Sustainable Development INDICATORS SD Indicators The elaboration of

Sustainable Development INDICATORS

SD: Indicators The elaboration of a suitable system of indicators for sustainable development is one of the major challenges facing contemporary science. The very interdisciplinary nature of the issue, which is preconditioned by the intricate and highly dynamic system of inter-relations and interdependencies between the socioeconomic system and the natural environment, renders the solution to the problem of indicator elaboration exceedingly difficult.

SD: Indicators • The individual indicators or systems of indicators that have been used thus far are the product of two relatively autonomous approaches. • The first approach is based on the notion that sustainable development can be measured and assessed by using several subsystems of indicators reflecting sustainable development’s various aspects— environmental, social, economic, institutional, and so on. Such is the approach of the United Nations Commission on Sustainable Development (UNCSD) and of the much-respected International Institute for Sustainable Development (IISD) in Canada.

SD: Indicators • The second approach puts its stakes on some “magical” indicator of a maximally-high degree of aggregation designed to reflect the entire range of indicators, covering the various aspects of sustainable development. • It is natural to assume that the implementation of the second approach is considerably more difficult from a methodological point of view because it means characterizing numerous and varied direct links and feedbacks between indicators from various subsystems. Often, comparing these indicators along the lines of a certain common trait (monetary, physical, extent of change, and so on) contains too many conditionalities or is virtually impossible at this stage altogether.

SD: Indicators • Are these two approaches mutually exclusive? Arriving at an integral and highly aggregated indicator is impossible without simulating an indicator system and corresponding subsystems grouped according to their congruity with the various characteristics of sustainable development. The issue we are focusing on is • (1) whether eliciting a sufficiently reliable integral indicator that could encompass and reflect the entire specificity and variety underlying sustainable development is possible in principle and • (2) whether the sum of relatively independent indicators, grouped in individual subsystems, could serve as a basis for the solving the methodological problem outlined above.

UN: SD Indicators • In 1997, at the 19 th Special Session of the UN General Assembly, the UNCSD tabled a proposal for the elaboration of a system of 134 indicators of sustainable development grouped by the four relevant dimensions: social, economic, environmental, and institutional. The UN General Assembly endorsed the proposal and gave its approval for the system of indicators to be tested in twenty UN member countries. The experience from the tests and the results from the comparative analysis indicated the need for further improvement of the systematization and formulation of some of the indicators. This brought about a decrease from 134 to 58 indicators with the purposes of avoiding double measurements and simplifying comparisons as much as possible.

UN Indicators: ECONOMIC • A. Economic Structure: GDP per capita, investment share in GDP, balance of trade in goods and services, debt-to-GNP ratio, total Official Development Assistance (ODA) received or given as a percentage of GDP • B. Consumption and Production Patterns: intensity of material use, annual energy consumption per capita, share of renewable energy resource consumption, intensity of energy use, industrial and municipal solid waste generation, hazardous waste generation, radioactive waste generation, waste recycling and reuse, distance traveled per capita by mode of transport

UN Indicators: Environmental • A. Atmosphere: greenhouse gas emissions, ozone-depleting substance consumption, ambient concentration of air pollutants in urban areas • B. Land: arable and permanent crop land area, fertilizer use, agricultural pesticide use, forest area as a percent of land area, wood harvesting intensity, land affected by desertification, area of urban formal and informal settlements • C. Oceans, Seas, and Coasts: algae concentration in coastal waters, percentage of total population living in coastal areas, annual catch by major species • D. Fresh Water: annual ground and surface water withdrawal as a percentage of total available water, BOD in water bodies, concentration of fecal coliform in freshwater

UN Indicators: Social • A. Equity: percentage of population living below poverty line, Gini Index of Income Inequality, unemployment rate, ratio of average female wage to average male wage • B. Health: nutritional status of children, mortality rate of children less than five years old, life expectancy at birth, percentage of population with adequate sewage disposal facilities, population with access to safe drinking water, percent of population with access to primary healthcare facilities, immunization against infectious childhood diseases, contraceptive prevalence rate • C. Education: percentage of children reaching grade five of primary education, adult secondary education achievement level, adult literacy rate • D. Housing: floor area person • E. Security: number of recorded crimes per 100, 000 population • F. Population: population growth rate, population of urban formal and informal settlements

UN Indicators: Institutional • A. Institutional Framework: national sustainable development strategy, ratified global agreement implementation • B. Institutional Capacity: number of Internet subscribers per 1000 inhabitants, main telephone lines per 1000 inhabitants, research and development expenditure as a percentage of GDP, economic and human loss from natural

UN Indicators: downsides Naturally, countries with larger volumes of industrial output, and that export their products to the international market and thus meet certain demand, will record higher levels of greenhouse gas emissions if all other conditions of the compared countries remain equal. In the first years of the transition to a market economy, the Eastern European countries— Russia included—marked a considerable decline in their GDP and most notably in their industrial output. This had a “positive” impact on the environment because the manufacturing facilities that used to pollute the environment had been closed down or only partially used. An important question to ask, however, is, Are lower greenhouse gas emission indicators under such circumstances a suitable sign for sustainable development?

UN Indicators: downsides • The “debt-to-GNP ratio” and “trade balance” indicators on their own, are also incapable of giving any ideas about sustainability or lack of sustainability. Countries with equal debt-to-GDP (or GNP) ratios are in different economic situations depending on the capacity and viability of their economies.

UN Indicators: downsides • The “energy consumption” indicator (encompassing renewable and non-renewable energy consumption) is far too general, as well. In its essence, this indicator expresses an absolute value that is not related to the efficiency of the economy. In principle, it is possible to see a scenario whereby the declining energy consumption per capita of the population is a sign of lacking sustainability and a shrinking living standard, should this result from rising energy prices rather than from growing energy efficiency.

Human Development Index HDI (UNDP) • This index is based on three relatively independent components: (1) level of education, (2) per capita GDP, and (3) life expectancy. Each of the components has a sub-index of its own with an equal weight in the formation of the composite index. In other words, the sub-indices are equitable. In my opinion, both quantitatively and qualitatively, the GDP per capita index directly or indirectly reflects the other two indices or is rather strongly influenced by them.

HDI Report 2014 http: //hdr. undp. org/en/statistics/ • Very High DI (top TEN): Norway, Australia, Switzerland, Denmark, The Netherlands, Germany, Ireland, USA, Canada and New Zealand • High HDI: Belarus, Russia, Oman, Romania, Uruguay, Bahamas, Lithuania, Chile, Argentina , Kuwait Bulgaria No. 59, Montenegro 49, Romania 52, Kazakhstan 56 • Medium HDI: Fiji, Turkmenistan, Dominican Republic , China, El Salvador • Low HDI: Burkina Faso, Liberia, Chad, Guinea-Bissau, Mozambique , Burundi, Niger, Congo (Democratic Republic of the), Zimbabwe

Index of Sustainable Economic Welfare ISEW Developed by Serafy et al. (1989); Daly (1989) has expanded an index of a sufficiently high degree of aggregation: ISEW = Cadj + P + G + W – D – E – N where Cadj is consumer spending adjusted for income inequality, P is non-defensive public expenditures, G is capital growth and net change in international position, W is non-monetarized contributions to welfare, D is the defensive private expenditures, E is the cost of environmental degradation, and N is the value of depreciation of the environmental capital base. • ISEW is a useful step forward in the effort to find appropriate ways of aggregating indices from various subsystems by bringing them down to comparable monetary values.

The Rio. Jo Dashboard System • In 2001 the Consultative Group on Sustainable Development Indicators (CGSDI), with the International Institute for Sustainable Development (IISD), elaborated and presented before the UNCSD the Dashboard (Appendix 1), which is a system of indices covering all aspects of sustainable development that have been aggregated in a Sustainable Development Index (SDI). The elaboration and adoption of this approach by the UNCSD took place in connection with the preparation of the World Summit for Sustainable Development (WSSD) held in Johannesburg in 2002 and the presentation of a report on the comparative analysis for the period 1990– 2000.

The Rio. Jo Dashboard System • The assessments and conclusions in the report have been made in compliance with the Millennium Development Goals (MDG). 2 Countries and regions implemented this Dashboard system of indicators to show the diverse nature of sustainable development, on the one hand, and to assess the policies pursued by individual countries or regional communities, on the other. This highly aggregated indicator of sustainable development is made of three relatively independent subindicator clusters, which reflect the situations of three spheres, which include • Environment—quality of water, air, and soil and levels of toxic waste; • Economy—employment, investments, productivity, income distribution, competitiveness, inflation, and efficiency of material and energy use; • Society—crime rate, health, poverty, education, governance, military spending, and international cooperation.

The Rio. Jo Dashboard System • As the suggested system of linked clusters indicates, each cluster is represented by an index, aggregating the indicators included in the respective sphere (environmental, economic, and social). The three cluster indices are aggregated again into an overall Sustainable Development Index (SDI). The indicators themselves are also represented in an index form. The environmentrelated index, then, is based on the Environmental Pressure Index (EPI) and the Ecological Footprint Index (EFI), 3 and the economy-related index is based on the GDP and the Index of Economic Performance (IEP). The Consultative Group on Sustainable Development at the IISD thinks that the highly aggregated index they suggested should be able to reflect the stock, flow, and related interactions and management decisions.

The Rio. Jo Dashboard System In essence, the third cluster concerning the social sphere is underdeveloped, although some possible indicators such as “happiness” and “fulfilment of the human potential, ” have been put forward. The question about how so many subjective assessments will be measured and will fit into the overall index has remained unanswered.

Ecological Footprint of GDP • The GDP carries abundant useful information about its ecological footprint if the output value is compared with the physical dimension (total and per unit) of the used input. The concept of ecological footprint was first introduced by Drs. M. Wackernagel and W. Reese in 1996. The energy and raw material consumption for production of a unit of GDP is one of the leading indicators for GDP’s spin-off effect, measured as an ecological footprint. Given that all other conditions are equal, the countries registering the lowest level of consumption per unit of GDP are among those with the highest industrial development and have the highest standard of living and high HDI. • The Eastern European countries, for instance, register from five to eight times more electricity consumption per end-product unit than do the developed countries. Factor analysis shows that this is because of two main factors: lower technological level and under-developed market incentives.

Ecological Footprint • In my opinion, the input-output model of W. Leontief (1936, 1966), Nobel Laureate in Economics, and its concrete orientation to the impact of the material and energy flow on the environment are mandatory instruments in the measurement of sustainability. Nowadays, this approach to measuring physical flows by intensity, direction, and effect on the economic process and the environment finds an increasingly wide application because it operates with specific, objective, and verifiable data, which gives reliable information about the ecological footprint of GDP production. The German scientist Schmidt-Bleek (1998) has suggested a differentiated approach that measures both the quantity and type of material resources that go into the production of a product unit (or a service unit) and the waste emissions from the production of a product unit (or a service unit). Two interrelated measures have been proposed by Schmidt-Bleek: the Material Input per Service unit indices (MIPS) and the “Ecological Rucksack” unit.

Ecological Footprint • As an alternative approach, Bailey et al. (2000) divide the domestic supply of raw materials into scrap and newly extracted resources. This is an important differentiation as far as the use of nonrenewable resources is concerned. This model measures the ecological footprint through an inputoutput model which shows the material flows in industrial systems. This method has enormous potential in studying the relationship between economic activity and the environment. The authors of these methods have succeeded in including other factors such as the international division of labor and the share of natural resources used as factors of production— which are either imported or obtained by the domestic extracting industry—in their analyses.

A GDP Matrix: An Attempt for Systematic Approach Gechev, R. (2005) Sustainable Development: Economic Aspects. University of Indianapolis Press, pp. 52 -55 • The proposed matrix contains indicators that are connected with the GDP in a direct, indirect, or relative way. As indicated earlier, the indicators are expressed in an absolute or dynamic form (in percentage terms) and as GDP derivative indicators, which reflect the interaction between the economic sphere and the other three dimensions of sustainable development. The comparative analysis of the stated indicators for an individual country, for a group of countries, and especially at an international level would make it possible to assess with a sufficient degree of accuracy the state and trends of development in compliance with the goals and criteria of sustainable development.

A GDP Matrix: An Attempt for Systematic Approach Gechev, R. (2005) Sustainable Development: Economic Aspects. University of Indianapolis Press, pp. 52 -55 • In my opinion, the most useful tool for assessing the ecological footprint of GDP production would indicate the energy and material intensity per unit of the GDP disaggregated by sectors, industrial branches, and types of production. Undoubtedly, the countries registering the lowest material and energy costs per unit of output are those enjoying the highest living standards. They also possess the biggest real and potential possibilities for maintaining, restoring, or maintaining and restoring the environment.

GDP: Is it a reliable indicator for sustainable development? • The claim that the GDP is a poor and even misleading indicator of sustainable development is frequently encountered in the specialized literature devoted to problems of sustainable development. This argument does not seem to consider the fact that the GDP indicator has not been created to measure sustainability. It is highly illogical to define the GDP as a “devilish” or “misleading” indicator, although such qualifications can still be heard or read. There is little surprise in the fact that we cannot measure atmospheric pressure with a thermometer. The indicator in question works perfectly well for the job it was created to do. To a large extent, the model for calculating the GDP has been made universal; in other words, it is one of the most reliable indicators for the purpose of performing international comparisons.

GDP: Is it a reliable indicator for sustainable development? • Besides, an available, accessible, and reliable database for each country and region exists, and GDP data compiled therein encompasses a sufficiently long period of time for trend analyses. Having been disaggregated in an appropriate and targeted way, the GDP and its relative derivatives can serve as a basis for performing a precise assessment of sustainable development. The advantage of this indicator is that it directly or indirectly reflects the environmental, social, and institutional aspects of sustainable development. The problem, then, is not whether, but rather how, the system of disaggregated indicators should be employed. My firm belief is that the GDP is not a misleading indicator but has frequently been misused.

GDP: Is it a reliable indicator for sustainable development? • If direct and indirect links exist between the environment and the processes of manufacturing and consumption, trying to find the complex of physical and monetary GDP characteristics related to them is more than logical. Neither the links nor the physical and monetary GDP characteristics indicate the exact state of the natural environment but give an adequate idea about the nature of the processes of interaction taking place, including the interactions from the sustainable development point of view.

GDP: Is it a reliable indicator for sustainable development? • Which arguments support this thesis? All experts agree that without economic growth, no social and economic development is possible. The development of technologies, social relations, the quality of life, and so on, is connected precisely with economic growth. One of the preconditions for the rise in the standard of living is the increase in the production of capital and consumer goods and services. In fact, the expanded production of capital goods and services is indispensable for the increased output of consumer goods and services. For people to consume more, more should be manufactured—what should be maintained is the growth of production. Because of this dependency, the level to which the social sphere is developed, as an important aspect of sustainable development, has a close positive relationship with economic growth.