David Cronin
BRUSSELS, Nov 22 2007 (IPS) – Conventional measures of economic success do not take sufficient account of the social and environmental challenges of the twenty-first century, according to senior European Union economists.
Speaking at a high-level conference here Monday titled Beyond GDP, Emeka Anyaoku, the World Wildlife Fund for Nature s (WWF) president and former foreign minister of Nigeria said, Economies are a means, not an end.
Governments and industry of today, never mind tomorrow, need to know how our ecological and social assets are performing, just as much as our economic ones, he stressed.
Since the 1930s, the main economic indicator used internationally to assess wealth is gross domestic product (GDP). It calculates the total final market value of all goods and services produced in a country over a set period.
Welfare of a nation cannot be inferred from a measurement of national income, Simon Kuznets the economist who invented GDP said in 1934. José Manuel Barroso, the European Commission s president, noted Kuznets words, stressing that data is needed to illustrate how measures for tackling climate change will bring benefits, so that they are accepted by business leaders and other interested parties.
We cannot face the challenges of the future with the instruments of the past, he stressed.
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While GDP has proven useful in comparing data from different countries, one of its main weakness is that it cannot distinguish between activities that have a negative and a positive impact on the well-being of society, said Joaquín Almunia, the European commissioner for economic affairs.
Output arising from wars and natural disasters may even register as an increase in GDP, he pointed out.
Almunia noted that the indicator dates back to the Great Depression era the worldwide economic downturn which began with a U.S. stock market collapse in 1929.
GDP is still used by the EU for such matters as deciding if its member countries fulfil the criteria to join the euro single currency zone, Almunia said.
No comparable indicator has yet been devised for measuring well-being, he added, although a certain amount of progress has been made in that direction.
The WWF has been monitoring the environmental performance of different countries using a combination of two alternative indicators. One is the United Nations Human Development Index (HDI), which is based on such data as life expectancy and school enrolment, as well as GDP per capita. The other is the Ecological Footprint, which measures the cropland, grassland, forests and fishing grounds needed to produce the food, fibre and wood a country consumes, in relation to the quantity of waste it produces.
Living and thinking within the box defined by these two indicators is the single greatest challenge of the twenty-first century, said Anyaoku.
A new WWF study concludes that as a society registers a better performance under the HDI scale its Ecological Footprint grows.
At one end of the spectrum of countries studied are those considered unsustainable, with a low ecological footprint and a low HDI including Bangladesh the Central African Republic, and Chad.
On the other end we find countries with both a large ecological footprint and a high HDI including Australia, Kuwait, Luxembourg, and the U.S. These too can be considered as unsustainable because of their high footprint.
In the middle lies a group of countries that may be considered to be the most sustainable at present having a relatively small footprint, as well as mid-range HDI values. Countries in this group China, Mexico, South Korea, and Vietnam are, however, moving toward higher Ecological Footprints and HDI values.
The European Union s Ecological Footprint in 2003 stood at 2.26 billion global hectares (gha), or 4.7 gha for every man, woman and child in its then 15 member countries.
The gha is a hectare of land capable of global average productivity the ability to produce crops or other resources and absorb waste sustainably.
Globally in 2003, there were 11.2 billion hectares of biologically productive land and water available and 6.3 billion people on the planet. This makes 1.8 gha per person.
In the same year, the EU s total supply of productive area was 1.06 billion gha 0.2 gha per individual.
According to the WWF, if everyone in the world consumed at the same rate that Europeans do, over two-and-a-half planets would be needed to provide the resources required and accommodate wastes.
We are now in ecological overshoot, said Anyaoku.
In plain terms, this means that we are using more resources and emitting more waste than the planet can handle, Anyaoku stressed, We are liquidating the assets on which human welfare depends. We are making existence ever more fragile and also taking away the development rights of future generations.
Portugal s Secretary of State for Regional Development Rui Baleiras said that poverty, inequalities in income distribution, education and the value of leisure time certainly influence the level of well-being of a country but they are not covered by mainstream economic indicators .
Moving beyond GDP is not as easy as it sounds, Pervenche Berès, A French Socialist member of the European Parliament said.
I hope that Europe can take the lead in developing an environmental measure that is relevant to the future of our planet. Beyond an index, we need the conviction of politicians to make sure that when we have the right measure, we take the right decisions, she said.
