low investment in human and physical capital. The frontiers of countries with missing values are not represented.
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As for pricing environmental degradation, things turn out to be even trickier because of the absence of any market valuation that could be used as a starting point: in theory, we must evaluate so-called “accounting prices” by modeling the long-term consequences of given changes in environmental capital and how they impact future well-being. But practical implementation raises considerable problems. Under the current state of the art, the prices used to value carbon emissions in existing estimates of ANS are not able to give it any significant role in the global assessment of sustainability, and this casts doubts on the usefulness of the indicator as a guide for policy.
Finally, by computing ANS per country we miss the global nature of sustainability. Indeed, one may feel uneasy when faced with the message conveyed by ANS about resource-exporting countries (e.g., oil). In these countries, from the ANS perspective, non-sustainability stems from an insufficient rate of reinvestment of the income generated by the exploitation of the natural resource: “overconsumption” by importing countries is not an issue at all. Developed countries, which are generally less endowed with natural resources but richer in human and physical capital than developing ones, would then appear unduly sustainable. As a consequence, some authors have argued in favor of imputing the consumption of exhaustible resources to their final consumers, i.e., the importing countries. If scarcities were fully reflected in the prices at which exhaustible resources are sold on international markets, it is true that there would be no reason for making such a correction. However, when prices are non-competitive, the importing country pays less for its imports than would be required; it will have a responsibility in global non-sustainability that is not captured by the money-value of its imports. Low prices allow such countries to overconsume and to transfer the long-term costs of this overconsumption to the exporting countries.

Footprints

Although apparently quite different from “extended wealth” notions, various attempts at measuring sustainability through the use of “footprints” are also inspired by the general approach of comparing current flows of consumption and their effects on certain dimensions of the environment with an existing stock. In this sense, they may also be regarded as “wealth” measures. However, the focus is exclusively on natural capital, and the valuation convention differs from the ANS one in that no market prices are explicitly used.
The Ecological Footprint (hereafter EF) measures how much of the regenerative capacity of the biosphere is used up by human activities (consumption). It does so by calculating the amount of biologically productive land and water area required to support a given population at its current level of consumption. A country’s footprint (demand side) is the total area required to produce the food, fiber and timber that it consumes, absorb the waste that it generates and provide space for its infrastructure (built-up areas). On the supply side, biocapacity is the productive capacity of the biosphere and its ability to provide a flux of biological resources and services useful to humankind.
The results are well-known and rather striking: since the mid-1980s, humanity’s footprint has been larger than the planet’s carrying capacity, and in 2003 humanity’s total footprint exceeded the Earth’s biocapacity by approximately 25 percent. While 1.8 global hectares per person are available worldwide, Europeans use 4.9 global hectares per person and North Americans use twice that amount, that is, much more than the actual biocapacity of those two geographical zones (Figure 3.2).
This indicator shares with accounting approaches the idea of reducing heterogeneous elements to one common measurement unit (the global hectare, e.g., one hectare with productivity equal to the average productivity of the 11.2 billion bioproductive hectares on Earth). It assumes that different forms of natural capital are substitutable and that different natural capital goods are additive in terms of land area, but strongly stands against weak sustainability assumptions. In fact, this indicator gives no role to savings and capital accumulation: any positive ecological surplus (biocapacity that exceeds the EF) does not entail an increase in some natural capital stock, and hence an improvement in future productive capacity. A fortiori, saving and accumulating manufactured or human capital does not help sustainability. On the other hand, one must observe that the indicator ignores the threat to sustainability resulting from the depletion of non-renewable resources (e.g., oil): the consequences for sustainability are treated only from the waste asa similation (implied CO2 emissions) point of view rather than from an analysis based on depletion dynamics.
 
Figure 3.2. Ecological Footprint by country
Source: Global Footprint Network, data for year 2005.
Reading: Dark areas correspond to countries with the highest values for the Ecological Footprint, Le., with the highest contributions to worldwide unsustainability. Countries with missing values are not represented.
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The results are also problematic for measuring a country’s own sustainability, because of the substantial anti-trade bias inherent in the EF methodology. The fact that densely populated (low biocapacity) countries like the Netherlands have ecological deficits, whilst sparsely populated (high biocapacity) countries like Finland enjoy surpluses can be seen as part of a normal situation where trade is mutually beneficial, rather than an indicator of non-sustainability. Indeed, recent research has tended to move away from comparing a country’s EF with its own biocapacity, and to propose instead to divide all countries’ EFs by global biocapacity. By doing this, one is acknowledging that EFs are not measures of a country’s own sustainability but of its contribution to global non-sustainability.
Overall, this means that the EF could at best be an indicator of instantaneous non-sustainability at the worldwide level. EFs for countries should be used as indicators of inequality in the exploitation of natural resources and interdependencies between geographical areas. Moreover, even the worldwide ecological deficit emphasized by the EF may not convey the message it is said to. Indeed, one can show that the worldwide imbalance is mostly driven by CO2 emissions, expressed in hectares of forest needed for storage. By definition, the worldwide demand placed on cropland, built-up land and pasture cannot exceed world biocapacity.
As a result, less-encompassing but more-rigorously-defined footprints, such as the Carbon Footprint (CF), would seem better-suited, insofar as they are more clearly physical measures of stocks that do not rely on specific assumptions about productivity or an equivalence factor. As far as communications is concerned, such an indicator is just as capable of sending strong messages in terms of the overutilization of the planet’s capacity for absorption. The CF also has the interesting feature of being computable at any level of disaggregation. This makes it a powerful instrument for monitoring the behavior of individual actors.

Quantifying Sustainability in a Consensual Way: What Are the Main Stumbling Blocks?

Let’s summarize the main messages so far. The previous section has shown the large number of existing attempts to quantify sustainability. This abundance of measures is a serious drawback insofar as different synthetic indicators convey widely divergent messages. This leads to a great deal of confusion among statisticians and policymakers. It urges a return to the fundamental questions: What do we want to measure exactly? What are the real obstacles to doing so with a single headline measure?

What Do We Want to Measure?

Since the Brundtland Report, the notion of sustainable development has expanded to become an all-encompassing concept that absorbs every dimension of present and future economic, social and environmental well-being. Such an ambition is justified, but it covers all the domains considered by the three subgroups of the Commission. The mandate of our environment/sustainability subgroup was narrower than that: it concentrated on the “sustainable” component of “sustainable development.” This question of durability can be expressed in the following terms: assuming we have been able to assess what is the current level of well-being, the question is whether the continuation of present trends does or does not allow it to be maintained.
It seems reasonable to separate the two notions of current well-being and of its sustainability, because the two questions are interesting in themselves. This provides a first guide for sorting out the many different approaches reviewed in the first half of this chapter.
• The extensive dashboards of sustainable development effectively conflate the measurement of current well-being and the measurement of its sustainability. This is not to say that dashboards are of no use. Quite the contrary: our final conclusion will be that a unidimensional view of sustainability certainly remains out of reach. But we do want to end up with a limited number of indicators—a “micro” dashboard—and one that is specifically dedicated to the sustainability issue, based on a clear notion of what sustainability means.
• Composite indicators raise similar problems, with the additional complication that the way in which various items are weighted is arbitrary, with consequences that are seldom made explicit.
• Measures of a sustainable standard of living, such as the Green GDP, are also insufficient for assessing sustainability. The proximity that such a sustainability indicator would necessarily have with standard GDP could be a source of confusion. If there are two GDP indicators, which one should we use in which context? What conclusion would we draw from the fact that a given country’s Green GDP is x% or y% of its GDP defined in standard terms? Does this necessarily imply that this country is on an unsustainable path?
In fact, Green GDP focuses on only one side of the problem, i.e., the measurement of what can be consumed every year without environmental impoverishment. This does not tell us whether we are on a sustainable path. If we want to measure sustainability, what is required is a comparison between this concept of genuine production and current consumption. All this makes the appropriate sustainability index more akin to a concept of net investment or disinvestment, and this is precisely the route that extended wealth or ANS exemplifies, but which is also implicitly followed by footprint indicators that are more specifically focused on the renewal or depletion of environmental assets. The argument goes as follows: the capacity of future generations to have standards of well-being at least equal to ours depends upon our passing them sufficient amounts of all the assets that matter for well-being. If we denote by “W” the “extended wealth” index used to quantify this stock of resources, measuring sustainability amounts to testing whether this global stock or some of its components evolve positively or negatively, i.e., computing its or their current rates of change, dW or dWi. If negative, this means that downward adjustments in consump tion or well-being will be required sooner or later. This is exactly what one should understand by “non-sustainability.”
In our view, such a formulation of the sustainability issue has the potential to provide the common language necessary for constructive debates between people from very different perspectives. To take just one example, it fully answers one of the longstanding objections made to GDP by environmentalists, i.e., the fact that ecological catastrophes can increase GDP through their implied impact on economic activity. In an extended wealth approach, an ecological catastrophe is registered as a destruction of capital. This accounts for the fact that it deteriorates sustainability by decreasing the resources available for generating future well-being. This outcome can be avoided only if some action is taken to repair the damage, with these actions being counted as positive investment.

Summarizing Sustainability in One Number: Is It Realistic?

Now, we have seen that both ANS and footprint evaluations are subject to many objections and can be considered, at best, as proxies of what would be genuine indices of changes in extended wealth or its components. Returning to fundamentals means asking precisely what would be required to measure the above-mentioned dW indices in a satisfactory way. Assuming away the measurement problems at first, we have to be more specific about several concepts: What is to be sustained? How do the various assets that will be passed on to future generations affect this measure of well-being? And how should they be weighted against each other?
It is clearly this last question that is more problematic and tends to crystallize opposition between the proponents of monetary indicators and physical indicators. Is there actually some reasonable prospect of evaluating everything in money units, or should we accept that this is possible only up to a certain point?
If all assets were traded on perfect markets by perfectly forward-looking agents fully taking into account the welfare of future generations, one could argue that their current prices reflect the discounted streams of their future contributions to future well-being. But many assets are not traded at all, and even for those that are it is unlikely that current prices fully reflect this future-oriented dimension, due to market imperfections, myopia and uncertainty. This implies that a true measure of sustainability requires a dW index in which assets are valued not at market prices, but rather using imputed “accounting prices” based on some objective physical or economic modeling of how future damage to the environment will affect well-being, just as it requires an exact evaluation of how current additions to the stock of human or physical capital are likely to improve or help maintain well-being in the future.
Recent research has clarified the requisites of such an exercise. One is a full set of economic and physical projection of how initial conditions determine the future joint path of economic, social and environmental variables. Another is the a priori definition of how this path translates in terms of well-being at all future dates, i.e., the knowledge of the social utility function, generally formalized as a discounted sum of well-being over all future periods.
Equipped with such instruments, it should be possible to derive sustainability indices that have the properties that one would expect, i.e., a capacity to anticipate future declines in well-being below its current level. Some simulations proposed in the technical report illustrate certain aspects of this capacity. First of all, this sustainability index is the best suited for sending correct forewarnings to countries that are on unsustainable paths because of an insufficient rate of accumulation or of renewal of their produced capital, be it human or physical. And this is of course an important property: even if environmental issues are of considerable importance, we cannot ignore these other dimensions of sustainability.
Second, such an indicator is inconsistent with the “strong” view of non-sustainability (i.e., problems arising from the depreciation of environmental assets that are essential to human well-being or even survival) only when it relies on fixed price levels for natural and non-natural assets. But if we were able to derive this index from a physical-economic model predicting future interactions between the economy and the environment in a reliable way, then this index would send us correct forewarnings of non-sustainability, through strong increases in the relative accounting or “imputed” prices of these critical natural assets.
But the problem is with those “ifs.” This construction remains fully theoretical. It shows us at best the direction in which index builders could try to go. It can also be used as a tool for emphasizing the many obstacles to the building of a comprehensive index and the need for more pragmatic second-best solutions.

Technological Uncertainties Argue in Favor of a More Hybrid Approach

Measuring sustainability with a single dW index can work only under two strong assumptions: one is that future eco-environmental developments can be predicted perfectly, and the second is that there is perfect knowledge about how these developments are going to affect well-being. These two assumptions are clearly at odds with our real-world situation. Debates on eco-environmental perspectives are dominated by ignorance and uncertainty about future interactions between the two spheres, and by a lack of consensus about the very definition of the objective function.
Let’s briefly develop the first point. The future is fundamentally uncertain. Uncertainty takes many forms, some of them amenable to probability computation, while many others are much more radical. This affects not only the parameters of any models that one may try to use to project eco-environmental interactions, but also the structure of the models themselves, the measurement of current stocks and even the list of the natural assets for which current and future stocks need to be taken into account. Most of the debate concerning long-term environmental change reflects different beliefs about future eco-environmental scenarios. There is no reason why sustainability measurement should escape such difficulties.
Some solutions might be considered for this problem. One is to do what all prospectivists do when they want to emphasize the uncertain nature of future trends, i.e., work with scenarios or provide confidence intervals. One could also consider submitting indices to some form of “stress test,” i.e., recompute them under assumptions of external shocks on asset values. This could include sudden upward adjustments in the value of environmental assets, but also drastic reductions in the value of some other items—such as produced capital and human capital. Such modes of presentation could be explored and eventually adopted.
But this could still be insufficient or difficult to present in a convenient way. Questions such as climate change require a specific consideration which drives us back to the distinction between weak and strong sustainability. The point is not that aggregate indices are by nature unable to account for situations of strong non-sustainability. The point is that we would be able to do so only by adopting extreme valuations of critical environmental assets, and that we are not that well equipped to quantify precisely what these extreme valuations should be. In such cases, and a fortiori for items for which we do not even have a single guestimate of a monetary value, a separate physical accounting is unavoidable.
The problem then is to present such an index in a compelling way. Monetary indices have the advantage of using units that speak to everyone. In addition, they can be related to other monetary quantities: this is what we do when we compute extended savings rates, and the orders of magnitude of such savings rates can be understood easily. On the other hand, a tonnage of CO"2 emissions is not a very informative number if we do not have some reference for how many tons can be emitted each year without severe consequences for the climate. Other physical indicators have been advocated by climate specialists, including “CO2 radiative forcing,” measuring the effect of CO2 on the Earth’s energy imbalance and measuring the regression of permanent ice. But it is difficult for non-experts to take such indicators on board. It is essential to find more suggestive ways to highlight such figures if we want the indicator to have an impact on the debate. One of the major successes of the EF has been its ability to express pressure on the environment in an easily understandable unit. The EF indicator has limits that make it problematic to many observers. But, given the objective of limiting climate change, the general idea of using the footprint as a generic unit for the different forms of pressure that mankind exerts on Earth’s regenerative capacity is an option. A metric like this is used, for instance, with the more focused concept of the Carbon Footprint or the kindred concept of the CO2 budget.

Uncertainty Is Also Normative

In addition to raising technological issues, measuring sustainability with a single index number would confront us with severe normative questions. The point is that there can be as many indices of sustainability as there are normative definitions of what we want to sustain. In standard national accounting practice, the normative issue of defining preferences is generally avoided through the assumption that observed prices reveal the true preferences of people. No explicit normative choice is therefore to be made by the statistician. But as soon as we recognize that market prices cannot be trusted, alternative imputed prices must be computed, whose values will strongly depend upon normative choices.
Can we solve this normative problem? One could attempt to solve it empirically by trying to infer the definition of well-being from current observations of how people value environmental factors compared to economic ones, using contingent valuations or direct measures of the impact of environmental amenities on indices of subjective well-being. But can the contingent evaluations and subjective measures established today in our specific eco-environmental setting be used to predict the valuations of future generations in eco-environmental settings that may have become very different? It could be argued that our descendants may become very sensitive to the relative scarcity of some environmental goods to which we pay little attention today because they are still relatively abundant, and that this requires that we immediately place a high value on these items just because we think that our descendants may wish to do so.
Another example of these normative issues is the question of determining how sustainability indices should aggregate individual preferences. This depends on how distributional considerations are taken into account in our measures of current well-being. For instance, if we consider that the headline indicator of current well-being must be the total disposable income of the bottom 80% of the population, or of the bottom 50%, rather than global disposable income, then sustainability indicators should be adapted to such an objective function. This would be in line with one of the other aspects of the Brundtland definition of sustainability that is often overlooked, i.e., its concern for the distribution of resources within as well as between generations. In a world where inequalities within countries naturally tend to increase, messages concerning sustainability will differ depending on the goal that we set ourselves. Specific attention to distributional issues may even suggest enlarging the list of capital goods that matter for sustainability: the “sustainability” of well-being for the bottom x% of the population may imply some specific investment in institutions that offer efficient help in protecting this population from poverty. In principle, the theoretical framework based on extended wealth tells us how we could ideally put some value on this kind of “institutional” investment. But, needless to say, the prospect of actually being able to do this is still more remote than for other assets.

An Additional Source of Complexity: The Global Dimension

A global context poses additional problems for sustainability indicators. Advocates of the ANS argue that sustainability problems generally concentrate in poor resource-exporting countries even if it is in developed countries that the resources are ultimately consumed. The argument is that, if markets work properly, the pressure that developed countries exert on other countries’ resources is already reflected in the prices that they pay for importing these resources. If, despite the cost of their imports, the developed countries can still maintain a positive ANS, this means that they invest enough to compensate for their consumption of natural resources. It is then the responsibility of exporting countries to reinvest the income from their exports in sufficient quantities if they also want to be on a sustainable path.
Yet this logic holds true only under the assumption of efficient markets. If markets are not efficient and if the natural resource is underpriced, then importing countries benefit from an implicit subsidy while the exporting ones are effectively taxed. This means that the actual sustainability of developed countries is overestimated, while that of the developing countries is underestimated. And this problem will be all the more crucial when there are no markets at all, or in the presence of strong externalities.
To illustrate this issue, let’s imagine a very simple two-country setting, where both countries produce and consume with external effects on the stock of a natural resource that is a global public good with free access. Country 2 uses a clean technology that has no impact on the natural resource, while country 1 uses a “dirty” one that leads to a depreciation of the resource. Let’s push the asymmetry further by assuming that it is only country 2 that is affected by the degradation of the environmental good. Country 1 is completely indifferent to the level of degradation of this environmental good, for instance because its geographical characteristics fully protect it from the consequences.
In such a setting, it is natural to redefine countries 1 and 2 as being respectively “the polluter” and “the polluted.” In this setting, there are two ways to consider sustainability. One is to compute changes in extended wealth for each country using country-specific accounting prices for the natural resource. The idea is that the environmental good is a common asset, but valued differently by each country, because they are not concerned in the same way by its degradation. In this example, the accounting price for the polluter will be zero, because we have assumed that it is not impacted at all by environmental changes, which implies that it attributes no value at all to the environmental asset. On the other hand, the polluted country will attribute a positive value to the asset. The message conveyed using this extended wealth concept is that the polluter is on a sustainable path, while the polluted is not.
From a certain point of view, it is correct to say that the polluter is not confronted by the prospect of a decline in well-being, in contrast to the polluted. But from another viewpoint, the message is clearly misleading. There is nothing the polluted can do to restore its sustainability. It is only a change in the polluter’s technology that could help restore the polluted country’s sustainability. We are in need of indices that would convey such a message. The popularity of footprint indicators stems precisely from the fact that, whatever their other limitations, they are able to send such messages to policymakers and public opinion. This is one more argument in favor of an eclectic approach that mixes points of views. An approach centered on national sustainabilities may be relevant for some dimensions of sustainability, but not for others. Global warming is a typical example of the latter case, as the prospective consequences of climate change are distributed very unevenly, without necessarily correlating with a country’s CO2 emissions.

Conclusion

To sum up, what have we learned, and what can we conclude? This trip through the world of sustainability indicators has been a bit lengthy, and we have not been able to avoid technicalities completely. A wide variety of indicators are already available and we have analyzed the reasons why a comprehensive assessment of sustainability is difficult to establish in a fully consensual way. Assessing sustainability requires many assumptions and normative choices, and it is further complicated by the existence of interactions between the socio-economic and environmental models followed by the different nations. The issue is indeed complex, more complex than the already complicated issue of measuring current well-being or performance. But we shall nevertheless try to articulate a limited set of recommendations, which we shall also try to keep as pragmatic as possible.
 
Recommendation 1: Sustainability assessment requires a well-identified sub-dashboard of the global dashboard to be recommended by the Commission.
The question of sustainability is complementary to the question of current well-being or economic performance, and must be examined separately. This recommendation to separate the two issues might look trivial. Yet it deserves emphasis, because some approaches fail to adopt this principle, leading to confusing messages. The confusion reaches a peak when one tries to combine these two dimensions into a single indicator. This criticism applies not only to composite indices, but also to the notion of Green GDP. To take an analogy, when driving a car, a meter that weighed up in one single value the current speed of the vehicle and the remaining level of gasoline would not be of any help to the driver. Both pieces of information are critical and need to be displayed in distinct, clearly visible areas of the dashboard.
 
Recommendation 2: The distinctive feature of all components of this sub-dashboard should be to inform about variations of those “stocks” that underpin human well-being.
In order to measure sustainability, what we need are indicators that tell us the sign of the change in the quantities of the different factors that matter for future well-being. Putting the sustainability issue in these terms compels recognition that sustainability requires the simultaneous preservation or increase in several “stocks”: quantities and qualities not only of natural resources but also of human, social and physical capital. Any approach that focuses on only a part of these items does not offer a comprehensive view of sustainability.
Speaking in such terms also avoids many of the misconceptions about the messages sent by traditional national accounts indicators. For instance, a frequent criticism of GDP is that it classifies ecological catastrophes as blessings for the economy, because of the additional economic activity generated by repairs. The stock approach to sustainability clearly avoids this ambiguity. Catastrophes will be recorded as a form of depreciation of natural or physical capital. Any resulting increase in economic activity would have a positive value only insofar as it helps to restore the initial level of the capital stock.
 
Recommendation 3: A monetary index of sustainability has its place in such a dashboard, but under the current state of the art, it should remain essentially focused on economic aspects of sustainability.
The stock approach to sustainability can in turn be broken down into two versions. One version would just look at variations in each stock separately with a view to doing whatever is necessary to keep it from declining or at least to keep it above some critical threshold beyond which further reductions would be highly detrimental to future well-being. Or one could attempt to summarize all stock variations in synthetic figures.
This second track is the one followed by so-called extended wealth or adjusted savings approaches, which share the idea of converting all these assets into a monetary equivalent. We have discussed the potential of such an approach, but also its limitations. In certain conditions, it allows us to anticipate many forms of non-sustainability, but the requirements for such a capacity are extremely high. This is because the aggregation required by this approach cannot be based on market values: market prices are non-existent for quite a large number of the assets that matter for future well-being. Even when they are available, there is no guarantee that they adequately reflect how these different assets will matter for future well-being. In the absence of such price messages, we have to turn to imputations, which raises both normative and informational difficulties.
All this suggests staying with a more modest approach, i.e., focusing the monetary aggregation on items for which reasonable valuation techniques exist, such as physical capital, human capital and natural resources that are traded in markets. This more or less corresponds to the hard part of “adjusted net savings” as computed by the World Bank and further developed by several authors. “Greening” this index more intensively is of course a relevant objective, and we can keep it on the agenda but we know that the analytical apparatus for doing so is a complex one: large-scale projection models of interactions between the environment and the economy, projecting changes in the relative scarcities of corresponding assets and their impact on relative accounting prices, and allowing also a proper treatment of uncertainties or potential irreversibilities that affect these interactions. Meanwhile, we must focus this indicator essentially on what it does relatively well, i.e., the assessment of the “economic” component of sustainability, that is, the assessment of whether or not countries overconsume their economic wealth.
 
Recommendation 4: The environmental aspects of sustainability deserve a separate follow-up based on a well-chosen set of physical indicators.
As far as environmental sustainability is concerned, the limitations of monetary approaches do not mean that efforts to monetize damages to the environment are no longer needed: it is well known that fully opposing any kind of monetization often leads to policies that act as if environmental goods had no value at all. The point is that we are far from being able to construct monetary values for environmental goods that at the macro level can be reasonably compared to market prices of other capital assets. Given our state of ignorance, the precautionary principle legitimates a separate follow-up of these environmental goods.
Another reason for a separate treatment is that these environmental issues often pertain to global public goods, such as the case of the climate. In such cases, the problem with the standard extended wealth approach is that it essentially focuses on country-specific sustainabilities. With global public goods, what is involved is more the contributions by the different countries to global unsustainabilities.
The EF could have been an option for this kind of follow-up. In particular, in contrast to net adjusted savings, it essentially focuses on contributions to global non-sustainability, with the message that the main responsibility lies with the developed countries. Yet the group has taken note of its limitations, and in particular that it is far from being a pure physical indicator of pressure on the environment: it retains some aggregation rules that may be problematic. In fact, much of the information that it conveys about national contributions to non-sustainability is imbedded in a simpler indicator, the Carbon Footprint, which is therefore one good candidate for monitoring humanity’s pressure on the climate, among many indicators proposed by climatologists that are shortly reviewed in the technical report.
For other aspects of environmental sustainability, such as air quality, water quality, biodiversity and so on, one can again borrow from these large eclectic dashboards. Just to note a few of the indicators already incorporated in such dashboards, we could mention smog-forming pollutant emissions, nutrient loading to water bodies, the abundance of key specified natural species, rates of conversion of natural habitats to other uses, the proportion of fish catches beyond safe biological limits and many others. Today, at this stage of the debate, economists do not have any particular qualification for suggesting what the right choices are. This is why we will not propose any closed list of these indicators here.
In short, our pragmatic compromise is to suggest a small dashboard, firmly rooted in the logic of the “stock” approach to sustainability, which would combine:
• An indicator more or less derived from the extended wealth approach, “greened” as far as possible on the basis of currently available knowledge, but whose main function, however, would be to send warning messages concerning “economic” non-sustainability. This economic non-sustainability could be due to low savings or low investment in education, or to insufficient reinvestment of income generated by the extraction of fossil resources (for countries that strongly rely on this source of income).
• A set of well-chosen physical indicators, which would focus on dimensions of environmental sustainability that are either already important or could become so in the future, and that remain difficult to capture in monetary terms.
This scenario has several points of convergence with conclusions reached by other reports recently devoted to the topic, such as the recent OECD/Eurostat/UNECE report on sustainability measurement, whose conclusions were released in 2008, or the more recent report by the French Economic, Social and Environmental Council released in 2009. The first one, in particular, strongly advocates the stock-based approach to sustainability and proposes a small dashboard clearly separating assets that can be monetarized in a reasonable way and other assets for which separate physical measures are necessary. The second one warns against limits of the EF and, as far as climatic change is concerned, argues in favor of the Carbon Footprint index. Such points of convergence are reassuring: they suggest that from a relatively confused situation we are steadily moving towards a more consensual framework for the understanding of sustainability issues (see the box below).9
Physical and Other Non-Monetary Indicators: Which Ones to Choose?
The Commission’s general position has been to avoid formulating definitive turnkey proposals on any of the different issues it has raised. All proposals, rather, intend to stimulate further debate. This is all the more true in the domain of physical sustainability indicators where the expertise of specialists from other disciplines is crucial and was only indirectly represented in the Commission’s composition.
Some suggestions can however be made, in connection with conclusions of some recent related reports.
In 2008, a OECD/UNECE/Eurostat working group produced a report on measuring sustainable development whose messages have several points in common with ours. It strongly advocates the stock-based approach to sustainability as the relevant way of structuring a micro dashboard of sustainability indicators gathering both stock and flow variables. It also suggests a line of demarcation between determinants of “economic” well-being (those that are the most directly amenable to monetary evaluation) and the determinants of “foundational” well-being, among which four couples of stock/flow environmental indicators devoted respectively to global warming, other forms of atmospheric pollution, quality of water and biodiversity. The details and positions of these indicators in the dashboard can be visualized in the following table.
 
Small set of sustainable development indicators proposedby the UNECE/OECD/Eurostat working group onsustainability measurement
Source: UNECE/OECD/Eurostat (2008).
Indicator domainStock indicatorFlow indicator
Foundational well-beingHealth-adjusted life expectancyIndex of changes in age-specific mortality and morbidity
Percentage of population with post-secondary educationEnrolment in post-secondary education
Temperature deviations from normalsGreenhouse gas emissions
Ground-level ozone and fine particulate concentrationsSmog-forming pollutant emissions
Quality-adjusted water availabilityNutrient loadings to water bodies
Fragmentation of natural habitatsConversion of natural habitats to other uses
Economic well-beingReal per-capita net foreign financial asset holdingsReal per-capita investment in foreign financial assets
Real per-capita produced capitalReal per-capita net investment in produced capital
Real per-capita human capitalReal per-capita net investment in human capital
Real per-capita natural capitalReal per-capita net depletion of natural capital
Reserves of energy resourcesDepletion of energy resources
Reserves of mineral resourcesDepletion of mineral resources
Timber resource stocksDepletion of timber resources
Marine resource stocksDepletion of marine resources
More recently, the French Economic, Social and Environmental Council (CESE) has produced a report whose initial aim was the assessment of the Ecological Footprint but that has more widely explored the different tracks available for quantifying sustainability. It has the same messages as the current report concerning the limits of this EF index, and the fact that most of the relevant information that it conveys is more directly and more neatly reflected in one of its subcomponents, the Carbon Footprint. As a consequence, it strongly advocates in favor of this index. Compared to Global GHG emissions suggested in the OECD/UNECE/Eurostat Dashboard presented above, the Carbon Footprint has the advantage of being expressed in this “footprint” unit that is intuitively so appealing and that has made the success of the EF. In addition to this, this CESE report has suggested emphasizing the other physical indicators already present in large international dashboards such as the one elaborated for the European Union Strategy for Sustainable Development. Some of them are those already quoted in the OECD/UNECE/Eurostat Dashboard.
As far as climate change is concerned, some other indicators can be considered. Direct observation of mean temperature is one possibility but not the best suited, because it has a tendency to run behind the main components of climate change and because there can always be disagreements about the causes of temperature rises, hence about their permanent or transient character. Consequently, climatologists prefer to make use of a thermodynamic concept, the CO2 radiative forcing, that measures the earth energy imbalance created by the action of CO2 as a greenhouse gas.
Alternatively, it is possible to directly use a notion of a CO2 remaining budget: according to climatologists, there is an upper limit of 0.75 trillion tonnes of carbon that might be discharged in the atsmosphere if the risk of temperatures exceeding 2° Celsius above pre-industrial levels is limited to one-in-four, this upperbound at 2°C being largely accepted among climate experts as a “tipping point” opening the door to unstoppable feedback effects (methane from melting permafrost, CO2 and methane from decaying tropical forests, all sorts of greenhouse gases released by saturated warming oceans, etc.... ). Of this 0.75 total budget, emissions to 2008 have already consumed circa 0.5. Hence the importance of monitoring this remaining CO2 budget. The attractiveness of this indicator is to be strongly consistent with the stock-based approach to sustainability. It can be also rephrased in the very expressive terms of a countdown index, i.e., the time that remains until exhaustion of this stock, under the assumption of emissions remaining on their current trend. This kind of representation is often used for other forms of exhaustible resources.
Still other indirect indicators of global warming are the regression of permanent ice or the oceanic pH. The regression of permanent ice has the advantage of being an advanced one and to be directly related to manifest effects. The oceanic pH increases with the amount of CO2 that is naturally pumped into the oceans. A consequence of this increase is a decrease in the quantity of phytoplankton, which is itself a carbon sink no less important than the forests. One may therefore say that the physical sink (sea water dissolving atmospheric CO2) destroys the biological one. This is the reason why the oceanic pH appears to be another good tentative indicator of climate change, pointing to one of the most vicious feedback effects. Among criteria for choosing between all the indicators, two are of particular importance. One is their ap-propriability by the public, the other is the capacity of declining them at national or even subnational levels: in this respect, the Carbon Footprint has quite a lot of advantages.
As far as biodiversity is concerned, the issue is currently under review by the TEEB (“the economics of the environment and biodiversity”) group working at the initiative of the European Union and it has been also recently addressed by a report by the French Conseil d’Analyse Stratégique, in this case with the idea of pushing as far as possible the monetization of this dimension. The reason for this search of monetary equivalent is essentially that it may foster incorporation of this dimension in investment choices: many public decisions such as building a new motorway imply some potential biodiversity loss through fragmentation of natural habitats. But the report also provides a very detailed and technical review of available physical measures of biodiversity, to which the reader is referred for further information.
At last, moving away from environmental preoccupations, but still on the “non-monetary” side, one important issue is the issue of social capital and “institutional assets” that we transmit to future generations. One will have noticed that the UNECE/OECD/Eurostat Dashboard presented above did not propose any indicator of this kind, not because the question is not relevant, but mainly because of lack of consensus about the way to measure it. Subgroup 3 was not in a position to explore this question further, but efforts along this direction remain undoubtedly necessary.
A subsidiary question concerns a user’s guide to such a dashboard. A warning should be given that no limited set of figures can pretend to forecast the sustainable or unsustainable character of a highly complex system with certainty. The purpose is, rather, to have a set of indicators that give an “alert” to situations that pose a high risk of non-sustainability. Whatever we do, however, dashboards and indices are only one part of the story. Most of the efforts involved in assessing sustainability focus on increasing our knowledge about how the economy and the environment interact now and are likely to interact in the future.