Session 3 Breakout Session Key Needs and Ways Forward WORKSHOP - PANEL 1

Session 3 Breakout session Key needs and ways forward WORKSHOP - PANEL 1

Carlos Figueiredo Environment Ministry, Portugal

Insights on New Measures of Progress

Good morning to everybody!

First of all, I would like to thank the organizers for the Portuguese case of a speciﬁ c indicator, the of this conference for inviting us to participate in Adjusted Net Savings (ANS). this workshop. This indicator is based on national accounts and My name is Carlos Figueiredo and I work at the is consistent with the capital approach to sustain- Portuguese Ministry of Environment, Spatial ability, i.e. the notion that future well-being can Planning and Regional Development. only be maintained if the wealth-producing asset base is preserved. This presentation was prepared with the support of a technical team listed here. This indicator is built upon the National Net Saving (NNS), which considers only the depreciation of built I would like to focus on three main questions. capital and attempts to include the net changes in both human and natural capital, thus providing a Firstly, what do we know about the different indicators measure of an economy’s genuine savings. that are linked to the well-being? Besides we should analyse some empirical results relating to GSI. In this way, The ANS indicator corresponds to the concept of weak sustainability (WS). Secondly, what do we want ? We want a new generation of indicators that should include the All values of those indicators are monetarized. environmental issues in complementing the GDP. Thus the aggregation is easily achieved by adding up the different values considered in the ANS Thirdly, what should we do? We should mobilize the algebric expression. different statistical institutions and also their main stakeholders to provide a set of complementary This is a real advantage to interact with the policy indicators with GDP. makers and to communicate to the general public.

The limitations of GDP and other traditional eco- This concept of genuine saving was considered by nomic measures as indicators of welfare are well- the World Bank to organize a set of data for all known. Moreover, such measures do not show countries that allow international comparisons. whether the economic system is on a sustainable path or not. Indicators that go beyond GDP are Based on data computed by the Environment needed to support better decision making. Department of the World Bank, these ﬁ gures show the path of the listed indicators as a percent- There are different categories of indicators age of GNI – Gross National Income. which can be roughly divided into monetary and non-monetary indicators. The former are generally In this way, we can see the evolution of ANS for based on corrected national accounts; while non- Portugal and the EMU countries between 1983 monetary indicators can be based on environmental and 2004. data or on socio-demographic data. In both cases the path of ANS roughly follows Although there are many indicators available, in this that of the conventional measures of GNS/ presentation we would like to focus on the analysis NNS, but the gap between ANS and NNS has

166 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 3 – Panel 1 Breakout session: Key needs and ways forward

been increasing in Portugal for over a dec- Finally, we propose that sustainability in the ade, unlike that of EMU countries, which has EU is assessed at a regional level, which will remained relatively stable. require spatially disaggregated data. This would be important for a consistent framework to sup- Workshop It is important to analyze the role of each com- port decision makers at national and European ponent in the results. The infl uence of educa- policy levels. tion expenditures (EDE) on the gap is high both in Portugal and in the EMU as a whole, but In the long term, we should end up in an estab- there was a signifi cant increase in education lished modular System of Economic and Social expenditures in Portugal from 1990 to 2004 Accounting Matrices and Extensions (SESAME), (larger than one percentage point in terms of with enough fl exibility to answer the needs of the ratio to Gross National Income). different users but that is still consistent with national accounts. As for natural capital depreciation, the Portuguese values show a smaller decrease, This is my guess on that matter! which also contributes to a larger gap. Thank you for your attention. Summarising, the gap ANS/NNS just mentioned shows a positive correlation with EDE and a nega- Feel free to put your questions and comments. tive one with depletion of natural resources and environmental damages since 1990.

Now, we propose moving forward on several levels so that new insights can be gained in the medium and long term.

Firstly, to get a better picture of genuine savings, additional natural resources and environmental damages should be included. In what refers to human capital creation, professional training expenditures should be considered without dis- regarding education and training outcomes.

Secondly, to improve the basic GNI measure, non-salaried time activities such as housework, vol- unteer work and leisure time need to be valued and included.

Thirdly, to ensure that we are not following paths that are just weakly sustainable, a set of environmental quality indicators, namely for critical environmental services, should be established for international comparisons. Indicators that reﬂ ect ecosystem resilience, such as biodiversity, require particular precaution as the context is of huge uncertainty.

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168 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 3 – Panel 1 Breakout session: Key needs and ways forward

Thais Corral Executive Director, Rede de Desenvolvimento Humano (REDEH), Brazil Workshop

I will address the three discussion questions1 by mentality and culture, so that we can really be offering some examples, because conceptually protective of the forest. Because the way that a lot has been said. But when we see what hap- people see wealth is just using the trees in the pens in real life as a consequence of a certain opposite way for money or for cattle. perspective, it’s also helpful to see how we can move forward. And, in terms of opportunities, The second example I want to give is also some of the consequences that we are facing related to consequences, and in this case the with this narrow view of GDP are very important consequences of poverty that are not taken in showing us what can be done, but also how into account in GDP. And it’s true for most these narrow views also reveal some kind of Latin American cities, namely the question of culture that is very difﬁ cult to change. And the safety. opportunity now is climate, as with climate we have a limited time in which we take action. Most of our cities have a high rate of crime today and if you go to people in terms of the And I want to give you the example of Brazil and service we’re doing on perceptions, the most what has happened over three decades in the important thing for them is safety. Because Amazon. As in the seventies we had a policy of of course if you don’t have safety you don’t occupying that region. It was the policy of our have wealth, you don’t have a lot of the things military government, which was very national- money can bring no matter at what level. And ist, and as a consequence of that people were on the basis of that, several cities starting with given subsidies to occupy the forests. So most Bogotá started a movement which was called of this was done just by chopping down the Bogotá ‘como vamos’, and then we had ‘Rio trees and putting cattle there, which was the How We Are’, and Sao Paulo, ‘Our Sao Paulo’. easiest way to get hold of the subsidies. Over And the idea is to match the perception with the years the consequence of that was major the statistics that are available and make them occupation of the Amazon, 30% of the forest usable for people, so that they can not only act was destroyed. And today it goes on because themselves but create a dialogue and a mobi- this trend still continues. So Brazil now occupies lisation that can be translated into action and the 16th position in terms of a global produc- can involve politicians and mayors. And there tion of greenhouse gases and 75% of this is are goals for the mayors. In the case of Bogotá produced by deforestation. The Amazon alone after ten years of this movement the situation is responsible for 3% of the global greenhouse in the city has totally changed. And I think this emissions and at the same time produces only shows us how indictors can be used by people 0.1% of our GDP. So now of course Brazil wants and produce change, because after all this is to change that perspective urgently and also what we want. doesn’t want to be seen as the villain on the global scene. We are changing; we are start- In an attempt to do that, in 2003 together ing to implement now a new law from 2006 on with Hazel Henderson and the corporate social incentives. It takes an opposite approach by responsibility movement of Brazil, statisticians, giving people a kind of salary to protect and policymakers and a lot of grass roots organisa- to maintain the standing forests, to maintain tions and social entrepreneurs, we organised the trees. The question is how long this shift in this big conference with the participation of terms of policy is going to take in terms of our 700 organisations. And the most important

1 What are the key opportunities for going beyond GDP? What is feasible in the short to medium term and how can implementation be improved? How to meet the needs of policymakers, key institutions, business, media and the broader public?

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lesson of that conference was dialogue, because And my ﬁ nal point is that ICTs (Information actually we have to understand each other. I think Communication Technologies) are very important it’s important, we need complex data, but how assets on our side. And I think that there are are we going to follow the path unless we can several examples, like the Community Right-to- really understand each other and make this useful? Know in the United States, that actually helped. Because all these very complicated methodologies, This was a law, integrated with access to ICTs, unless they are translated into something that can on information and helped the United States to be put into action, are very limited. And this con- overcome toxic release into the environment. And ference was an example of that, as an outcome of this is an information and model that is 20 years all these movements. There are all these examples old, but is an example of how information put in of cities working on their own neighbourhoods, the hands of the people can really make a change. schools, no matter what level. But the important Thank you. thing is that people can handle the complexity and are not afraid to use them.

Peter van de Ven Statistics Netherlands

I would like to put forward two arguments, two My second message is that we can learn from messages I want to convey. The fi rst one is a plea the worldwide success of the system of national for cooperation. I think that we as researchers, accounts. There are some factors which we should statisticians, policy analysts, and policymakers learn from in making environmental accounting should look more for the common ground and or, more broadly, the measurement of well-being should do a better job in looking for the areas a success. where we agree instead of stressing the points of disagreements, and that for two reasons: To go back to the fi rst point, as I have said, I have a long experience in national accounts and I can tell - The fi rst one is that I see from the discussions on you that hardly any national accountant considers environmental accounting that people are very GDP or economic growth as the ultimate indicator engaged and very personally involved. In my of societal progress. There is no argument about opinion, progress in measuring and analysing that. Of course economic growth is considered to broader concepts of welfare and broader concepts be an important indicator of economic activity, and of well-being society may sometimes even have an indicator for production and income with strong been hampered by the discussion about rival indi- relationships for example with employment, and cator approaches by what in the documentation for that reason also with, for example, issues like for this conference is called “beauty contests”. social exclusion.

- The second reason is that we have totally differ- On the other hand it’s clear that GDP has its limi- ent ideas and concepts of welfare and well-being. tations. We all agree about that, including 95% Every introduction showed a different approach. of national accountants. So that’s not an issue My question is, do we actually know what we want and it’s important to realise that. In my opinion, to measure? It seems that everybody has a dif- the discussion is much more on the way to arrive ferent idea. Therefore, we should also look for the at a broader measurement, to a more inclusive common ground of what we want to measure. measurement of welfare or wellbeing. Personally,

170 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 3 – Panel 1 Breakout session: Key needs and ways forward

I think that welfare and wellbeing is a mul- help each other and support each other. As a tidimensional phenomenon and as such I’m statistical offi ce, by providing the relevant data, strongly in favour of a limited set of headline the relevant statistics, and researchers can help indicators in which, for each aspect of welfare, by telling us what kind of data are needed. “We Workshop an indicator is defi ned that is directly observ- can help you”. able and measurable. In addition, these indicators should preferably be embedded in an The second point, as stated before, was that integrated system of accounts. By doing this, we can learn from the success story of national it is possible to analyse the interrelationships, accounts. Factors in that success are: one set the interlinkages, and the trade-offs between of international standards; a conceptual frame- different indicators. That’s very important when work with worldwide commitment to apply these discussing and analysing policy choices. guidelines. In addition, there is international agreement about a set of tables that a critical On the other hand, I know that there are other number of countries compile in practice, making approaches that try to capture these different international comparison possible. Furthermore, aspects of welfare or sustainability in one indica- there is agreement, implicitly or explicitly, about tor. Just to name a few examples: Sustainable headline indicators. National Income such as developed by Dr Hueting who is present here – he is a pioneer in this work In my opinion, it is important to have such – or Genuine Saving developed by the World an international standard for environmen- Bank. There are other approaches as well. tal accounting as well, like the system that is already mentioned in the introduction, the Personally, I think that there are still a lot of SEEA, the System of Integrated Environmental theoretical as well as practical problems involved and Economic Accounting. This system is now with these single indicator approaches, certainly being developed to an international standard when it comes to the inclusion of this kind of by the United Nations in close cooperation with research in the programme of offi cial statistics. other international organisations. However, I am But that’s not a point I would like to make. quite sure that it will not be possible to agree on aggregate indicators. On the other hand, I My main argument is that all these approaches think it will be possible to develop a system in are not mutually exclusive; that initiatives like which economic development can be related to Sustainable National Income or Genuine Savings environmental issues. It is very important to complement or supplement information from look into such international standards, agree multiple indicator systems. We should not com- on them, and agree on a set of tables which as pete with each other, instead we should try to many countries as possible compile. ©TI-BC

19 & 20 November 2007 171 OPENING AND DISCUSSION OF WORKSHOP

• Jeff Mason ceptual framework of national accounts. I am a Reuters, Chairman of Workshop Session 3 member of the advisory expert group on national Panel 1 accounts which is responsible for the revision or the update of international guidelines on national My name is Jeff Mason and I’m a correspondent accounting. I’m also, perhaps more importantly in for Reuters based in Brussels. It is my privilege this context, a member of the UN Committee of to be the chair of this working group. Thanks for Experts on Environmental Accounting, a committee joining us. I see my role as simply one of facilita- that started two years ago with the goal of arriv- tor and getting the conversation rolling. I’m looking at international standards for environmental ing forward to having a good conversation. Also, accounting and a better common approach to to talk a little bit perhaps about the needs of the environmental accounting. media in an issue like this, so feel free to throw questions my way about that later once we get to For the speech of Carlos Figueiredo, the discussion. see page 166. For the speech of Thais Corral, see page 169. What I’d like to do ﬁ rst is just have all the panellists For the speech of Peter van de Ven, brieﬂ y introduce themselves and then we’ll start see page 170. with our presentations. Please go ahead.

• Jeff Mason • Carlos Figueiredo Chairman Environment Ministry, Portugal A couple of thoughts came to my mind listening to My name is Carlos Figueiredo. I work at the Ministry the speakers that I think it might be interesting to for Environment, Special Planning and Regional explore; the idea of complexity and making sure Development. I’m an economist and I worked with that whatever the direction that we go doesn’t get a small technical team to prepare this presenta- too complex. It’s appealing at least to a journalist tion. We have the full presentation available on whose job is to boil it down to that lead sentence in the website of the conference. a story or in a TV report in a 1½ minute package, so I think that’s an interesting issue that maybe we can touch on. • Thais Corral REDEH, Brazil Also both of you gentlemen talked about having an international standard. I would be curious to My name is Thais Corral, I come from Brazil. I hear more from the panel about what that stand- am the head of an NGO called Network for Human ard should be, and I’d also be curious to hear Development. I was involved in the Rio Conference what some of our audience members think about in 1992, the UN Conference for Environment and that. Development, and since then we have been working on how to translate information into action, espe- The three issues that we are supposed to be fol- cially with local sustainable development, renewable lowing during this session are as follows: energy, and empowerment of women in the community. I am also an old friend of Hazel Henderson - What are the key opportunities for going and in 2003 we organized together a big confer- beyond GDP? Some of those have just been ence on indicators on quality of life and sustainable discussed. development and that’s the reason why I’m here. - What is feasible in the short to medium term and how can implementation be improved? • Peter van de Ven Statistics Netherlands - And then thirdly: How do we meet the needs of policymakers, key institutions, business, media My name is Peter van de Ven. I have more than and the broader public? 20 years experience in national accounts. I still like national accounts very much. My present posi- So I suggest we start maybe with the ﬁ rst question is director of national accounts at Statistics tion: “What are the key opportunities for going Netherlands. I have been and I still am heavily beyond GDP?” Does anyone have a question along involved in international discussions on the con- those lines?

172 Beyond GDP: Measuring progress, true wealth, and the well-being of nations 19 &20 November2007 environmental integrated accounting, avery 1993 andtheSEEA,system ofeconomicand to suchanissue.Inmy viewgoingbackto perhaps wecanseewhat wouldbetheapproach I thinkthatitisadif certain products. because whenyou gotothe shopyou lookat aggregated level butalsoproductbyproduct, an estimateoftheunpaidcost,notonlyat So thequestionis:areweabletocomeupwith the pictureabit. remuneration ofproducedcapital,tosimplify paid, i.e.theremuneration oflabourandthe what you seeisonlyare when you gotoashopand lookattheprice, which areinvolved inmarket transactions. So paid except forasmallpartofthenatural assets course thisisnotre that weareconsumingpartofnature.And to policy-makers buttothepublicatlarge,is which isincreasinglyclearinmy viewnotonly and fundamentalproposalbecausetheissue, In my viewthiswas avery, very interesting my point. the expressionwas notperfectbutthisis called theenvironmental price.Unfortunately price tobepaid,andthissecondwas shop-owners – toaddasecondpricethe proposed toshop-owners– the bigchainof was madeandtheministerinchargeactually what aretheunpaidcosts.Andsuggestion was raised on,howtoshowpeople,consumers, ronmental conference,theinterestingquestion which was bothapolitical,economicalandenvi- Conference.” Inthecontextofthisconference, has beencalledthe“GrenelleEnvironmental In France inrecentmonthstherehasbeenwhat in thecontextofnationalaccounting. question whichperhapscanbeusefullystudied will notanswerthequestion,butIraise a success ofthesystemnationalaccounts.I said, onhowtotrytake advantage ofthe of 19 but nationalaccountingdidnotexistinthe Ven, nearlyfromthe19 de van Peter probably anoldernationalaccountantthan Vanoli,I amAndré anoldnationalaccountant, • the Environment whichisactuallyastatistical the Scienti eso ae Breakoutsession:Keyneedsandwaysforward Session 3–Panel 1 fi ce. I will elaborate on what Peter van de Ven de van ce. Iwillelaborate onwhatPeter th The FrenchInstitutefortheEnvironment André Vanoli century. InFrance Iamretired,butchair fi c BoardoftheFrenchInstitutefor fl ected inthecoststhatare fi cult questiontoanswer, fl ection ofthecost th century… tution, it’s whatismostimportant… will agreewithmebutit’s notanissueofinsti- on environmental issues.IsupposeJacqueline substantial. Andmy advicewouldbetofocus of notachievinganything reachingsomething wide. Ifyou want todo too muchthereisarisk the conferenceasawhole–isperhapsbittoo mean onlytheworkshopbut conference –Idon’t I am afraid thatperhapstheobjective ofthis demand. Andinmy viewthisisabasicissue. could beallocatedtothevarious partsof estimates ofunpaidcostsandtoseehowthey certain mainissues.Oneistotryhave global me thatitwouldbenecessarytoconcentrate on able toanswerthisquestion.Butitseems tion isinyour countries,butwearenotreally raised knowwhatthesitua- inFrance, Idon’t main objective. Andnowadays thequestionis been pursuedinsteadofconcentrating onthis reasons toomany objectives inmy viewhave give avisualsymbol.Unfortunatelyforvarious the costofnotdegrading theenvironment, to is whatwouldbeorhave been was theestimateofmaintenancecost.That important pointwas stressedatthetime: it make therightdecision. of pricesforproductsto helptheconsumers second approachwould betohave amultitude havebecause you tomonetisethings.The don’t might bemoredirect,ismaybe lesspolemical the previousspeaker was defending,andwhich Then thesecondapproach,whichapparently prices, you needacorrectprice. needamultitudeof correct price,you don’t on obviously, istosay: whatyou needisthe one theenvironmental economistsareworking in it.Somaybe oneapproach,andthatisthe then themonetarypricealreadyhasthosecosts taxes fortheenvironmental costsorwhatever, If you have themonetarypriceandifyou have that wewant thingstobein prices. them atthesametime.Oneofistodecide between, orwecandecidetogoforbothof Basically wehave twoapproachestochoose is relevant. the issuethatpreviousspeaker broughtup I amanenvironmental economistandIthink • Lisbon University, Portugal Catarina Roseta-Palma fi nal 173

Workshop OPENING AND DISCUSSION OF WORKSHOP

Now I think we should be clear about what we’re communication their job? A lot of statisticians feel proposing. We don’t want to do both at the same that when they put fi gures out their job is fi nished, time because that would be wrong. For example, while of course it is not, at least in my view. And imagine you have a carbon tax and the carbon so it’s diffi cult to convince not only statisticians content of the product is already being considered but other institutions that the communication of in the price, then you don’t need to have a spe- information is part of the role of knowledge build- cifi c indicator for carbon content in the product. ers. This is a big shift in the culture of statisticians This relates to a question that I had before the and again this requires investment. previous speaker took the fl oor, and this question is directed to the statisticians in the room: how advanced are statistical systems in terms of price • Jeff Mason valuations for environmental or social indicators? Chairman Especially environmental indicators where I know that a lot of work has been done, but it is analytical I’m going to come back to you in just a second. work. There’s a lot of methodological discussion on We’ve got three comments. I’m going to start by what’s the best way to analyse monetary values saying as journalist on the panel “good communi- for environmental goods. And so, how has this cation is very important to us.” If you have a mes- been incorporated into statistical systems? These sage that you want to get across to a journalist, are not observable data, these are data that are just throwing a bunch of numbers at us without constructed by people working in the fi eld and I a little bit of interpretation will be less successful. was wondering whether these data are useful; So I am pleased that you brought that up. are they considered; are you thinking of including them in the statistical systems? • Peter van de Ven Statistics Netherlands • Enrico Giovannini OECD Well the fi rst issue is about valuation and how to show people the unpaid costs and how advanced I am not sure, Peter, that past experience with are our statistics to do that? Let me fi rst stress national accounts could be taken as a good model that, in my opinion, it is important to have this to go forward. The community of national account- kind of research and this kind of experimenting ants at the beginning, and even now, is relatively on the valuation of these costs. On the other hand small, and the number of those who have the however, I think at the moment that we are not capacity to produce data according to national so far that we can integrate these kind of valu- accounts, which is big machinery, is very limited. ations into offi cial statistics. When you look, for Today a lot of people are trying to put forward example, at the interrelationship between envi- indicators of wellbeing or other environmental ronmental pollution, the effects on ecosystems measures and we cannot close the door to those and backwards, and the effects of ecosystems on who are trying to do it. The real problem is how the services that the economy derives from the can we try to build a taxonomy that brings together ecosystems, we hardly know how this relationship the existing taxonomies? This is one of the most works. And to value this, to put it into money, is important issues and we are working on this with too complicated. A fi rst step could be to value and some people in San Francisco, who are trying to subtract depletion of natural resources. We are develop algorithms able to transform the natural well advanced in that fi eld, but when it comes to language into taxonomies in order to understand ecosystems it’s too diffi cult. what these hundreds of initiatives around the world are developing in terms of taxonomies. So this is Another point I want to make, is that we are not something that we need to do, otherwise we will only dealing with a statistical problem; it’s also give the impression of tremendous confusion, while a societal or a political problem. We know what my guess is that in the end the key words are not happens to the environment, we don’t need sum- so different around the world. mary indicators to show that we are using up our environmental resources. Still we do not act upon My second very quick point is about what can we it. And then I come to what Enrico Giovannini said do in actual terms, also in the short run. I think about the importance of communication. In my that communication is so important that we need opinion, as statisticians, we should do a better to invest. But to do that, the fundamental question, job in communicating. Sometimes, we put too especially for statistical offi ces, is: to what extent is much emphasis on economic growth. Instead,

174 Beyond GDP: Measuring progress, true wealth, and the well-being of nations 19 &20 November2007 GDP because economicgrowthisvery important. GDP. It’s very dif the nextindicatorsetmust beacomplementto re The cation andhowtosensitize thepolicy-makers. There isanotherproblemintermsofcommuni- need togoaheadstepbystep. is astartingpointprobably, andIfeel thatwe resources. We have environmental damage.This indicator. We alsohave the depletionofmineral ment toanindicatorlike thegenuinesaving probably needtodoamethodologyimprove- of educationandweneedtobalancethat.We but wehave someproblemswiththeoutcomes because wehave highlevels ofexpenditure, We have alotofproblemsinPortugal withthat compatible withoutcomes. I thinkthat’s very importanttomake expenses probably missingtheoutcomesforeducation; with expenditures,educationexpenditure.It’s capital anddepreciation,human tant components:buildcapital, genuine netsaving becauseithasthreeimpor- son wehave chosenlotsofdifferentquestions answeratthesametime.Thatisrea- can’t need togatherthemtogether. AndIthinkwe for energy. We have madesomestepsbutwe and energy. We have NAMEA,nationalaccounts natural capital,like depletionofnatural capital, attempt toimprove somecalculationsabout initiatives, andsomeindicatorsthatmake areal side thebox. Becausewealreadyhave some think thatatthismomentweneedtoout Yes, IagreetosomeextentwithPeter, butI • on broaderpicture. this monitor, wewant toprovide information and theSocialCultural PlanningAgency. With Forecasting, theEnvironmental PlanningAgency, planning agencies,theBureauforEconomic venture betweenStatisticsNetherlandsandour monitor onsustainability. Thisisaco-operation have concreteplanstodevelop andpublisha do. IntheNetherlands,forexample,wenow tant thingsaswell.That’s somethingwecan growth, andshowthatthereareotherimpor- tal orsocialprogressonaparwitheconomic we shouldputotherindicatorsonenvironmen- publish somedatalike GDPWorldwide.think I is credibility. We needaninstitutionthatcould eso ae Breakoutsession:Keyneedsandwaysforward Session 3–Panel 1 fl ected inmonetaryvalues. Thesecondone Environment Ministry, Portugal Carlos Figueiredo fi rst isthatweneedtohave indicators fi cult tocreateanalternative to fi xed formation in ordertointroducethingslike The thirdoneisthatweneedmoreadvances improvements have alsotaken placeduringthe a very importantreferencesystem.Alotof included inthenationalaccountsbecauseit’s And very easytheaggregatecomponents. of indicatorsisre posite indicator, buttheevolution ofthesekinds Another thing:it’s very dif makers’ awareness. step; it’s very importanttoheightenthepolicy- and forestry. AndIthinkweneedtogostepby indicators arenotincluded,forinstance other wealthstocks,becausethesekindsof of re with thesekindsofindicatorsandexploreways something like that.Butweneedtogoahead some improvements inGDP, like GreenGDPor We needtoadjusteconomicgrowthandmake really challengeourselves inthatrespect. to usetheinformation,from thebeginning,and munication butalsoallthe peoplewhoaregoing more tointegrate peoplethat dealwithcom- for thatreason,Ifeelisweneedmoreand in whichyou’re elaborating thatthinking,and yourself andyour way ofthinkingintheprocess alone, you know. You have to reallychallenge work on whatyou said,tothinkthe box doesn’t work.AndIthinkthat,building And thatdoesn’t complex workthatmaybe tookustenyears. there andunderstandsin ever, andthenwe pretendthatsomebodygoes statistician orasasocialentrepreneurwhat- work.Becausewe didn’t stand why thesemulti-disciplinaryapproaches understanding. Ittookmealotoftimetounder- are about. Ithinkthatweareinanera wherewe need peopletounderstandwhatwearetalking tors, amongdisciplinesandlevels, we are togetintomoreco-operation amongsec- for theera inwhichwearein.Becauseifyou question ofcommunication,whichiscritical I justwant tomake abriefcommentaboutthe • forget that. last decadeinnationalaccountsandwecan’t REDEH, Brazil Thais Corral fl ooded withinformationbutvery little fi fi ning thesecalculations. nally, these kindsofindicatorsmustbe fl ected inmonetaryvalues, it’s fi nish doingajobas fi fi cult tohave acom- ve minutesallthat fi sheries and sheries fi sheries 175

Workshop OPENING AND DISCUSSION OF WORKSHOP

Of course maybe we will go less quickly but we will So we have to create a system which builds from go further. And I think that’s what we need now, the bottom. If we just have a top-down system, it and I like that sentence of Al Gore, “if you want to remains an academic exercise. People won’t relate go quick you go alone, if you want to go together to it, so if you’re going to have national accounts and far you have to see that it will take more time”. of wellbeing, it’s got to be a bottom-up process, And I think that time now is very helpful. and that’s my plea. Thank you. Nick Marks, New Economics Foundation. And the second point I want to make is about including the price in the products. I also think that we have to take into account the effort that • N.N. was done over the years by all the people that built the certifi cation process, which is not so clear I would like to say more or less the same thing. in this environment but very helpful in terms of Today we have a kind of disequilibrium. We are in a responsible consumption. good position to produce indicators as Peter van de Ven said. We have good indicators, we have good institutions. All this is functioning, but the problem • Jeff Mason as he said is what do we want to measure? And Chairman the next question is who is the ‘we’? Who decides what we want to measure? That is the problem. Just a reminder that the second two questions on our list were: First of all it is a problem of democracy, which is to choose the right indicators we want for society. - What is feasible in the short term, short to The indicators, for instance, the government can medium term, and how can implementation be choose what kind of indicators they want. We do improved? it in the Council of Europe for instance. We have and some benchmarks we defi ne together between - How to meet the needs of policymakers, key governments. And also at local level. When we say institutions, business, media, etc? we speak about well-being, what is well-being? We want to measure well-being, but who is able to say what is well-being? So we have to get the • Nick Marks citizens themselves to tell us What they consider New Economics Foundation their own criteria for indicators of well-being. We always say we need to make things understand- I want to address the last question about how to able and useful and communicate well. We are make it useful for policymakers. Policymakers are always in the same framework, which is that we interested in adding value and it’s a question of are producing indicators and we want the people what we value. And it goes back to your fi rst point, to use them. We have to change that. We have to Peter, what are we trying to measure here? start from the democratic process and help them to build it. The technical services are a good place I think what we’re trying to measure here is people’s because they can help. We have done it in some lived experience; it’s their experience of actually cases and showed that it is possible. what services provide and what national governments provide. And we have to get into the realm of the subjective if we’re going to do that. So in the • N.N. UK local governments are very, very interested in wellbeing, because they know that they have cer- This trade of information for decision-making has tain economic situations which they can’t control. been going on for quite a while. But what service provision can do is affect people’s experience of their life. So if you’re going to create What has developed quite well over the past 10-15 a system of national accounts, you’re going to build years is our ability to look ahead, to make forecasts. them up from the bottom. I don’t think there’s any Scenario driven, model based outlooks. way that they’re going to be useful if they’re not built from the household upwards, through the local One of the short-term possibilities is to take the authorities, through super output areas where you sometimes crude indicators that you have. A set can see where deprivation is felt and experienced, like Peter van de Ven said to show trade-offs and where crime is experienced, where fear of crime apply them in a forward-looking manner like GDP is experienced, and that’s how we have to do it. has always been forecast traditionally. As a very

176 Beyond GDP: Measuring progress, true wealth, and the well-being of nations 19 &20 November2007 producing is “toaddvalue.” production, value added,andthede national accountsand incomemeasure because theyarenotproduced byman,whereas outside thenationalaccounts, whichislogical the nationalaccounts.Also, theirlossesremain goods humanitydisposesof, remainoutside tions, whicharethemostfundamentaleconomic ent. Byde environment, onwhichhumanlifeisdepend- possible usesofthenonhuman-madephysical environmental functionsarede remain available forfuturegenerations, and which ensuresthatenvironmental functions for themaximalattainableproductionlevel, an importantone,becauseitisindicator ity. That isonlyoneaspect,butitmightbe are preferencesforenvironmental sustainabil- There isoneindicatorthatassumesthere takes toomuchtime. on assumptions.Iwillnotdothat,becauseit tions. ItcanbeshownthatGDPisalsobased measure. Whatwecando, ismake assump- these indicatethepreferencesthatwecannot and welfareissimplysatisfactionofwants, and key totheproblem.We cannotmeasurewelfare be given becauseofpreferences.Thatisthe rates ofeachaspecttheseindicatorscannot because theyentailcon it isnotagoodideatobuildcompositeindicators I wouldlike tomake twocomments:oneisthat a previoussession. with Jan Tinbergen, whosenamewas citedin than 40years. I’ve alsopublishedtogether I’ve beenworkingonbeyond GDPformore • work onthat. that’s partofthediscoursenowandwecan outlooks includingprojections.It’s something reporting toSpringCouncilbasedonworldwide to thestructural indicators,astheindicators be feasibletocobbletogetheracomplement 10-15 years. That’s thedifference.Soitwill less becomeaccustomedtothatover thepast Decision makers andtheaudiencehave moreor this sortofprimitive butstillfeasibleforecasts. worldwide environmental outlooksthatinclude next springthattherewillbenolessthanfour on, itisbysheercoincidencethisautumnand short-term opportunitythatwecancapitalize eso ae Breakoutsession:Keyneedsandwaysforward Session 3–Panel 1 National Income,TheNetherlands Foundation forResearch onSustainable Roe fi e Hueting fi nition, theseenvironmental func- fl icting goalsandthe fi ned asthe fi nition of nition Third,sustainablenationalincomeprovides - Second,sustainablenationalincomerelates - First,sustainablenationalincomeistheonly - has fourfeaturesthatnootherindicatorhas: This indicator–sustainablenationalincome damental environmental functions. production level thatleaves intactthosefun- able nationalincome.Thisisde national income,theenvironmentally sustain- and maybe alittlebitbetter, isthesustainable least thesamelivingconditionsaswehave, in suchaway thatfuturegenerations have at Based ontheassumptionthatwewant tobehave about that. maybe theEuropeanUnioncould do something indicator hasnochance ofbeingdeveloped; important andscienti So weareinasadsituation thatmaybe themost national income,thosesubsidies werecancelled. Parliament tosubsidize furtherelaboration of although theDutchgovernment promisedthe a very seriousproblem.The sadthingisthat So thereisabiggap. We aretalkingabout about 50%ofthecurrentproductionlevel. Netherlands, andthatestimatetooarrived at more advanced estimate was madeforthe duction andconsumptionisunsustainable.A at about50%.Thatmeansthat50%ofpro- for theRioConferencein1992andwearrived Tinbergen andmyself income was madebyJan The Inthefourthplace,sustainablenationalincome - the distancebetweenactualproduction I cannotshowyou atthemoment. the economy hasshownina Ecology relatestosubjective preferencesthat to themeasurable, physical environment. the systemofnationalaccounts. mated inaccordancewiththeconventions of standard nationalincome,becauseitisesti- indicator whichisdirectlycomparable with tions available forfuturegenerations. de further away fromenvironmental sustainability, or not,asIsaidalready, acountryisdrifting the courseoftimeandthusshowswhether shows thedevelopment ofthisdistancein or towards it. a countryisdriftingaway fromsustainability provides thisdistance,so itshowswhether level asmeasuredinnationalincome.Itthus fi fi rst roughestimateofsustainableworld ned askeeping vitalenvironmental func- fi cally bestunderpinned fi fi ned asthe gr which gure 177

Workshop OPENING AND DISCUSSION OF WORKSHOP

• Victoria Thoresen • Carlos Figueiredo Consumer Citizenship Network, Norway Environment Ministry, Portugal

I have a comment and a question related to the I think that these are very good questions, but we reasons that we are here. We asked what are we are still at the beginning of this debate. On the one measuring. We have heard much discussion this hand we need to have indicators that need mobili- morning about indicators but very little about the sation of statistical institutions, governments and human development index, which I have under- society in general in order to simplify the methods stood UNDP based very much on theories of needs. and to clarify the contents of these kinds of indi- Yet as was mentioned, needs change. This is a cators. It is my feeling that some indicators need problem, but one of the basic deﬁ nitions of human universal application and need to have some cred- development was participation in decision-making. ibility in order to be useful for policy-makers. If this is one of the key indicators of human development, than it is interesting to see that in the ISO There are a lot of indicators all over the world, - International Standards Organisation – process like ecological footprint, happy planet, and so on. on developing standards for social responsibility There are a lot of indicators like this, but we need for all organisations in the world, which is going to create an environment in order to put some on at present, they also focus on stakeholder people together to discuss that. It is very impor- involvement as one of the criteria for measuring tant to make a linkage with national accounts and social responsibility, because this also changes the recent improvements in national accounts, constantly. because we have some physical indicators, and monetary indicators. So we need to correctly adjust So my question is: if we are talking about bottom- the concept of sustainable development in order up, if we are talking about democracy, perhaps one to put different indicators to use. I think that we of the most important criteria that can be devel- need to go step by step. oped in whatever indicators we now work on, or choose to focus on, is participation at grass-roots level, which again will connect with the question • Thais Corral of dealing with communication; because if people REDEH, Brazil there to help make the indicators, then they will understand them better when they are made. So From what I have heard here and from what I I think we have to consider that very carefully in sense and feel after all these years working with the our work today. information, one of the challenges that we have is to maintain the integrity of the information and the methods we know about, in order to guarantee the • Ruut Veenhoven diversity of the needs, the need for participation and Erasmus University, Netherlands the actual use of the information. I think that is still a challenge, because we do not know exactly how I would like to pick up on the question Peter Van to do that. Even in what I see as multi-stakeholders der Ven raised: what do we want to know? Well, processes, it is still at the very beginning, because it one of the things we want to know is how we can is more or less the same people that continue to go save the world, while leading a decent life? I think to the same meetings, because these are the people an answer to that question is in the Happy Planet who actually know about it, and can understand the Index by the New Economic Foundation, which on level at which we communicate those things. How can the one hand takes happy life years in nations, and we really make information useful for the different on the other hand, sees how large the ecological levels, so that people can really make something footprint is, and allows us a picture of how efﬁ cient out of that information? That is still a challenge. We countries are in realising good quality of life while do not know the answer yet. at the same time preserving the environment. The other point I want to comment on is this whole This is a very simple index which everybody under- new trend of happiness and how we measure stands. It is not yet perfect. We have data problems happiness. We also have to consider the diversity but these can be solved pretty easily. in that, because they are situations in which happiness is very different. In the city where I live, I think that for most people nowadays happiness is just to feel safer, and just to be able to go out on the street. So it is probably very different from

178 Beyond GDP: Measuring progress, true wealth, and the well-being of nations 19 &20 November2007 ademocratic processtode - theneedtohave abottom-up approach, - things like: key messagesIgot fromthesessionincluded here andtohearthevarious presentations.The Just avery quickone.Iam very pleasedtobe • comment? Does ourRapporteur want tomake any • because oflacktime. asking therightquestions.Iwillleave itatthat, that point.Butiswheresciencestarts, urement issues.Iammuchmorehesitanton opinion, however, whenitcomestothemeas- on asustainablepath?We have differencesof What wouldnationalincomebe,ifwehadbeen with Dr.Hueting onthevalidity ofhisquestion: On SustainableNationalIncome,Ifullyagree policy happen. society theinformationtheyneedtomake this to thatneed,andgive politicians,togive as statisticianshave aresponsibilitytorespond factors, whenitcomestosocietalprogress?We from society, frompolitics:whatareimportant isticians, weshouldbemoreopentofeedback democratic processisavery valid point.Asstat- in othercountries.So, whattomeasure?This be safetyinRiodeJaneiro, andotherthings know whatdrives happiness.Asyou said,itmay cannot make apolicytoactupon.You needto factors drivingthishappiness.Otherwiseyou On theotherhand,you stillneedtoknowthe that. Itisvery valid, very goodinformation. of happiness,indeedweshouldknowmoreabout About subjective well-beingorthemeasurement • challenges wehave intheworldtoday. embrace thatdiversity, whichalsore Norway orDenmark.Ithinkwealsohave to the way wearegoingtolookathappinessin eso ae Breakoutsession:Keyneedsandwaysforward Session 3–Panel 1 to bemeasured, and United NationsEnvironment Programme Fulai Sheng Chairman Jeff Mason Statistics Netherlands Peter vandeVen Rapporteur fi ne what needs fl ects the ects fi nal , of you. ApologiestothepeopleIhadcut Thank you tothespeakers. Thankyou toall • take thisworkforward. the kindofdirection,inwhichwewouldlike to fully begettingcloserperhapstodetermining questions thathave beenraised, wewillhope- though wemay notbeabletoanswerallthe Hopefully, asaresultofthisdiscussion,even should beopen-mindedtodifferentpossibilities. several times,thisisnotabeautycontestandwe other kindsofindicators.Butaswehave heard familiar withforthelasttwodecades,andalso sustainable nationalincomewhichIamvery rest ofyour day. Please keep thedialoguegoing,andenjoy the to thoseofyou whoIwas notabletocallon. off orencourage tohurry, andapologiesalso the systemsthataredeartopeople’s minds, We have heardseveral propositions,someof issuesincludingalsotheneedfordiversity, - for differentkindsofindicators. Chairman Jeff Mason 179

Workshop WORKSHOP - PANEL 2

Isabelle Cassiers Professor of Economics, University of Louvain and National Fund for Scientiﬁ c Research, Belgium

As a panellist invited to the expert workshop, I shall We should recognize that we live in a kind of comment on the key points to which the speak- schizophrenic society: ers were asked to react. I shall tackle four issues: - On the one hand we know that the path we are on is not sustainable and brings forth questions on life satisfaction: this conference, many NGO’s 1. Beyond or beside GDP? activities, and some academic work on the sub- ject bear witness to this trend. We should be coherent about the status of GDP. - But on the other hand we are ﬂ ooded by adver- One of the key points raised for speakers (The tisement and by all kinds of encouragement to merits and limitations of GDP) states that: consume, and produce, and drive and ﬂ y as much as possible. “GDP is not an indicator of well-being or welfare; it is an indicator of economic market activity; Going beyond GDP requires addressing this it does not pretend to be an indicator of well- contradiction. being or welfare, but some use it as such; GDP growth is not necessarily a progress indicator, In the same line, the move beyond GDP is an implicit though the news often portrays it as such”. recognition that the market cannot respond to our aspirations and that there is today a strong need We now have a consensus on this statement. for public intervention, from local to global. This Nevertheless, another key point (New tools need might also encounter some political resistance. to be applied to measure progress, wealth, and well-being) suggests that : 3. Consider the distributional concerns

“More adequate indices of progress, of wealth and The distributional concerns are not included in well-being must include environmental and social the Core messages. Inequalities (not only income indicators, in addition to the traditional economic inequalities, but also unequal access to education, ones.” to healthcare, to culture) have risen during the last thirty years and will probably still rise in the future, The expression “in addition” is questionable. If we despite the millennium goals. On this point we are agree that GDP is not an indicator of well-being, if moving backward as compared to the model that we recognize the existence of negative correlations was set up after the WWII, at the time when GDP between GDP growth and the quality of life, then was implemented. Besides the fact that inequalities why should we keep it as a ground for a new indi- are often felt as a limit to social wellbeing, inequali- cator? Of course there might be a strategic issue ties give in fact more power to the wealthy citizens here. Leaving GDP aside might appear unfeasible and hamper the democratic process of redeﬁ ning in the short run and nevertheless be kept as a long the progress of societies. On the move towards a run target. In any way the status of GDP should more even share of income and wealth, we might be explicitly stated, otherwise the risk is that huge as well encounter political resistance. efforts eventually lead to very minor changes. 4. A normative issue that requires 2. Economic interests against a democratic process challenging GDP Being a normative issue, the move beyond GDP cannot be a technocratic process but must be We should put more emphasis on the fact that rooted in a democratic ground, because it is. A there are strong economic interests involved in question such as “Where do we want to be in ten pursuing economic growth without restriction and year time” has to do with values and ends. If we in keeping GDP as proxy to well-being. seriously want to address the question of what is

180 Beyond GDP: Measuring progress, true wealth, and the well-being of nations 19 &20 November2007 eso ae Breakoutsession:Keyneedsandwaysforward debate onGDPandthede That majorinstitutionshave launchedacritical possible andatevery stageoftheprocess. be allowedtoexpressthemselves asmuch well-being andhowtoenhanceit,peopleshould Session 3–Panel 2 ﬁ nition ofprogressis and sustainableconsensus. cratic way. Thisistheonlychanceforabroad questioning asfarpossibleandinademo- pivotal, butitisnowcrucialtowidespreadthe 181 ©Photo European Parliament

Workshop Workshop

Jean Gadrey Professor of Economics, University of Lille

I largely agree with Isabelle on her four points. we want to go beyond GDP in a way that is coher- In less than ﬁ ve minutes I will only insist on two ent with the three pillars of sustainable develop- complementary questions and a few key opportu- ment policies, which is a condition of success in nities that I’ve personally experienced. my view.

First question: If we want to enlarge the circle For environmental factors or for well-being con- of stakeholders for new indicators, what is the tributions such as leisure time, domestic labour, main political change? Do we need sets of multiple unemployment costs, and so on, progress has been indicators or synthetic indicators? made towards economic valuations even though other good methods exist. But it is much more Answer: we need all types depending on what they risky to give economic valuation to contributions are intended for, but considering the aim of this such as equality between men and women, social session, I defend a limited number of synthetic indi- security, decent work, and so on. This is why most cators as key opportunities for three reasons: existing indicators in these ﬁ elds, beginning with the UNDP’s one, are based on a weighted aver- 1. If we want to challenge the excessive attraction of age of selected variables and this is why they are GDP in public debates, sets of multiple indicators often accused of being arbitrary. In my view, this are simply in a position of unfair competition. is unfair. As far as we recognize that any indica- For citizens, for policy-makers, and the media, tor, even GDP, is based on value systems and on synthetic indicators are more appealing. Oliver judgement of what is worth measuring and what Zwirner’s presentation this morning was based is not, we should also admit that it is possible to on them, this is an indication. organize democratic debates on what should be included in a synthetic social indicator and on 2. It is true that they have serious shortcomings, the weightings. That could even be a remarkable but they are young and they will increase in contribution to policy design and to democracy. It reliability. is an opportunity.

3. They lead people who discuss them to go beyond And the last opportunity: There is a rapidly them, and to enter the complex ﬁ eld of the sub- growing interest in local indicators, whether syn- indicators on which they are built. They may thetic or not. I am convinced that the popularity of open up some very rich debates. European policy for a proper use of new indicators will largely expand on a local and territorial basis Second question: How to take care of social in the future. This is a key opportunity that I have considerations in new synthetic indicators? This is also experienced. another challenge and an opportunity to grasp, if

182 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 3 – Panel 2 Breakout session: Key needs and ways forward

Paul Hofheinz Lisbon Council Workshop

I’m from the Lisbon Council. We’re a think tank. have here. The main difference is growth, and We have as our mission the Lisbon Agenda and GDP in particular. Let me just say that when we do a great deal of work in all areas trying to I say that I’m not standing up for any economic make that process happen. We can talk more interest, quite the opposite. It’s GDP, it’s the about it later if there is interest. strength of our economy that has allowed us to invest heavily in public health, that has given I’m going to take issue slightly with some of us this thing that we call the European social my fellow panellists here and with some of model that we fi nd so precious, that pays for an what we heard this morning. I do think there enormous number of social advances. I think you are some points of consensus, here and I will ignore GDP as a social indicator at your peril. It end on the points of consensus, but I want to is one thing to sit here in Europe or perhaps in start out talking about differences before we a country like Sweden and say GDP no longer move into the less controversial areas where I matters. But go and say that in Botswana and do think we can agree. you will hear a very different explanation of why this process is important. Let me stress that the areas where we agree are probably the most important. We agree on We can talk about inequality in the world in a what needs to be done. There may be a bit of moment, which is related, but I’m going to set a difference in the diagnosis. that aside for now. I do think there is a very big problem with GDP, and not simply with GDP but I think GDP is really important and that it is a with the entire range of indicators that we use social indicator and let me tell you why. If you go to think about the economy today. The problem back to the world 200 years ago – Ms Cassiers, is that those indicators are stuck quite fi rmly I think you are a professor of economic his- in the industrial era. It is still essentially based tory, are you not? – I’m going to talk about the on the assumptions that the world had in the historical development and I suspect you have 1930s when these indices were created. a different interpretation or you couldn’t have said the things that you did. So what’s different between that era and ours? I would argue that there are three things that In the year 1820, the standard of living here in are very important: Europe, where we are today, according to the very good economic historian in the Netherlands, - The fi rst one is that in the 1930s we didn’t Angus Maddison, was roughly 90% of the stand- think of the earth’s resources as limited. ard of living in Africa today. The world was a Now, anyone who is honest and reads the very poor place 200 years ago. Most people newspapers and follows the public debate lived until their mid forties; that was the life understands and accepts that we have a very expectancy. Most women had seven or eight serious problem with the way we are using children, the majority of whom would not reach the world’s resources and are going to have adulthood. Obviously an enormous number of to make important, vital changes in precisely things have changed in the last 200 years, in that area in the next 20 years. By the way, particular here in Europe. What you fi nd today they are going to be hard but that doesn’t is a very different standard of living. You fi nd a mean that we don’t have to make them. very high standard of living in the industrial part of the world. You continue essentially to have a - The second big difference is most of us standard of living in Africa that is roughly the are no longer working in manufacturing. same as it was here 200 years ago. They have Manufacturing is still about 20-25% of our not made progress in the same way that we economy, but it no longer drives jobs. That’s

19 & 20 November 2007 183 Workshop

been the case for three decades now. If you The second is inter-generational accounting. There look at the statistics, you’ll see I’m correct. Long is an awful lot of very interesting work going on in before any of us heard of the word ‘globalisation,’ that area right now. I would argue that if 60 years we were losing jobs in manufacturing. We’ve ago we did have a very clear division in our econ- been taking on jobs in the service sector and omy between labour and capital, the principal that is why our economy continues to expand. division we have today is between generations. We We’ve also been losing them in agriculture. The have a generation alive right now that is frankly three principal sectors of the economy: agri- consuming the resources of the generation right culture, industry, and services are moving in behind it. That’s true in the environment where different directions. Losing jobs in agriculture we have a generally clear understanding but it’s and manufacturing, gaining them in services. also true in our social system too. There has been a real delay in reforming social systems in ways - The third area that I think is profoundly different that are putting genuine strain on their ability to now, and we can discuss this if you like, is that deliver equity in the 21st century. We need to pay we no longer have a very clear division between much more attention to the way that generations labour and capital. I think that 60 years ago manage the earth’s resources, one for the other. we absolutely did. There was much less access to education, there was very real poverty here The third would be the nature of our workforce. in Europe. We still have it but not like we did I mentioned the three sectors, and people often 60 years ago. throw out the statistic that 70% of our population is working in the service sector. I don’t think we A couple of things have changed. One of them is know or understand the service sector nearly well home ownership. You have much broader home enough. It lumps together far too many things ownership throughout Europe and indeed the ranging from architects and engineers to janitors industrial world right now. Those home owners and what we sometimes call McDonalds jobs. There – are they labour or are they capital? And also are very good jobs in the service sector and we pensions. Because whether we like to admit it or need to try a lot harder to understand better what not, a lot of our pensions are tied up in the global the service sector means, because as I mentioned capitalist system. They are invested out there in a moment ago, the service sector is the only sector various ways. The point I’m trying to make is that of our economy where we have been adding jobs the distinctions that used to be fairly clear to us for 30 years. If – we want to attack our employ- 60 years ago are no longer so clear. Where we ment problem, it means we need to add jobs have unclear distinctions, it leads in my view to there not in McDonalds jobs, but in good jobs in shabby thinking. the service sector.

Let me give the six areas where I think that we The fourth, an area in which the Lisbon Council do need to work on statistics. I hope and believe has been quite active, is human capital account- that there will be some consensus around this area ing. In an era of globalisation, if we are going to even if there is not on the diagnosis. go to our population and say that this transition is important, you are going to have the highest The fi rst one is green growth. I think that to say wages in the world, you are going to have the most that we will solve any of our problems, in par- generous social welfare system in the world, and ticular the social ones, without growth is simply you’re going to do it by high value-added work, we incorrect. There is a wealth of evidence to support need to do much more to develop people’s minds that. But that doesn’t mean that we can afford to give them the capacity to develop themselves. the same type of growth that we have had. We Not just as children but through life-long learning need to fi nd a way of looking at our statistics and throughout their lives and anything that statistics forcing it – as a bare minimum – to give us the can do to help us understand that is useful. We cost of carbon. We cannot continue growing by have a project at the Lisbon Council called the treating our atmosphere, as Al Gore put it quite European human capital index where we have memorably, as a giant sewer. It is in many ways been trying to measure this as a way of shedding up to the statisticians to help us understand that. light on it in the public policy domain. To help us understand the cost of carbon and the cost of excessive use of environmental resources The fi fth area is benchmarking. We can do an awful so that we can track it and improve. lot more there, including some fairly simple things. In particular, benchmarking where we stand versus the values that we profess. A perfect example is

184 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 3 – Panel 2 Breakout session: Key needs and ways forward

Kyoto. We talk about Kyoto all the time and it’s I was going to say something about Pisa and a source of pride that we have signed it and what’s happening in education. We have a ten- embraced it, but very few European countries dency to talk a lot about social inclusion whereas will meet their Kyoto targets by the year 2010. our statistics tell us that we are doing very badly Workshop In fact, there are only two, according to two on that, in particular in immigrant communities. studies that have come out from the IPPR and Pisa tells us that when immigrants come here, the European Commission. The two are Sweden fi rst generation immigrants do better on their and the UK. The reason is particularly interesting Pisa than second generation immigrants. is that Sweden and the UK are also two of the four countries that will likely reach their Lisbon Last but not least, is something that my col- targets on employment. There is a fair amount leagues mentioned and with which I totally of evidence out there that if the policy mix is agree. Gini coeffi cients. It’s a very important right, there needs not be a trade-off between area of analysis. The problem with Gini coeffi - jobs and environmental standards. That may cients – this sounds strange – is that the analysis sound obvious to you, but read the newspapers. behind it is important and we need to fi nd a way Quite often environmental standards are being to get better measurements of inequality into attacked as job destroying. They are not. We the public domain. can use statistics to settle that argument. ©Photo European Parliament

19 & 20 November 2007 185 OPENING AND DISCUSSION OF WORKSHOP

• Aldo Ravazzi will open the ﬂ oor at the end for comments, and, Ministry of Environment, Italy, if we have time, the speakers will come back with Chairman of Workshop Session 3 Panel 2 comments on the comments.

My name is Aldo Ravazzi. I happen to be an econo- This is a session, like the two other parallel groups, mist lost in the jungle of the Italian ministry of trying to fi nd ideas to see where we are and how environment. I also happen to be chairing the OECD we can go forward. It will be an open discussion. committees for national environmental policies and Professor Anil Markandya has been asked to be for taxation and environment. our rapporteur in the plenary. I have also asked him to give us his opinions since we cannot lose The reason I have been asked to facilitate our this opportunity to have him with us and hear discussion here, I imagine, is because Italy has what he thinks. recently moved forward an important ‘delegated law’ as we call it, on environmental accounting With your permission, if the rules of the game are clear, and budgeting. This means that the Italian public I would like to give the fl oor to Isabelle Cassiers who administration at all levels – state, region and is teaching at the Catholic University de Louvain. city – must include environmental accounting and greening of the budget in national accounts. For the speech of Professor Isabelle Cassiers, We have about 24 months to establish a national see page 180. system. A very advanced draft has been passed through government and parliament, and requires only one last passage through parliament, which is • Aldo Ravazzi planned during the next few weeks. Then we will Chairman have 24 months to establish this system. Thank you very much Professor Cassiers. Quite The problems and challenges are quite clear – but interesting points, reminding us that GDP never not the answers. We have a number of good statis- pretended to be a measure of welfare although ticians, economists, and environmentalists and we it has very often been interpreted as such. And hope to bring good news in the near future. This is the balance between technocratic and democratic a rare attempt to have a specifi c law on environ- processes is another very key issue. How do we mental accounting and budgeting go forward. prepare the world for the future? We probably need technocracy to have data available, but then Our organizers have asked us to discuss together we have to be able to make the decision-making and to come up with some ideas, some convictions process effective in order to have useful indicators that we can try to share together here, and then in and measures of welfare and production. the general conference this afternoon and tomorrow morning. We have a number of specifi c questions: For the speech of Professor Jean Gadrey, see page 182. - What are the key opportunities for going beyond GDP? - What is feasible in the short and in the medium • Aldo Ravazzi term? Chairman - How can implementation be improved? - How to engage policy makers, key institutions, Thank you very much Professor Gadrey. It is not business, media, the broader public, and stake- easy to synthesize years and years of work. holders in general? It is interesting to see the problem of social and There is a general consensus that a lot of work environmental aspects integrated into economics. has been done by a few people, who deserve our That is one of the major challenges we are working admiration for their efforts and capacity. Now, we on at European level. The Lisbon and Gothenburg have to try to transform all the efforts of research strategies are trying to push forward in this area. and institutional capacity-building which have been The use of indicators for Lisbon and Gothenburg at attempted in recent years into policy and decision- the Spring European Council may be also a point making which is effective and recognized. for refl ection.

To help our discussions we have speakers who have I would like to give the ﬂ oor to Mr Hofheinz of the been invited to share their views with all of us. We Lisbon Council.

186 Beyond GDP: Measuring progress, true wealth, and the well-being of nations 19 &20 November2007 these different formsofcapitalinsome workin We have made someattemptstotrymeasure human capital,natural capital, and socialcapital. cal capitalbut,ashas been pointedout,also assets. Thestockofour assets isnotjustphysi- goods andservices,but forthestockofour accounting isnotforthe beyond GDPiswealthaccounting. Wealth The otherelementthatisusefulhereingoing come upandareusefulfordecision-making. importance. Like itornot,monetaryvalues do doing damagehereandyes, thesearethingsof so thatpolicy-makers canseethatyes, weare GDP, butitgives someideaoftheirimportance to GDP. meanwehave toaddit Thatdoesn’t the environment thataretakingplacerelative value oftheexternalities,damagesto been concernedwithtryingtodeterminethe suggested someofthese.Myownworkhas dovery well.Thepreviousspeaker doesn’t give values totheotherimpacts,whichGDP pointed outistoplay thesamegameandto One ofthethingsthathasbeensuggestedand people willtake asseriouslytheytake GDP? thing thatwillbeaheadlineindicatorwhich In thatcontext,whatcanwedotohave some- focus onwhenwetalkabout‘beyond GDP’. of nationallevel indicatorsthatwearetryingto valuable, butitisnotareplacementforthekind in welfareofaparticulargroup. Thatisvery which ismoreappropriatetoshowthechange a regionorproject,toidentifysomething tant, butperhapstheywillapplyatthelevel of the national level. Anumberofthepointsmadeby look atsomethingwhichwillbeanindicatora talking about‘beyond GDP’, wearegoingto emerging, butthe There aredifferencesofopinionwhich Just afewpointsonwhathasbeensaid. • your key viewswithus? Professor Markandya, wouldyou like toshare • page 183. For thespeechofPaulHofheinz,pleasesee eso ae Breakoutsession:Keyneedsandwaysforward Session 3–Panel 2 University ofBath,UK,Rapporteur Anil Markandya Chairman Aldo Ravazzi fi rst twospeakers arerelevant andimpor- fi rst thingisthatifweare fl o of ow well-being oryour well-beinganditwillnever really goodmeasure,itisnotameasureofmy a measureofwell-being.Ofcourseit’s nota perfect.Asthe It isn’t We doeverything withtheGDPindicator. can’t that formofaccountingwouldbeuseful. important sourcesoftheircapitalandmaybe actually losingcapital.Theyaresome a biggerimpact.We needtoshowthattheyare ‘so what?’Thefactisthatwemay needtohave for thesekindsoffactors,theIndonesianssaid growth rate fellfrom7%to6%whenyou allowed would. InIndonesia,whenweshowedthatthe much impactonpolicy-makers aswethoughtit have as useful. Ourearlyworkonthatdidn’t impose. Theideaofgreengrowthwouldbevery in thelightofenvironmental coststhat we more carefully. We needtounderstandthem Yes, wedoneedtounderstandourgrowthrates will begoingoninthefuture. a usefulindicatorofsomethethingswhich are losingcertainformsofcapital,which to develop. Itwilltellusthingsaboutwherewe are very imperfect,butthisisanimportantline are stillnotvery welladvanced. Ourmeasures was engagedwiththeWorld Bankbutwe which I Howtomeettheneedsofpolicy-makers and - Howcanimplementationbeimproved? - Whatisfeasibleintheshorttomedium - Whatarethekey opportunitiesforgoing - put tous: Please give shortreactions tothequestions • social indicatorsthathave beenmentioned. and measuresofwealth,sometheother we have talked about:measuresofinequality and supplementitwithalltheotherthingsthat and improve thatqualityanduseitjudiciously contexts andforsomepurposes.So, let’s try gone up3%,no, butitwillbeusefulinsome you ifGDPhasgoneup3%,thatwelfare beagoodmeasuretotell bad measure.Itwon’t years agowithnowandGDPmay notbea 200 societies. Asthepreviousspeaker said,compare indicator oftherelative well-beingofdifferent ciously andover time,itisperhapsnotabad be that.Butinsomecomparisons,ifmadejudi- other stakeholders? term? beyond GDP? Chairman Aldo Ravazzi fi rst speaker said, it isn’t rst speaker said,itisn’t 187

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• Viveka Palm at the regional level, we have created a tool, a Statistics Sweden prototype.

I’m working at Statistics Sweden with environmental There are many problems with implementation, accounts, so obviously I’m going to talk about what but the main problem is to ﬁ nd the key words to I think we could do with environmental accounts. disseminate the results to our policy-makers. Our work is very hard but also very fruitful, because We’re using the system for national accounts as a there has been a lot of interest in the work, in the basis and we’re adding in environmental data and four corners of Europe from southeast England to giving it to policy-makers. All the questions you’ve North Brabant in the Netherlands, Emilia-Romanga, been addressing are things we also discuss. and Maloposkie in Poland.

However, what has not been said here, but what The team did good work, but the problem was I think is one of the main things that our policy- to transfer the results and the process we imple- makers use, is that we are tracking what type of mented to the policy-makers. Those involved in economic instruments or institutional instruments disseminating the results also question how to that are being used to actually change what is interest the media. going on. Another issue is to achieve more of a mixture Swedish society knows that we have a problem and between institutional statistical ofﬁ ces at the we don’t really need a measure to tell us that we national level and this kind of ‘experiment.’ Because have a problem. We rather need to know how we our statistical ofﬁ ce debates with the person con- can get out of it and move towards development cerned but does not want to be directly involved. that is better. There seems to be some concrete dividing wall at local level. What we are doing is looking at where we have environmental taxes, how they are working, where One last thing, a colleague of Mr Markandya, they are not working and what type of carbon University of Bath, Allister Hunt, was involved in emissions, for example, are not taxed at all. one of our conferences in Bologna.

We are also looking for the regular investments that are being made in the economy to understand • Aldo Ravazzi what type of environmental damage you get from Chairman them so that you can change your perspective on what you should invest in, preferably using tech- It is very interesting that the challenge is at the nology that will take you further on. same time local, regional, national, European, and probably beyond. That is something I would like to add to this debate, to actually look at what we’re doing right now and see how we can invest differently. • N.N.

I’m involved with sustainable development • Maria-Paola Dosi indicators. Emilia-Romagna Region, Italy I was interested to hear the number of panellists I am Maria-Paola Dosi from Italy. I am the coordina- mention the different types of capital that are tor of an INTERREG IIIC project that involves the behind the generation of well-being. I’d be inter- issue of this conference, i.e. the implementation ested to have your individual views on the last type of the Lisbon and Gothenburg agendas by means that Anil Markandya mentioned, social capital, and of international projects and sub-projects that whether you think that has anything more than transfer actions on the ground by local authorities metaphorical value compared to the other types of and local organizations, universities, etc. capital, and whether you could really measure it in a meaningful sense, in an accounting sense. In particular, one of these sub-projects deals with the implementation of the NAMEA matrix at You also mentioned as an avenue, giving value the regional level. Using Eurostat guidelines on to the different types of capital. Do you think it air emissions, in particular greenhouse gases, would also be possible to give a monetary value

188 Beyond GDP: Measuring progress, true wealth, and the well-being of nations 19 &20 November2007 eration whenrevisiting indicators. would beimportantto take themintoconsid- stitutional value toasocietyorcommunity, it documents thatcanbe summarized asofcon- important goalsandvalues areestablishedin level ofpoliticaldiscourse.Asfarasthemost frequently usedinnationaldiscourseoratany about theconstitutionalityofindicatorsthatare at theUN,EU, andnationallevels. We cantalk certain anchorsasfarvisionisconcerned, linked tothevisionandprocess.We have I certainlyagreethattheindicatorhastobe • of whatshouldbemeasured. both, butweneedtohave avery goodgrasp nocratic versus democratic processes.We need speaker, ProfessorCassiers,thenotionoftech- Coming backtothepointraised bythe have allthesediscussionsaboutthoseterms. weight thanhumancapital,forexample?You in termsofvalue. Shouldhealthhave greater this morningweightingissuescreateproblems and therearenoweightingissues.Aswesaw the analogywithGDP, theyardstick iscurrency being reallyisandwhatmatters.Ifyou use sis therejusttounderstandbetterwhatwell- What shouldwemeasure?We needmoreanaly- ceptual framework behindthesocialaccounts. I have aquestionthatismoreaboutthecon- resources andsocialdevelopment. opment ofsocialindicatorsrelatedtohuman I’m headingagroupwhichworksonthedevel- • separately inany case? that you doneedtomeasurethedifferenttypes much ononeaggregatingvalue andforgetting any case.Istherenotariskinfocusing too have tomeasurethisaggregatingin ited andsoeven withonemeasureyou would between thedifferenttypesofcapitalsarelim- otherwise, given thatsubstitutionpossibilities one aggregatingmeasure,monetaryvalue or make any sensetoreallyfocustoomuchon monetarizing allfourtypesofcapital,wouldit to socialcapital?Andgiven thelimitationson eso ae Breakoutsession:Keyneedsandwaysforward Session 3–Panel 2 for Central andEasternEurope Regional Environmental Centre Janos Zlinszky Development, Canada Human Resources andSocial Raynald Létourneau ﬁ rst

information aboutachievingornot bring inotherindicatorstohave afuller setof it isforreally. I think thatanewinitiative to the electorate doesnotunderstandGDP. What itself wouldbeunderstood.Iventure tosay that only have halftheproblemofGDPbecause If wehave suchscienti human capitalinthisrespect. tremendous responsibility, andwetalked about has tremendousimportanceinthissenseanda make apointhere,thatsecondaryeducation and rudeundiplomatic,butIjustwant to politicians, andforgive meforbeingvery rough and again.Ifwedividesocietyintoexperts This isapointwecannotavoid raising again ences, natural sciences,andtechnicalsciences. scienti call itscienti a minimumthresholdofliteracy – you could sive one,asyntheticoneorsetofindicators, any indicator, beitasimpleone,comprehen- My secondpointisthatforthecomprehensionof used. Several speakers referredtothat.I agree constructed, buteven morewiththeway itis problem isinsomedegree withtheway GDPis We dohave abigproblem, bytheway. The be important. injecting goodandpractical ideas,isgoingto energy, whichisrealenergy andwillcontinue doing theirownthing.Managingthatlevel of communities, sectors,companiesandsoon,are are alotofautonomousprocessesoutthere: will have onlyapartialeffect,because there try todiscussherewhatwearegoingdo,this out therethatisvery decentralized. Whenwe We have torealize thatthere isamovement multiple levels fromcommunities uptonational. community whereinitiatives aretakingplaceon fi years. It’s15 interestingtoseethatthewhole We’ve beenlookingatindicatorsforabout • elaboration onthat. social indicator, andIwouldlove tohave abit me thatMr Hofheinz saidthattheGDPisa Finally, Ihave avery briefquestion. It struck a betterunderstandingabouttheGDP. the newindicators,aparallel effortingetting our constitutionalgoalsshouldhave, beside eld hasreallymushroomedintoavery diverse Development, Canada International InstituteforSustainable Laszlo Pinter fi cwemeanhumanities,arts,socialsci- fi c literacy – isnecessary. Andby fi c literacy, thenwewould 189

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also with the previous speaker that we have to societies. Some societies with the same GDP have do work on that front. I do agree on incremental different outcomes. change, but at the same time we also have to be clear that any adjustments to the GDP system The problem is how society uses GDP to produce along the lines of Markandya’s comments counting well-being. This is the central issue. The problem the uncounted adjustments will take signifi cant of what is well-being, what are the ends, is a amounts of time. Despite the progress we have democratic and political problem. We should not made in keeping track of physical accounts, our put indicators of outcome and means on the same monitoring systems are still not strong enough, level. They do not have the same importance. We particularly if we want to base a solid economic cannot mix means and ends of development in a valuation on them. composed indicator. We should be very careful how we decide which indicator to use. And that is my last point. For a while we will have to live with both working with physical accounts From this point of view I agree that a very long list and making better use of new types of physical of indicators where we mix together means, ends, accounts in decision-making, and at the same resources and the end results of the functioning time build up economic valuations and learn how of society is not a good approach. We should pri- to use them better. oritise. We should have a democratic discussion about the prioritisation of outcomes that we want to pursue to create a good life for people. We should • Aldo Ravazzi not mix together the means to get a good life and Chairman the outcomes of a good life. Thank you very much for reminding us how much My last point is about subjective indicators. I am GDP has evolved through time (since it was intro- very worried about the mix of means and ends. duced after the ’29 crisis) as well as the debate Subjective indicators are another category of indi- on ‘beyond GDP’ in the last 10-20 years. We all cators. They are very attractive and fashionable know the debate among experts on how to defi ne now, but there is no real theoretical discussion the GDP, fi nding international agreements: the about the real meaning of subjective indicators. The national accounts experts have been fi ghting for subjective perception of our lives is important, but a very long time and are still fi ghting on a large sometimes, for the poor especially, the perception number of issues, like the rate of unemployment, and the reality are very different. how many defi nitions we have in different countries and how delicate the debate is. We need objective conditions and subjective perception as well. But we should consider the fact that the private sector especially is very good at • Pasquale De Muro mental adaptation and will not refl ect real con- University of Rome ditions in their survey because they adapt very strongly to hardship and tough circumstances. It I work at the University of Rome. Currently I am is very dangerous to take for granted that subjec- working on a European research project that deals tive indicators are very good. with these issues.

I want to make a point about the approach that • Jörg Mayer-Ries we are following. We cannot limit our discussion Federal Ministry for the Environment, to a mere statistical, ecological, or even political Germany problem because there are a lot of theoretical problems that are in the background and that we I work with the federal ministry of environment cannot avoid. A relevant entry point from this point in Germany. I’m also an economist lost in this of view was made by Amartya Sen: we cannot bureaucracy, but only for a few weeks. This is a avoid distinguishing between means and ends. new position. Of course we cannot consider GDP not useful. It is a very important tool, but it is just a tool. That We are working on the general aspects and stra- is its job. We cannot consider growth per se as tegic questions around sustainable development negative or positive. It is just a means to an end. and the role of accounting in this context. Let me But to which end? It is the way we use resources make a more general comment. for well-being, which is the central problem of

190 Beyond GDP: Measuring progress, true wealth, and the well-being of nations 19 &20 November2007 thing. Notonlyonthenational level. with theenvironment, thiswouldbeawonderful household, toshowwhat you areactuallydoing paper aboutGDP. Ifyou hadanindicatorinyour environment ornot,you donotreadinthenews- an individualofwhetheryou aredestroying the If you wouldlike tohave apictureforyourself as projects andthenlookforlinkages. ent perspectives andtocarry outexperimental a wonderfulopportunity. Thisisapleafordiffer- old things.Thisisapoliticaldiscussionandit will beeconomicinterestintryingtokeep the derful –greengrowth,humancapitalbutthere All thequestionsandtasksyou listedarewon- a specialsocialindicator. result butasocialindicator–asyou said–but show thatGDPisnotaneutral natural scienti for economists,journalists,andpoliticiansto For example,weshouldcreatenewcurricula economy butalsowithsocietalquestions. is interlinked withecologyandnotonlypure work onalternative perspectives onhowsociety is agoodtimeforpoliticiansandscientiststo interesting. Thiswillpersistasaproblem.Now levels, fromdifferentperspectives, itwillnotbe try toconvince societytouse it.Ondifferent It makes nosensetocreateanewGDPand learn bythat. between thedifferentways andthenwecan look atmakingabenchmarkandcomparison about lookingfromnewperspectives. We should The wholediscussionaboutbeyond GDPisone was goingon,openedupdifferentpossibilities. as thelevel andinterestinsociety, andwhat and thespeci conceptualised sincethe1930s.Itwas wartime, what was decidedinmakingGDPasithasbeen look beyond GDP, weshouldlookbeforeGDPand national accountingavailable. Ithinkbeforewe I studiedeconomy, therewas nohistoryof My experienceasaneconomistwas thatwhen be mixed withotherlevels. This isavery importantaspectandshouldnot we needtotalkaboutGDPonanationallevel. The lasttwospeakers madeitvery clearthat make asocialindicator. or interestfromwhichyou lookatsocietyand tistics insociety, andtheparticularperspective is alotoflinkagebetweenaccountingandsta- I thankthepanelformakingclearthatthere eso ae Breakoutsession:Keyneedsandwaysforward Session 3–Panel 2 fi c macro-economictheoriesaswell fi c understand whatisimplicitbehindGDP. give otherexamples.Our so on.Advertising isaservicebutit For example,greenhousegas,advertising, and be devaluated, whatwillhave anegative value. value. Itisademocratic taskto decide whatwill it hastobedevaluated. Ithastobeanegative greenhouse gasdoesnothave tobevaluated, so not bevaluated. For example,you say that The otheraimistoknowwhatshouldand not createpro is notvaluated. For example,domestictasksdo pro ate everything thatmakes apro goals andaims.Themainimplicitaimistovalu- understand whatGDPmeans.hasimplicit be accounted.My is whatshouldbeaccountedandnot I comefromtheCNRSinParis, France. Mytopic • because I thought thatthebackground ofthis an indicatorofrelative well-being of societies, Mr Markandya say thatGDPshouldbekept as ellists andsay thatI’mvery surprisedtohear I would like toreactsomepointsof the pan- in danger. Thisisanimportant point. value, because theyputthesocietyorplanet decide whichitemshave toreceive anegative to knowbeforeyou change orkeep it,andto sued throughthismeasure?Itisvery important valuated itemsinGDP. Whatarethe goalspur- to decideandunderstandwhataretheimplicit remark. Beforegoingbeyond GDP, you have would say isthatItotallyagreewiththelast to reactallthecomments.The Unfortunately, thereis nottimeenoughtotry • very limited. now, choosingsomekey issuesbecausetimeis views withus.Alastroundfromthespeakers My thankstoallthosewhohave sharedtheir • should notbevaluated forsocialgoals. a pro that entailsmoreinequalityandeven itifmakes CNRS, France Georges Menahem University ofLouvain Isabelle Cassiers Chairman Aldo Ravazzi fi t isvaluatedmake apro andwhatdoesn’t fi t, even ifitisvaluated bytheGDP, it fi tsotheyarenotvaluated. Ican fi rst pointisthatwehave to fi rst aimistobetter fi t. What makes t. Whatmakes fi rst thingI fi t 191

Workshop OPENING AND DISCUSSION OF WORKSHOP

conference was the fact that we want to establish people do. I just want – like most people here – to clearly now that GDP is not an indicator of well-being put GDP in its rightful place as one of the means to of societies and so it cannot be used in a compara- an end which is something like having happy people tive way. in harmony with nature. No more, no less.

Along the same lines, when Mr Hofheinz takes Today, many economists are trying to save GDP as Maddison’s long-term data to show that we have being a proxy of well-being. Not perfect, but not succeeded in so much more welfare today than too bad. It is going to be more and more difﬁ cult 200 years ago, again, this is through GDP data, as the ecological crisis will concern more and more reconstructed for 200 years. This is probably total people. But we should save GDP as a good measure nonsense, although Maddison is a very great econo- of what the founders of national accounts built in mist and produces the best known and most solid their time without any confusion with well-being. data we can use for long-run studies. No less and no more.

It is only one component. All the work in this conference should show that GDP is not all of progress • Paul Hofheinz and maybe not only progress is in GDP. Suppose Lisbon Council that in 20 years, if we succeed in establishing another global index that really represents what Just listening to the debate, it strikes me that this is people understand as well-being, and that - as a little bit of a medieval conclave. That we are argu- Maddison did – reconstructed this index through ing over the fi ne points and that actually we agree time to go back – 200 years, I’m not sure that broadly. I sense more consensus than disagreement we would have the same image of the progress on all of the points that have been made, including accomplished. Probably we have very different the ones that the panellists have just made. ideas of economic and social history. In my view, we cannot have a linear interpretation. We have to The gentleman here asked to hear more about have a systemic interpretation. For instance, when what I said about GDP as a social indicator. This we compare our level of growth today with that of is exactly what I said. I said it is a social indica- Africa, we have to understand how the West built tor. I did not say it was the social indicator. There part of its wealth on slavery and colonization and are quite a few other things we can look at, but how it hampered Africa’s development. GDP does tell us something about well-being, in some ways, in different parts of the world. I used the example of Botswana; if you go there it does • Aldo Ravazzi mean something that their GDP is as low as it is Chairman compared to what GDP in Europe means. The debate between ecological economics and Just to give an example of an area in transition, I environmental economics is reaching a very high would mention China. We are all seeing very serious level with refi ned elements, but we have to go problems with China’s growth both environmentally forward. Professor Gadrey, you have the fl oor. and socially. But let’s not overlook what lies right behind it, which is that their country has come out of a situation only four decades ago where many • Jean Gadrey of them were on the verge of famine. These aren’t University of Lille statistics that I’m disputing, I’ve been to China and talked to people about it and that is how they First, trying to answer Paul Hofheinz, we may see the difference between the social market they or may not disagree on the fact that unlimited have today and Chairman Mao’s time. growth is possible in our rich countries with respect to ecological constraints. I don’t know, but I’m Briefl y about what the lady said about measuring sure that we can agree to adopt indicators that the different types of capital. Thank you for that allow us to better measure sustainable well-being question. Bring it to a lot of other conferences. You and to see if continuous growth is and can be a are absolutely right. We need to do more of that. long-term contribution to sustainable well-being, We have tried to come up with a way of measuring which nobody can say today. precisely what you said, in accounting terms, human capital. I’d be happy to talk to you about it later. Second, responding to Anil. Personally, I don’t want It’s been problematic, but what we’re trying to do any suppression of GDP. I don’t think that many is to get the debate moving in that way because if

192 Beyond GDP: Measuring progress, true wealth, and the well-being of nations I thinkthereisroomforboth.Boththingscan 19 &20 November2007 everywhere. It dependswhatkindof growth reduce poverty by6-7%.Notthesameamount correlation. You increase GDPby10%andyou reduction withrespecttoGDP andthereisastrong done worktolookatthe elasticityofpoverty say that.Webecause GDPisperfect.I didn’t have saying thatweshouldnot gobeyondwasn’t GDP To replytothecommentfromMs Cassiers, I more workcanbedonetoimprove onthat. the residual.That’s nottheonlyway togoand present value ofconsumption andthenpicked up other formsofcapitalrelative tothediscounted a residual.Inotherwordswede World Bank,socialcapitalwas measuredas In theaccountingthatweweredoingat Somebody asked aboutthevaluation ofwealth. used withthesamedegreeofcon asensethatthesemightbeableto wasn’t subjective indicatorshadsomeproblems,there that oneortwopeoplefeltsomeofthese go intothatsyntheticindicator.do sense WhileI time, wearenotabsolutelysurewhatshould some kindofdemocratic process.At thesame priate weightingsneedtobedeterminedin that theappropriateindicatorsandappro- rapporteur, Icansensethatthereisafeeling going tobeeasydetermine.Inmy roleas What theappropriatenewindicatorsareisnot to betaken. feels thatthereisscopeforboththeseactions sions, fromthetable,thataudiencealso be done.Icertainlybelieve fromthediscus- Theotherdirectionhasbeenwhatnewindica- - OneishowwecanmodifyGDPorimprove - two ideas: Just brie • what we’retryingtodowiththat. we canmeasureit, sustainability indicators. we mightbeabletousemodi eso ae Breakoutsession:Keyneedsandwaysforward Session 3–Panel 2 or dothisjobbetter. tors canweproducewhichwouldcomplement working inthatdirection. and ofsustainability. Someofushave been cator, butasausefulindicatorofwell-being it asanindicator, perhapsnotaperfectindi- Rapporteur Anil Markandya fl y, thedebatereallyisfocusingon change fi ed oradjusted fi it. Andthat’s fi dence, that dence, ned all the us understandwealthandwell-being. to can useitasaproductionmeasureandtrying GDP’, inotherwordsusingGDPasfarwe munities areinvolved inre experts. Itisgoodnewsthatsomany com- key issuesfromvery differentcommunitiesof One minutejusttoclose.We hadanumberof Professor Markandya. of reportingonthesethingsintheplenary, You willhave thepleasure–anddif • perfect indicator, butthecorrelationsarethere. is linked tokey socialindicators.Itmay notbea and togobeyond GDPinthatcontext,but to understandwhattheelementsofgrowthare you have. Ofcourse,that’s why itisimportant plenary. Thank you very much.Itistime togobackthe many ofusaretrying todotogether. and tonotwaste all thisimportantworkthat done attheresearchlevel andinpublic affairs on; i.e. institutionalising indicators,measures,andso ourselves to izers areaskingustohelpthemand tohelp European Commissionandalltheotherorgan- Finally, my lastpointisthatourfriendsinthe contributions canalsocome. From theseareasofworkgoodresultsand the areaofG8butgrowslargerandlarger. Reuse ofwaste andresources).Thelatterisin Initiative (Reduction ofwaste, Recycling and R the Japanesearepushingforward withthe3 rials management,aswelltheworkthat resource productivity, andonsustainablemate- forward, whichisworkon material OECD ontheseissuesthatmay helpustogo May Ialso mentionthegoodworkdoneat good stepintherightdirection. centres, anduniversities. Thiscouldbeanother administration, NGOs,enterprises,research experts fromthedifferentcommunities,public ful thattheyhave broughttogetherallthese good opportunityandwemustbevery grate- Fund andClubofRome have given usavery Commission togetherwithOECD, World Wildlife The EuropeanParliament andtheEuropean fi Chairman Aldo Ravazzi nd indicators,complexornot,which help fi ndingways topro fi nd ways tomove forward by fi fl tfromallthework ection on‘beyond fi cult job – job cult fl os and ows 193

Workshop WORKSHOP - PANEL 3

Stuart Bond WWF, UK

I would like to start by suggesting that the scien- ferent ways, looking at carbon ecological footprints, tifi c evidence shows – and we heard a lot about it greenhouse gases, and a range of environmental this morning – that the human economy has gone indicators. beyond limits. It’s very clear that the scientifi c evidence is very strong. We can measure it in many In the UK, we’ve used an input/output-based different ways. There are a lot of measurements approach largely because it talks the language out there. They can be in ecological footprints, of economists. It allows us to be able to talk to carbon footprints, and water footprints. They can economists as well as to environmentalists. This is be in the very stark realities of greenhouse gas a statistical base for the foundation of a lot of the emissions and of climate change. All these unin- work we are involved in. I would recommend that tended consequences from our past endeavours a comprehensive multi-regional input/output model are becoming very diffi cult to address: soil degra- is developed for the EU, and if money allows, a true dation, water stress, biodiversity loss and so on. system that integrates country accounts in a com- Many of the issues that we all hear are very close plete multi-regional input/output framework. to our hearts. This statistical base is almost nothing unless we get What we really need is not just a step change, but a policy-makers and decision-makers to start using whole-scale revisioning, an evolution in our econo- and interpreting it and to start making decisions mies, our patterns of production and consumption. based upon it. Hand in hand with an evidence base, Most crucially, what we are here to discuss today we need applications and we also need to build is the tools that we use to measure the successes capacity. As part of an ongoing work programme or otherwise of that market transformation. on the one-planet economy, I have been working on an integrated solutions approach that is based If the human economy has now gone beyond limits, upon a resource fl ow model as the underlying the rules of the game have simply changed. While dynamic of society. Increasingly, this turns the we keep a very detailed track of the stocks and costs of climate emissions into opportunities for fl ows of money, we need to keep just as strong, supply chain transformation. or even stronger, track of the stocks and fl ows of materials and energy. I’m not suggesting that we A one-planet economy is not just an idea from WWF supplant traditional monetary accounts. I think UK, it is also an idea from the UK government itself that they do a very good job in the right place. and is enshrined in the sustainable development But if we are to preserve and improve upon our strategy. However, there is no defi nition of what stocks of natural capital, clean air, fresh water, and a one-planet economy is, so the programme of the soil to grow things in, we now need to invest work that we’ve been espousing is starting with heavily in a programme that measures and tracks this evidence base, moving on to applications, and materials and energy stocks and fl ows. building capacity. As part of that, we’ve developed a defi nition we’re calling ‘an economic system We also need to measure stocks of material and of production and consumption’, which respects energy fl ows both on a production basis and on a all environmental limits while being socially and consumption basis. For a globalised economy we fi nancially sustainable. need measures that transcend G8 political boundaries. The footprint approach is one way of doing Clearly such a whole supply chain transformation this. It reallocates to what economists would call strategy is not possible overnight. We need to ‘fi nal demand.’ tackle slow structural changes fi rst if we have any chance of success. So far, most policy is based on Much work has already been undertaken in produc- quick easy wins. We haven’t tackled the systemic ing a whole series of accounts in a number of dif- issues.

194 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 3 – Panel 3 Breakout session: Key needs and ways forward

I would like to direct your attention to a couple little about it. We’ve been tinkering at the margins. of facts and fi gures to highlight the size and the While this produced some reductions in emissions scale as well as the urgency of the challenge. with some increases in resource effi ciency, it is We can defi ne the target rate for change by not going to produce the large-scale systemic Workshop setting a one-planet target at a strategic point transformation that is required. A 75% reduction such as 2050, which is the current horizon for is a massive number in 40 to 50 years. It’s a very climate policy. This would mean a year-on-year short time. The time scale is compressing our reduction in total resource use of 3-3½% per needs to be able to act and to act very fast. year as measured by the ecological footprint. By 2020, the reduction of the total footprint will We need to follow this up. Not only with meas- be about 35%, and by 2050, 75%. If we factor ures and metrics that go beyond GDP, but with in economic growth at an average of 2¼ -2½%, commitments, real political commitments for it’s all country dependent, then the required rate tenacity to implement a vision – a key vision - of decoupling or improvement in the resource over a 40-year time scale. It will take courage effi ciency of footprints of the Euro GDP would and leadership to start now on a long and com- be a reduction of more than 5½% year-on-year plex journey. Metrics that lead beyond GDP are for the next half century. This is about twice the an important start but they need to be clear, rate that we’ve seen in the recent past. transparent and robust, and they need to transcend boundaries between environmentalists and This one-planet target of 3-3½% absolute economists and to be trusted by both camps. resource use and 5½% in relative decoupling is the ultimate benchmark for a pathway to This strategic programme of transformation in environmental sustainability. It is also a guide markets, of governments, technologies, and to the long-term policy framework for public consumer behaviour will also require political policy and business performance that enables maturity that accepts the principle of multi-level organizations to plan ahead. It can then translate and multi-lateral governance. This will help to easily into schemes such as the cap and trade secure a one-planet agenda that works across principle of the EU ETS, using the cap as a ceil- every sector from feed and agriculture to public ing on emissions, and this should be reduced services, to business and manufacturing, to con- by 3-3½% per year. sumer lifestyles. We can produce the metrics. As we heard earlier, it is not just about producing Aside from the technical case, what is clear, and the right sort of metrics for the right sorts of this is really where I started, is that we know people; we also need the political leadership to something is wrong. So far we have done very be able to take this forward. ©Photo European Parliament

195 19 & 20 November 2007 Workshop

Teresa Fogelberg Deputy Chief Executive, Global Reporting Initiative

Measuring by reporting

I will share with you a method whereby, through and is now ofﬁ cially part of the United Nations a system of global voluntary reporting bottom up, Environment Programme. It has some 25,000 mutually inter-validating information can be publicly network members and is based in Amsterdam. It communicated on issues which are traditionally has a board comprised of business, governments, not covered by GDP but are key to measuring and academics, labour representatives, and interna- assessing the economic and sustainable health of tional accountancy specialists. Together, they have main actors of society, namely and particularly the developed and negotiated a reporting framework business community. and principles on how reporting should happen with 70 indicators, both economic, and environ- If you look at the list of these issues, we all agree mental, and including all kinds of labour practice, that most of them are not included in the traditional human rights, society and product responsibility GDP indicators, and that we all think that they are indicators. All of these indicators have been com- important for us to cover today. If you look at the monly negotiated between all these civil society, sources of information on these indicators, we have business, and government representatives and are to look at all kinds of different sources mentioned in that sense owned by them. There is agreement here on the slide. In order to fully capture that we on them and they are also formulated in an easily need three kinds of innovations, three changes. understandable and usable fashion.

First of all, the nature of the indicators. Now there are 1,200 organizations issuing annual reports where they give information on both their Secondly, we should not look only at the geographi- fi nancial performance but also specially on these cal entry point such as nations, states or munici- sustainability indicators. Of these, 600 are based palities, but we should also look at actors that in Europe, but the majority are multinational com- borders, i.e. global players, such as the corporate panies and therefore they also give information on sector, that go beyond national borders and have their presence in other parts of the world. operations in many countries of the world. What I would like to end with is the question: ‘What Thirdly, we also have to look at how the informa- is feasible in a few years?’ and if I go back to the tion is actually reaching politicians, those who question of the early plenary this morning: ‘Where make decisions on investments, such as fi nancial would we be in 10 years from today?’ We could eas- analysts. Therefore we have to look at a variety ily manage to have 75% of multinationals producing of actors who provide these data and informa- these kinds of sustainability report. It may be a tion and who share them in an inter-subjective bit more diffi cult to reach, 75% of public agencies, interplay and interaction, what we call a ‘naughty and here I mean ministries or organizations like the stakeholder process.’ European Commission, to also produce reports on their own sustainability performance. And about All of these approaches can be found going beyond half of SMEs will be doing so. In order for this to national borders using information on environmental, happen, civil society has to continue to be very social, and economic performance and using informa- critical and watchful of the content of these data tion from different stakeholders and actors in what and policy-makers should make it happen through we call the ‘sustainability reporting approach.’ their regulatory framework, either by making this kind of reporting mandatory or by creating stimuli About ten years ago, an organization called the to do it on a voluntary basis. Global Reporting Initiative (GRI) was formed

196 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 3 – Panel 3 Breakout session: Key needs and ways forward Workshop

197 19 & 20 November 2007 Workshop

198 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 3 – Panel 3 Breakout session: Key needs and ways forward Workshop

199 19 & 20 November 2007 Workshop

200 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 3 – Panel 3 Breakout session: Key needs and ways forward

Andrea Saltelli, Jochen Jesinghaus and Giuseppe Munda Workshop European Commission, Joint Research Centre, Italy

Well-being stories Disclaimer: The opinions are those of the authors and not of the European Commission.

First story Here is the UK ISEW as we all know it: GDP The index of sustainability of fi scal and is rising steadily, while the ISEW reaches its ecological development. peak in 1975, shortly after the First Oil Crisis (1973/74), and shortly after the publication “Russia is outpacing the US, UK and Germany in of “Limits to Growth” (Meadows & Meadows & securing its population’s long-term economic and Randers, 1972) – here is The Scientifi c Proof that environmental future, according to a new study”. we have already exceeded the environmental limits, and that we urgently need to change Thus incipit a piece of the FT (September 13 2007) course to Save The Planet. looking with polite disbelief at an 18-country index of “Sustainability of fi scal and ecologi- Personal Indicator Sustainable Economic Welfare cal development” developed by Economists £ per Capita 10000 – GDP at Germany’s Allianz Insurance and Dresdner Your ISEW Bank. The index ranks Russia sixth in, ahead of the UK (placed seventh), Germany (ninth), 8000 – and the US (17th).

6000 – The index is a composite of ﬁ ve indicators: public debt, current account and net borrowing 4000 – balances, carbon dioxide emissions and energy use per unit of gross domestic product. 2000 –

Second story 0 – – – – – – – – – – – – – – – – – – – – – – – – – The Index of Sustainable Economic 1950 1958 1966 1974 1982 1990 1996 Welfare, ISEW – also available as Genuine Progress Indicator, GPI. Here is a slightly modiﬁ ed purely environmental ISEW: we eliminated all “social”, i.e. inequality, Gini, household work etc. corrections but Indicator Sustainable Economic Welfare £ per Capita kept the environmental, i.e. air pollution and GDP 10000 – climate change items. The result: GDP is still ISEW rising steadily, but the ISEW outperforms GDP 8000 – from 1982 onwards!

6000 – Third story The Ecological footprint 4000 – Carrying capacity of ecosystems including 2000 – humans are difﬁ cult to compute as humans’ footprint depends on population density, consumption levels as well as on technology. What

0 – – – – – – – – – – – – – – – – – – – – – – – – – 1950 1958 1966 1974 1982 1990 1996 are the policy implications of the remark that

201 19 & 20 November 2007 Workshop

Netherlands occupies 15 times its actual size in use of these accounts to give a crystal clear mes- E-footprint? Would the impact of Netherlands’ sage what satellite accounts are good for. people for the world be better if they were spread thinly over free spots on the planet? How would Second suggested inference. The danger of the EF capture the practice of exporting production reductionisms. Only economy and environ- and pollution abroad? Can we trust EF data when ment matter. we know that trees absorptive capacity depends on age and location and that world averages are used? As the stories of the index of the Allianz-Dresdner These are but some of the most common criticism Bank (sustainability of fi scal and ecological develop- to EF heard in Ecological Economics Circles. ment) and the Ecological Footprint show, reducing well being (in the sense of Eudaimonia) to economy The Ecological Footprint, while an excellent advo- and environment runs two major risk: cacy tool, suffers from the same weakness as GPI etc., i.e. from the attempt to aggregate disjoint 1. to yield a measure scarcely informative for both indicators on the basis of “acres”. Neither dollars nor dimensions. What, implications for policy can Russia acres are neutral enough to be applied to a wealth draw from the Allianz-Dresdner Bank index. of indicators that do not always fi t neatly into the metaphor (try using “acres” for the fragmentation 2. to leave an entire universe of dimensions of landscapes, or to subtract “dollars” from GDP for uncharted. Would anyone like to live in a coun- correcting gender inequality). This is indeed a strong try which is prosperous and ecologically minded narrative underpinned by a weak model. under a dictator? Would we accept therein the existence of slaves? Incidentally Aristotle would. How can we build a measure of well being in dollars or acres forgetful of equity, cohesion, Some Inference education and culture? Who would be convinced of it across disciplines and in society? First suggested inference. The metric fallacy. In our opinion ISEW and the Ecological Footprint The environment has an important role in poli- suffer from the same problem: “Incommensurability, tics, but assuming that economists (including the i.e. the absence of a common unit of measure- National Accountants whose GDP someone wants ment across plural values, entails the rejection to modify), social scientists and others can be not just of monetary reductionism but also any treated as “optionals”, is a tactical error that will physical reductionism (e.g. eco-energetic valua- not promote the good cause of the green com- tion). However it does not imply incomparability. It munity that is so active at “Beyond GDP”. allows that different options are weakly comparable, that is comparable without recourse to a single Third suggested inference. Where to go type of value”. [Joan Martinez-Alier, Giuseppe Munda, John O’Neill, 1998, Weak comparability There is a long path ahead toward a model for of values as a foundation for ecological econom- well being - while we do not know what the fi nal ics, Ecological Economics, 26, 277–286]. One of model will be, we know that the initial input vari- the most widely quoted paper in the Ecological able set will include as a point of departure what Economics literature is “The value of a songbird”, statisticians have painfully collected. by Funtowicz and Ravetz. One can imagine the argument from the title. The same considerations A look at Eurostat’s “key” indicators shows that apply to other attempts to ‘adjust’ GDP, e.g. by the environment does indeed play a signifi cant satellite accounts. role among the 250 Sustainable Development and Lisbon (Structural) indicators present there. But any Satellite Accounting is an excellent tool for mod- attempt to go “Beyond GDP” must recognise the elling the interactions between the economy and complexity of the task to measure societal progress the environment. It is an essential tool for energy (wellbeing, sustainability, eudaimonia or whatever use, greenhouse gases, and a handful of other label one wants to adopt). Picking a dozen of envi- indicators; however, we fear that non-practitioners ronmental variables, adding a handful of economic misunderstand “environmental accounts” as a and social fi g leaves, and aggregating them on the generally applicable methodology for calculating a basis of some magic but unfortunately not so trans- “Green GDP”. It is in the interest of the concerned parent unit is clearly not bound to be a successful services of the European Commission fostering the strategy when trying to challenge GDP growth in its role as key policy guidance indicator.

202 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 3 – Panel 3 Breakout session: Key needs and ways forward

on the SDI headline 13 as it played with the Structural Indicators 12!

Clearly our still unknown model will aggregate, Workshop and here the trite arguments of the apples and oranges which would be added and the even more trite one of the arbitrary nature of the

weighting process. If one were to see how CO2 emission are converted in dollars by reduction- ists (a 4 orders of magnitude uncertainty range is considered by practitioners) then some carefully and transparently negotiated aggregation may seem a better option.

If we are to indicate a good practice, then Yale/ Columbia Environmental Sustainability Index and Environmental Performance Index are egre- gious measures of environmental stewardship and we would have liked to see more of them at this conference.

A careful modelled aggregation performed by respected academic or international organisations can bring to page 1 of the literate press issues as diverse and at time specialised such as university ranking, good governance, and the freedom of press which would otherwise be lost on page 14.

Here what the Financial Times says about the World Bank sixth annual Worldwide Governance Indicators (July 12).

Economists are often accused, justly, of thinking that what cannot be counted does not count. In this case, economists are trying to count what - many would say - cannot be counted. The alternatives, however, are worse. Either we ignore this fact or we make subjective guesses. For all its weaknesses, the Bank remains best- equipped to crunch the numbers and deliver

©Photo European Parliament the judgment, however unpalatable.

By the way, NOT aggregating a battery of indicators is also not a viable option; neither the 13 Sustainable Development headline indicators, http://composite-indicators.jrc.ec.europa.eu/ nor the 12 Lisbon headline indicators are suf- fi ciently simple to be understood by ordinary citizens not to capture a headline. In 2004 the Commission ‘published’ the 12 SI headline indicators and the Financial Times produced itself the aggregation to slam the story in page 3! See Saltelli, A., 2007, Composite indicators between analysis and advocacy, Social indicators research 81(11), 65-77. Further these e.g. SDI 13 variables can generate monsters. FT would be surprised to fi nd Romania fi rst if it played

203 19 & 20 November 2007 OPENING AND DISCUSSION OF WORKSHOP

• Ivo Havinga I would like the presenters to concentrate on these United Nations Statistics Division, three questions. Chairman of Workshop Session 3 Panel 3 With that, I would like to give the ﬂ oor to I would like to welcome you to this breakout ses- Stuart. sion. It is a pleasure having this large audience to help us get going on this particular topic. We have For the speech of Stuart Bond, a list of excellent speakers but before doing that please see page 194. let me just brieﬂ y introduce myself.

I am Ivo Havinga from the United Nations Statistics • Ivo Havinga Division, UNSD, responsible for economic statistics Chairman in a broad sense and environmental accounting. I know, we all have opinions, but it’s not for me to Very succinct and very clear. You make a couple of speak. My job is to moderate this meeting. I do points about opportunity and feasibility. You say that with pleasure. we have to have clear policy goals and we have to communicate them very clearly, and you say We have excellent speakers. Let me introduce by 2010 and 2020, 2050. You talk about overall them. transformation in terms of looking at production, consumption and accumulation. - We have Stuart Bond, he is sustainable development offi cer from the WWF, a pleasure, Stuart, With that, Teresa, can I ask you to continue? to have you here; - We have Teresa Fogelberg; she is responsible For the speech of Dr Teresa Fogelberg, for the global reporting initiative. She’s deputy please see page 196. chief executive and has an extensive background in sustainable development and she has also worked extensively in development aid. A pleas- • Ivo Havinga ure, Teresa, to have you here; Chairman - We also have, Mr Andrea Saltelli; he is an applied statistician at the Joint Research Centre in Italy. We know that the global reporting initiative is a Andrea, welcome; prima facie case of moving forward in a terrain - Then we have Marcel Canoy; he is economic at international level, at UN level. Thank you for advisor from the European Commission of making that clear. Thank you also for explaining European Bureau Policy Advisers, and he is our feasibility, because feasibility was also created Rapporteur. under the UN auspices and also in terms of the way forward by setting clear goals. In terms of organizing the session, I will take the speakers as I have introduced them to you. That is With that, I would like to ask Andrea to take the fi rst Stuart Bond, then Teresa Fogelberg, and then fl oor. Thank you. Andrea Saltelli. Basically what I’ve been asked to do by the organizers is to concentrate on three For the speech of Andrea Saltelli, see page 201. particular questions. I will read them to you so that you know that I will try to focus discussion on these issues, because this discussion will lead • Ivo Havinga into the next session. Chairman The questions are: I enjoyed listening to some of your fallacies. You have strong views on the single metric that is used. - What are the key opportunities for going beyond You don’t want to compete between the social GDP? dimension and the economic and environmental - What is feasible in the short to medium term dimensions. These are strong points. and how can implementation be improved? - How to meet the needs of policy-makers, key Laurs mentioned that also from Eurostat he is institutions, business, media, and the broader very optimistic. I hear the same thing from you. public, i.e. how to meet the needs of the So much is already being done and we could stakeholders?

204 Beyond GDP: Measuring progress, true wealth, and the well-being of nations 19 &20 November2007 concerned. do that,butthisisakey issueasfarIam to resources.Thereare someotherways to advice inGermany is toshifttaxes fromlabour that wehave throughresourceuse. Our policy other words,tointernalisetheexternaleffects do thatistoincreasethepriceofresources.In save resourcesandthemosteconomic way to What canwedo?Thekey issueistobegin side. Thatistrueonamicrolevel forproducts. That isresourceproductivityonthesystems of decouplingagainstwhatwedotonature. take any indicatorsyou wish.Itisaquestion resource productivityperunitoutput.You can we arereallythinkingabouttheinputside,and If ontheotherhandwetake a systemsapproach, right thing. only tosymptoms,weusuallydonotthe ronmental policiesthatifwerelateourthinking on CO the outputside.Thereisalotofconcentration One isasymptom-orientedchoice.Thaton have twochoicesbasically. of thehumaneconomy onthe environment. We have tolookatwhataretheprofoundimpacts what arethelimits?Ifwetake thisseriously, we gone beyond limits.Ifullyagree.Thequestionis It hasbeensaidthatthehumaneconomy has ing factorsforwhatwecandoinoursocieties. guardrails ofthelawsnaturethatarelimit- any socialdevelopment. Inthatsense,itisthe cannot have aneconomy andwecannothave ronment, withouthealthy natureservices, we The to allthree. I have very fewpoints,Chairman,thatrelate • for goingbeyond GDP? First question:whatarethekey opportunities can take thequestionsonebyone. fl Thank you, panellists.Iwouldlike toopenthe improve ourcommunications. capitalize onwhathasbeendoneandmaybe We have learnedinthelast30 years ofenvi- There aremany othersthat wecouldregard. eso ae Breakoutsession:Keyneedsandwaysforward Session 3–Panel 3 oor, moresystematicallyifImay. Maybe you Factor 10Institute Friedrich Schmidt-Bleek fi rst isthatwithoutafunctioningenvi- 2 rightnow. Thisisoneofthesymptoms. are onthetableandwetookISEWasoneof Saltelli talked aboutthevarious measuresthat Commission’s, JointResearch Centre.Andrea I’m JochenJesinghausfromtheEuropean • scarce, that’s partofit. To save resources,you have tomake themmore • prices recognized. of humansocietyontothemarket andgetthe What Ihearisthatyou want tobringtheeffects • audience. It isnotasustainable strategy tocheatthe unless werelyonapublic thatiseasytocheat. Going forgreenGDPisjustnottherightway, the general heading‘greenGDP’orwhatever. these blackboxes thatareonthetableunder I justwant tohighlighthowmisleadingare action thatWWFisaskingfor. that wewouldhave toimposeonCO I’m notsure.Butitisonly1/100 25 US dollarspertonneorso. Maybe itis40, check. You will has tobeinthisgreenGDPmeasure.Goand It’s oneofthemostimportantindicators,soit the ISEW, thereisCO dollars perbarrel.In to addataxofabout100 not 100aswehave currently. Sowewouldhave dollars perbarrel, to increasetheoilprice200 introduce environmental taxes. We wouldhave catastrophe. Buttodothatwewouldhave to We have toactandwehave toavoid thebig IPCC. Iagree,wehave adoomsday scenario. scenario thatwearecurrentlyhearingfromthe and it’s incomeinequality. It’s notthedoomsday into thedetailwe how weareonthewrongtrack, butifwelook graph showingthegapthatopensandtellsus Everybody goesaroundwiththisfamousISEW not tolookatthedetail,intomethodology. the strikingexamplesofhowmisleadingitcanbe Joint Research Centre European Commission, Jochen Jesinghaus Factor 10Institute Friedrich Schmidt-Bleek Chairman Ivo Havinga fi nd thatitisvalued atabout fi nd thatit’s householdwork 2 . It’s somewhereinthere. th ofthesum 2 to getthe 205

Workshop OPENING AND DISCUSSION OF WORKSHOP

• Hans Diefenbacher • Jean-Louis Weber Institute for Interdisciplinary Research, European Environment Agency University of Heidelberg I will answer your three points separately because I belong to the Institute for Interdisciplinary you asked us to do so, but I would have preferred Research, University of Heidelberg. I’m one of to start with the last one which is the answer to the young fossils of this debate because I’m one the questions of the stakeholders. But I will take of those who made the time series of the ISEW them in the order you propose. for Germany about 15-18 years ago. The opportunities of going beyond GDP. I take it as I completely agree with you. This is just another a producer of information for policy-making. First fi gure and not a better fi gure. But the GDP is a of all there is strong political demand. This confer- single measure as well. And everybody looks at ence is one example. The Potsdam Initiative of the it. This is the problem. The problem is how do we G8+5 is quite high-level. I don’t know if there is get rid of the one single measure that is mislead- a higher level of demand in the world, and they ing us. Maybe it is a good idea to have such a clearly expressed the question about the cost of measure, the GDP, and another just in a tiny box not taking care of biodiversity. Like it or not, but on the same page of the publication? So every the question is there. As professionals we have to time you look at the GDP, there might be another answer these kinds of questions. truth that is worth a debate. As long as we are not able to get rid of the GDP, I would like to at There is a millennium ecosystem assessment that least raise the idea of another single measure. I will be revised now and will be updated by UNEP completely agree that it is a better to have nice by 2015. The question of accounting for the eco- headline indicators. But we cannot get rid of the nomic costs and benefi ts of the ecosystem and other strategy for the moment. ecosystem services is now on the table. It was not that clear in the fi rst millennium but it is now. You can say that you also have several initiatives • Marco Malgarini in Europe at country level. Several countries are Institute for Studies and Economic engaged in ecosystem assessments and in ecosystem accounting, including with monetary valu- Analyses, Italy ation. You also have initiatives at local level, and In answer to your question of what do we have last but not least, at company level. Companies to do to go beyond GDP, I am more interested in are interested in having complete accounting of the part related to subjective measurements of their environmental impacts. Not only the direct personal and national well-being. In this sense, impacts of their use of materials and emissions there is some scope perhaps to enlarge the avail- of residuals, but the indirect impacts linked to ability of indicators that are on the table right their degradation, maybe involuntary degrada- now. If I understand correctly, basically we have tion, of the environment. Politically, this is a huge indicators that are available over quite a long opportunity. time span. You’ve got surveys that try to measure personal well-being every three or four or fi ve Technically, we now have access to a huge number years. I wonder, as a question to the audience, if of databases. Maybe the problem is to fi nd one’s it is worth trying to increase the frequency of this way trough all this data. We have a lot of statistics kind of measure. That would be of some interest available. A lot of scientifi c knowledge. A lot of especially if we are able to look at the individual software to process the data. You have AGS now, dimensions of this data. Looking at the individual very common software on your desktop. What we dimensions of this data may allow us to measure are missing is some framework to organize the the impact of different policy measures on sub- activity of various communities of statisticians jective well-being. In this sense, we could think and scientists of various domains. We have one about developing some high frequency subjective framework which is not perfect, but which is under well-being measures. revision and will be perfect by 2010. It is a system of economic environmental accounting. This system is candidate framework to help in organizing the necessary multiple activities.

206 Beyond GDP: Measuring progress, true wealth, and the well-being of nations 19 &20 November2007 you canaddare needs. Apartfromyour own thoughts,maybe feels thatwealsohave toconcentrate onthe term have beencuedbyMarcelonthat,buthe key opportunitiesareandtheshortmedium coming very closetounderstanding whatthe we meettheneedsofpolicy-makers? We’re to concentrate onthethirdquestion,howdo Before you start,Iwouldaskyou, ifpossible, • whole process. one couldlookintoasamethodtocontrolthe million citizens. Thisisoneofthethings with 800 approach, whichhasworked for47countries the wholecycle beginsagain.Thisisasectoral build capacitytoreachtheseindicators.And up. Thenagain,targetedmechanismsexistto that thenissuerecommendationsonfollow- This isthenveri common benchmarksdecidedbygovernments. purposes. Thisistranslated intoconventions, discussing indicatorsandneedsforcertain from thebeginning,withcivilsocietyexperts management process.We have atotalcycle regional andsectoral approacheswith apolicy this ispreciselyamodelwherewecombine To commentonwhattheCouncilofEurope does, available. and methods,tousethebestpractices plementary approachtodifferentareas,sectors action? Itisindeedtruethatweneedacom- get politicianstotranslate theknowledgeinto do weactuallyfollowupindicators?How And thequestionofprocessmanagement,how in particular, theso-calledsubjective ones? indicators areweusingandforwhatpurpose, a consensusontheindicators.Whatkindsof If wewant tomake animpactweneedtohave • eso ae Breakoutsession:Keyneedsandwaysforward Session 3–Panel 3 Chairman Ivo Havinga Council ofEurope Andreas Siegel fi ed bymonitoringmechanisms fl ection ontheneeds. discourse isvery muchaboutboth:atraditional native approach,becauseatthemoment really pushingvery hardforthiskindofalter- But now, alltheevidenceisthattheyare not that theCommissionisinapositiontodoit. feel At thesametime,atmomentwedon’t of measuring. a regiondecidestoadoptthisalternative way global level, itcouldbeavery strongsignalthat you wouldthinkofaEuropeaninitiative. At the of actorsthatcouldbringthischange.Ideally, seewhere isthecriticalmass moment wedon’t very keen tohave alternatives toGDP. For the have aneed.AssocialNGOs,wewouldbe to policy-makers, you To concentrate onthelastquestion.Relation a broadcoalitionofEuropeansocialNGOs. I’m thedirectorofSocialPlatform,whichis • ure theyneedfortheir purposes. and make theappropriatedecisionformeas- overwhelming forpolicy-makers tosiftthrough of ourtime,itmakes itvery cumbersome and we give toperhapsoneoftheleadingproblems it relatescloselytotheincreasingattentionthat so, whilethatisapositive development, because to themeasurementofhumanwell-beingand indicators thatrelateinsomeform orother 300 the UNDPthatshowstherearemorethan by statisticians.We nowhave arecentstudyby I feelthatthethirdquestioncanpartlybehelped • of NGOs. on growthandjobs.Thatistherelative worth work inacontextwherethekey EUstrategy is important, butatthemomentitisdif presidency oftheEUcouldtake it.Alltheseare are readytotake thiskindof approach.Anew working withagroupofMemberStatesthat old way. I’mreallywonderingifwecouldstart alternative. Theyarehappytocontinuethegood of policy-makers feelneedthis whowedon’t icy-makers, atthemomentwehave agroup For us,whenwetalkabouttheneedsofpol- of theNGOs. on CSRhasreallysloweddownintheopinion approach tobothandeverything thatwas done Social Platform Social Platform Roshan DiPuppo Yale University Tanja Srebotnjak fi rst have toseethey fi cult to cult 207

Workshop OPENING AND DISCUSSION OF WORKSHOP

So I think statisticians have an important role to fi ll I will not dwell much on that, I will just give you by helping policy-makers with decision-making, by an example, the time distance method, which is providing the index most suitable for their needs. on the virtual indicators’ expo, so you can see it In part we have talked about many measures, but there. But basically it means you can reach new so far very few of them come with uncertainty conclusions, for instance, in the European Union, assessments, confi dence intervals, anything that if you are comparing two time series, one is life gives the user an idea of how valid and reliable expectancy male and female. If we compare it and how variable a measure really is. So that was statistically, it’s 8% higher. If we compare it over just what I wanted to add to the debate. It has time - this is my measure – looking for the same only come forward in the margins so far. level of the indicator at two times, believe it or not: 29 years, what is the policy conclusion? That you have to have both measures, because if you • Mathis Wackernagel wish to fi nd out if it is a diffi cult problem, you use Global Footprint Network time distance. If you wish to say it’s no problem whatsoever, you use 8%. So we need different What does it mean that Holland uses fi ve times uses of data, which are already there, better uti- their own resources? Essentially, to use more than lisation of data, because otherwise the interest you have, you have to either deplete your own groups, which would like to put it one way would assets or you have to import the difference from use one measure, and the other interest group somewhere else. So that exposes you to the risk would use the other measure. So, I would simply of overshooting. It also means that other countries suggest that we don’t look for new perspectives that try to imitate Holland should probably think on indicators but at the way we discuss, interpret twice, because it may be diffi cult to import that and communicate them. much from other places.

I think it’s an important indicator, which leads to • Ivo Havinga your third question: How can we serve stakehold- Chairman ers? Essentially I think we have to focus on how do indicators frame the key question? I think the key Wonderful. It is good that you brought it out. You question for the 21st century really is as Professor know, it’s not just statistics. It’s also that we have Schmidt-Bleek said “How can we live properly on to build knowledge out of your two analyses. Thank one planet?” So, rather than having one Holy Grail you for this intervention. indicator, we need to have indicators that look at tension. We need indicators that look at how well we live but also, to an extent “Do we live within the • Richard Walton budget of one planet?” And it’s through this tension European Central Bank that we manage both the interest of stakeholders and the innovation that is necessary to overcome To answer the third question, I can only say that, of this tension rather than just look away from it. course, the needs of policy-makers will undoubtedly vary with the political orientation of the policy- maker concerned. • Pavle Sicherl University of Ljubljana, Slovenia I would rather address the fi rst question: key opportunities for going beyond GDP. In that I see I just want to say a few words about how to meet a limited set of undisputed core indicators, which the needs of the stakeholders. I will link it to what are linked by an accounting system. Frameworks Andrea was saying. There is a lot of work done in of national accounts and environmental accounts collecting indicators. So we have a good start from have been mentioned. This is nothing new, because that point of view. But I think that there is also an we already have important target variables like important aspect which I call “human interface”, infl ation, monetary aggregates, the unemployment and that is understanding information and com- rate; so the challenge in answering the fi rst ques- municating that information. So what I want to tion is to supplement the list of policy indicators say is that when we have indicators, we should with a few social and environmental indicators that take up what OECD is suggesting from statistics are easily incorporated into forecasting models. to knowledge to policy, and for that we don’t just Examples include life expectancy, adult literacy need new indicators and new ways of thinking, rates and greenhouse gas emissions. but also to see the results of statistical measuring.

208 Beyond GDP: Measuring progress, true wealth, and the well-being of nations 19 &20 November2007 impressed with, becausewhenwe talkabout which isthesecondthing politiciansarevery ter re footprint nexttomaybe another one thatbet- We doneedamainindicator like ecological being aboutquestionssuchas and maybe acceptitasaproxy forthetime not seeksomething type ofrecognitionyet asGDP. TheEUshould have thesame The onlythingis,itdoesn’t missions andsoon,thisisbeingrecognised. contributions tosustainabledevelopment com- is gainingmoreimportance.Ifyou lookatEU perfect indicator?Ithinktheecologicalfootprint be believed whenweareperfect.ButisGDPa are beingdiscussed,wetendto, wecanonly the viewthatwhenenvironmental indicators deterioration, water scarcityandsoon.Buttake footprints nowthereistoomuchfocusonCO lack thatabit,andIpersonallyfeelwith climate wehave IPCC,withotherindicatorswe to anagreedobjective, anagreedgoal.With ronmental indicators,wealways have to link peoplearenothappy.it isn’t, Butwithenvi- When growthishigher, peoplearehappy, when indicators isthatGDPjustaboutgrowth. I think thecomplicationwithenvironmental of theenvironment, butalsopredictstrends. is important-give informationaboutthestate outlook 2030,whichdoesnotonly-andthis OECD willcomeoutwithanewenvironmental European Environment Agency. Nextyear the tal decline.We have very goodreportsfromthe We have alotofinformationaboutenvironmen- minds ofpoliticianstodeterminetheirpriorities. becomes asin ronmental organisationsneedanindicatorthat level. Asforourneeds,it’s very clearthatenvi- environmental organisationsworkingonthe EU Environmental Bureau,whichisafederation of I’m SecretaryGeneral oftheEuropean • communicate well. Basically you’re saying, keep itsimple,but • are wemakingimprovements. economic growthbadfortheenvironment, or rather tion aboutothervery importantthingslike soil and thismay intheendgive toolittleinforma- eso ae Breakoutsession:Keyneedsandwaysforward Session 3–Panel 3 European Environmental Bureau John Hontelez Chairman Ivo Havinga ﬂ

ects social indicatorslike employment, look atthingslike ecologicalfootprint, ﬂ uential asGDPtoin

instead ofGDP, butshould

is thequalityof ﬂ uence the uence 2

the Lisbonprocess,weneedakindofinherent is very clear. For instance,inEUstrategy itis sustainable development andwell-being,Ithink, measures ofwell-being.Andthelinkbetween to usethisbigpolicyframework topushother countries. SoIthinkitisagreatopportunity At theEuropeanlevel, weseethatinmany driver forpolicyactions. in thegeneral publicmeaningthatit is aclear development hasgotmoreandattraction arching goalofpolicies.Thisissuesustainable recognised intheEuropeanUnionasover- the sustainabledevelopment strategy, whichis for goingbeyond GDP, onebigpushshouldbe To comebacktoyour issueonopportunities • in theEU. critique ofthequalityeconomicdevelopment wrap itup. Andrea, canIaskyou tostart? the othersession.I’llgive you alloneminuteto because wehave tostopby12:10hgo I wouldlike toturn tothepanellists,simply • need differentkindsofmeasures. order todeliver amoreef sustainable. Whatdoesitmeanforthem?In the ecologicalfootprintby5%inordertobe them, forinstance,thattheyhave to decrease tive. We cannottalktopolicy-makers andtell go alone,even if, to recognisethatthosekindsofindicatorscannot composite indicators.Butindoingso, wehave is perhapsthecasewithsomewellestablished expect indicatorstobemoreattractive, andthis social developments. Butweshouldcertainly kinds ofmeasureeconomic,environmental, of topics-objective, subjective andvarious interesting, becausetheycover alargevariety sets ofindicatorshave theirlimits.Theyare ticularly truewhentargetingpolicyneeds.Large to addressthesedifferentusersanditispar- Certainly weneeddifferentkindsofindicators ing aboutthefactthatwehave differentusers. There wereseveral speakers thismorningtalk- see clearlythislinkbetweenthetwo. being ofpresentandfuturegenerations. Sowe de ﬁ European Commission,Eurostat Pascal Wolff Chairman Ivo Havinga ned asmaintainingandenhancingthewell- a priori , theyaremoreattrac- ﬁ cient message,we 209

Workshop OPENING AND DISCUSSION OF WORKSHOP

• Andrea Saltelli • Teresa Fogelberg European Commission, Global Reporting Initiative Joint Research Centre I also wanted to refer to the gentleman from Mathis Wackernagel has done a fantastic job. No Heidelberg, but not because of the ranking of his other indicators I know of have had the power institute, but because of the remark that he made of advocacy that his indicator has had. Jochen about trying to endeavour to use maybe two main Jesinghaus, who knows these things better than indicators for the general public. Having said that, I do, tells me that the ecological footprint can do listening to this discussion, there has been an overall a great job, especially in efﬁ cacy of development, focus on the environmental. Somebody said, you when you talk about ofﬁ cial development aid in should not over-focus on climate change issues,

global partnership studies. That is when you want CO2 reduction, but I think if you are trying to make to make sure that we do not deplete the resources a third very important indicator, I would again like of developing countries. to draw attention to issues of social empowerment, social inclusion, emancipation, equal pay, to that I was just making an argument about the metrics, whole grouping of social rights, which maybe in which is something I feel strongly about. The care- Europe we have already attained to a large degree, ful, cautious aggregations of a variable done by but we should have the ambition to have these an institution, which has the legitimacy to do this indexes at a global level. So that’s my ﬁ rst reaction aggregation and is done with extreme care, is the to your point. Yes, simple, but let’s not forget about way to go and Tanja’s work here is a good exam- these very important social ambitions that we also ple. Look at the environmental sustainability index have as a global community. and environmental performance index produced by Yale and Colombia Universities for the World The second point is the remark of Tanja, about the Economic Forum. EPI as a measure of a country’s validity of data. I think it’s a very valid point that stewardship to uphold the environment is a very you made, but I would say, let’s not listen only to good example of how far you can go. statisticians, listen also to civil society, which also has a critical role in following data. And ask the Of course, at the same time you have to be detailed question, are these the right data, and if they are, and parsimonious. You can do that with statistical is the content valid? methods nowadays. I cannot go into this now. And of course you must also be transparent, because I would also like to draw your attention to a if the users and stakeholders cannot understand whole new profession, and that is the profes- how you have reached some kind of aggregation, sional assurors. Now that companies are coming this will not be useful. Finally, of course, you must up with their own data, of course, we have the be able to assess the uncertainties, because if we ﬁ nancial; we have the accountants, who are all

know beforehand that CO2 ‘numeraire’ is uncer- following Sarbanes-Oxley and all the European tain by orders of magnitude, we won’t go very far laws on fi nancial reporting. But the more important with it. Then we will have a model which is totally environmental and social accounting becomes, qualitative. the more important it also becomes not only for civil society to critically watch those fi gures, but One last point and here I return to the question by also for professional assurors. For instance, the the Chairman: the media. Now, I argue that you International Assurors Standard Board has now can get even the most abstruse topic on page 1 of developed very concise methods in order to vali- the Financial Times by careful aggregation of the date the data being produced by companies. So nature which I discussed just now. Two days ago, you get a whole new profession of sustainability the Times supplement review of higher university assurors; for instance some universities already ranking (THES), was on page 1 of the Financial give Masters degrees in that very specifi c new Times. The title was “Heidelberg only 60”, so all profession. the Germans readers opened the journal and go to page 4 and read the article on university ranking. My last comment is that some speakers indeed You know it’s done carefully and well by a reputed spoke about the importance of the corporate sector. institution, so it made it to page 1 of the Financial We should not forget that the corporate footprints Times. This is what we have to do. I could give of some individual companies in terms of annual examples of global governance and other examples, budget and turnover, bypass by for the GDPs of but this is enough for today. national economies. That disappeared a little bit in the discussion, and that was part of my presenta-

210 Beyond GDP: Measuring progress, true wealth, and the well-being of nations 19 &20 November2007 we’re notreallytaking action. All ofusthinkwewould like togetthere,but to worklessandwhere you gettolive more. somewhere better?Somewhere whereyou get ligent enoughtomove somewhere smarter, get tothatstageorarewecollectively intel- well above 200dollarsabarrel.Dowewant to to astagewherepeakoildrives oilpricesup talked aboutoilpricesandsoon.We couldget goals andsoon.Therewas agentlemanwho – millenniumdevelopment goals,biodiversity sense ofachievingsomevery key objectives with environmental limits,andthatalsohasa to createaneconomy thatlives with,andworks to business,andgovernment. Thisistheidea: and communicatingnotonlytoconsumers,but measuring, weneedtokeep oncommunicating, not onlyindicators.We have tokeep don’t on and outsofit,theycangettheconcept.Andso gettheins about, andeven thoughtheydon’t print: peopleunderstandwhatwe’retalking That ispartlythepowerofecologicalfoot- and themeasuresneedtobecommunicable. change. We needtoproducerelevant measures The pointofmeasuringistoactuallycreate really needtomove beyond simplymeasuring. forcing ustotake action,tomake choices.We that isreally, reallycompressingtime,anditis climate changeisoneofthosebigdrivingforces preclude action,andIthinkthereisatime, measure thingstothen we neednewperspectives? Ithinkthatwecan comments? Doweneednewindicators,ordo Can Ijustpickuponthefatheroftimeseries • and alsointermsofcompetitiveness. policy-makers bothintermsoftheenvironment, statistical importance,butitisalsoimportantfor their ownfootprints.Thereforeit’s notonlyof providing thesekindsofstatisticsanddataon that theyactuallygothroughthedisciplineof advantage fortheEuropeancorporate sector this summer, andheseesitasacompetitive companies). AndImetVice-PresidentVerheugen the majorityofthesecompanies(Fortune 500 about thefuture,butatthisactualmoment, now bythese-atthismoment.Iwas talking the dataandinformationbeingproduced I thinkthatpolicy-makers cannotaffordtoignore global reportinginitiative. tion inthebeginningwhenItalked about the eso ae Breakoutsession:Keyneedsandwaysforward Session 3–Panel 3 WWF, UK Stuart Bond th degree,butdoesthat well acrossthemediaallway throughthe logical footprintsofcities,whichwas picked up We’ve donealotofworkrecentlyontheeco- Indicators arereadilypicked upbythemedia. I’ll justpickuponyour pointaboutthemedia. increased resourceef measure,norcan they get consumers can’t about householdsandsoon.It’s very clearthat talk aboutbusinessandtherewas talkearlier And thenjustto the rightdirection. if it’s notdrivingchange,it’s notmoving usin know? Isitgoingtohelpdrive change?Because policy? Isitgoingtomeasurewhatwewant to story. For us,wewant toknow:Isitusefulfor I’m smallerthanyou –whatever. That’s amedia up onkey issuesthatsay, I’mbiggerthanyou, want toknow. Andthemediawillhappilypick for policy, anditmeasuressomethingthatwe can communicateit,wemake itrelevant all thatsortofstuff. Whatisusefulthatwe UK. You know, my footprintisbiggerthanyours, forward tothecontinuation. excellent meeting.Ithankyou allandIlook two minuteswhichtheyhad.Ithinkitwas an they have beenwillingtostickin the oneor for theirinteraction andthesuccinctnesswhich discussion. Iwouldlike tothanktheaudience I wouldlike tothankthepanellistsforthis • we want togetto. we allknowarenowtoabetterplacewhere transformation totake usfromtheplacewhere from business,toleadasortofkey sectoral board, fromconsumers,interestgroups, multi-level, multi-lateral partnershipsacrossthe have theabilitytopulltogetherrightsortof to bevery clearthatitisgovernments that a sortofgovernance perspective. Italsoseems ally derives fromacollective will,largelyfrom is good,andthat“growthgood”modelactu- models arepredicatedonthefactthatgrowth can do. Butit’s alsoclearthatcurrentbusiness facturing andsoon.That’s somethingbusiness Chairman Ivo Havinga ﬁ nalise, we’ve hadsome ﬁ ciency fromcarmanu- 211

Workshop

Session 4 Collaboration opportunities Workshop

Bedrˇich Moldan Professor at the Charles University, Czech Republic

I will try to summarise my recommendations in salient indicators to answer this issue. There are 5 points. certainly many other policy issues with concrete targets, so we should really respond to that and My fi rst point is that I would recommend focusing develop indicators which are adequate for these on modifi cations and supplements to GDP, and not purposes. replacing it. In fact it was said here too and I think that after all, GDP itself and its use, is modelled My fourth point is that certainly you can cite that approach, because we are all talking about many features which good indicators should fulfi l. GDP as an overarching indicator. But if you look at I would focus on just one and that is the indicators what the statistical offi ces are reporting regarding should be scientifi cally robust. I would prefer simple economic performance, there are other indicators indicators with units based on concrete measures which are also very important and which supple- and I am afraid that I personally do not believe ment GDP from the economic point of view, like too much in democratic weighting and the like. By labour productivity, like unemployment, etc. So we training I am a natural scientist and I would prefer should not forget that GDP does not stand alone. simple, robust indicators like material fl ow analysis, So we should not go the way, in my view, of hav- which is quite a straightforward approach and is ing a ‘magic bullet’ just replacing GDP. very telling. It could be a model for that.

My second point is – and here I quote Oliver Zwirner, My fi fth point is that when we are talking about who said this morning and I think it was very impor- environment especially, I would recommend three tant – is that our approach should also include things: timeliness. I think that it is extremely important if we are about to really supplement economic - First to my mind the most reliable and fruitful indicators like GDP, like unemployment, all that, approach is to focus on pressures, because this is that it should be developed in such a way to be something very concrete and very instructive. equally timely, and it is up to the statistical offi ces to fi nd ways as to do it. We environmentalists - Second, and again I quote one of the previous who are monitoring and measuring have so many speakers of the morning, Jacqueline McGlade: try online systems, it is a pity and it is a shame that to develop indicators on eco-systems services, we are not able to deliver timely information like because this is something which is really very economists. In fact I don’t understand the reasons important. for that. - Third, focus on linkages, and one typical link- My third point is that we should rely more on age is decoupling indicators, try to compare indicators and measures which respond to specifi c and economic performance and pressure on the policy requirements. Look at climate change, for environment. This is an example which I would instance. We should focus on reliable, good and very much recommend to develop further.

214 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 4 Collaboration opportunities

Willy de Backer 3E Intelligence Workshop

I am of course fi rst and foremost a journalist of mine, they do not know what it is. It maybe now, an independent journalist after having fantastic, it may be very good, but ecological worked for about 8 years as a chief editor for footprint, they know what that is. And now - and Euractiv.com, the policy portal that probably there is a bit of a problem with it - it is even a lot of people in the room will know. But my being “hijacked” by others, by business. I was background, as you said, has been in politics. listening to CNBC last week, where some busi- Anders Wijkman started this morning by saying nessman was saying “we have a big footprint in that there was a similar debate about ten years Asia.” He means of course a presence in Asia, ago in the parliament. I know, Anders. Back in but he calls it a big footprint. You see, it has the eighties already I was in a similar debate fi ltered through, to the businessmen, which is in the UK called the Other Economic Summit, I an important thing. I think the ecological foot- think where also Hazel Henderson was present. print is something that we should build upon, So it is not something that is absolutely new or and maybe in a way we can “ecologise” GDP only from the last ten years. by trying to combine them and then creating a new hegemonic myth. What is the problem? If it was already discussed in the eighties, why hasn’t it reached politicians The use of media: that is the next point I would yet? There seems to be a problem between like to tackle, having been in the media myself the good instruments, the indicators that you and being a journalist. I think you will have a have, how to communicate it, and then after very diffi cult time working through traditional you have communicated it, how to get it into media to get your new alternative indicator of policy-making. And I would like to try to address this new hegemonic myth across. There is, on these kinds of things. the other hand, another system, or another instrument now, which is blogging. As a journal- First of all, I think the problem is that we do ist, I have moved from traditional online media not see that GDP has become what I call a to professional blogging. I can give the exam- “hegemonic myth.” And when we try to tackle ple of the Peak Oil Community. I do not know it , when we need to come up with something if lots of people know about it here, I am not new, you will have to come up with another going to go into details, but it is about reserves hegemonic myth. Otherwise you will not be able of oil, gas, etc – this Peak Oil Community has to get it into politicians’ heads. What does that actually managed – in about three years (using mean? It means it has to be simple. It has to be blogging) to create a community and to start comprehensive. I know it has been said several infl uencing the politicians now. So you can use times already, this is not a beauty contest about that, and I think it is something to pick up for what is the best indicator. So in a way you do this conference as an instrument later. See if not need to make a decision on should we use you can actually create a “beyond GDP blog” this one or that one, or should we concentrate community and just not have this kind of meet- more or put more money into this or that one. ing every ten years. But you should fi nd a communicatable narrative on the basis of some of the indicators. If I look An other point. It was said that we have no at all the different indicators that I have been lack of data. I would like to contest that. In following over all these years, I think there is the area of resource depletion, there is a big only one up to now that has really reached the lack of transparent data. Even the International awareness of the media, and probably also the Energy Agency - I was in London when they awareness of some parts of citizens. And that presented their last outlook - was very clear on is the ecological footprint. That is the only one. this, and next year they want to concentrate As for the happiness index, if I talk to friends on bringing more transparency into the data on

19 & 20 November 2007 215 Workshop

resource depletion, because it is not clear at all cies, etc. They have sort of become independent what our oil reserves, our gas reserves, and our from politicians, so that the whole lobbying proc- coal reserves are. So let us also make sure that ess and all that does not come into play anymore. we get transparency there. Maybe we need, and this is my question, like the European Central Bank, a kind of independent And then one last question. There is one institu- sustainability institution that looks at policies and tion where we also have lots of statistics, and can, like the bank does, feed in their ideas and where it actually goes into policy-making. That is say to politicians “Sorry but this is the wrong way the European Bank of course, and national banks. to go, because of these and these data.” I think They use statistics to make policy. The difference that is what I wanted to say broadly. I have a few is that actually when they monitor monetary poli- more ideas, but I’ll keep it to this. ©Photo European Parliament

216 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 4 Collaboration opportunities

Johannes Blokland Member of the European Parliament Workshop

In the seventies we had in the Netherlands a long I have some criteria for that: debate about employment and unemployment. Different institutions all had their own indica- - First, we need harmonised measurement tors. Some of them used mainly employment methods. whereas some of them more used unemployment. And so you saw that there were different - Second point: reproduction is very important. indicators. For each goal there was an indicator Each scientist must be able to see how the about employment and unemployment. This others have developed their fi gures. When gave rise to a lot of discussion between politi- that is impossible, and each scientist has cians. It was not very helpful. So in the end, his own fi gures, then we are on the wrong The Netherlands took the decision to give the track. job of employment and unemployment fi gures to the statistical offi ce, an independent institu- - A systematic approach is very important. tion. Ever since we have no discussions about Comprehensibility of the system is very impor- the fi gures. That was fi ne. tant, as well as comparability and objectivity. We also need time series. We have to see Two years ago, we had a debate in this parlia- what the development in time is, and what ment, and also in the Netherlands, about the we have to do with the fi gures is also to make fi gures on air quality. And each party, each prognoses. We have to see what will happen in partition had its own features. There were dif- the future if we continue in the same way. ferent measurement methods, different models and different correction factors. What was My last point is that we already had an accepted the conclusion? That it is not very helpful for accounting system. More than ten years ago, the politicians when each organisation has its own European Parliament and the Council accepted features. So what we have to do is to fi nd con- a system of economic accounts, environmen- ditions for the development of indicators of tal accounts and social accounts as a basis for progress through wealth and well-being which thinking. Therefore we can go further along are broadly accepted. that path. What is fi ne with this system is that it meets all the conditions. So it is objective, we have time series, we can make prognoses so I think that we have to go further in that direction. I am very afraid when each party has its own indicators. Then we just fi ght each other with indicators and have no common basis to go further. And this is ten years after accept- ance of the accounting system the Parliament established. This is a pity.

19 & 20 November 2007 217 OPENING AND DISCUSSION OF WORKSHOP

• Fulai Sheng Rapporteur Session 3 Panel 1

I just wanted to report to you that in Panel 1 we had a very interesting discussion, and we heard a diversity of views on how to move this work forward and how to address the questions raised. Let me try to summarise some of the key streams of thoughts that came up from the panel discussion.

Number one. I would describe it as the issue of • Pieter Everaers empowering people to use indicators. In this stream Director, European Commission, of thinking, I just wanted to identify some of the Eurostat, Chairman of Workshop key points or phrases, not always in complete Session 4 sentences. There is a point that people at different levels should be able to use the indicators. People My name is Pieter Everaers. I am Director at from different groups need to understand each Eurostat, responsible for agricultural statistics, other better, what indicators mean to them. Also environment and statistical cooperation. very importantly: how do we translate indicators into meaningful policy actions? Of course in terms I have the pleasure to chair this session number of empowering people, that would really take us 4, “Collaboration opportunities”. We have the big to the next stream of thinking. challenge to give a message to Anders Wijkman so that he can this evening take the output of the Number two. I would describe it as really the expert workshop to the large conference. emphasis on a bottom-up approach, which means that in order to be able to use the indicators to Next to me I have the three rapporteurs and on initiate actions, to be able to understand each my left I have two of the panellists. We are still other, we really need to build indicators from the waiting for Johannes Blokland. We have about bottom, from the grassroots level, because we need 30-35 minutes. I have asked the rapporteurs to to know what issues are important to people. And be brief and to focus on the main points. I will give what are the issues that people really care about? them each about 4 minutes and then I will ask In this regard, there has been a lot of emphasis on the panellists to discuss the steps forward. The communication, how we could utilise communica- main questions - just to repeat them – are: What tion techniques and communication tools, different are the key opportunities for going beyond GDP? ways of communication to engage people at that Second question: What is feasible in the short to level, or rather at different levels. In this regard, medium term? And how can implementation be as far as communication is concerned, there was improved? And the third question: How to engage some discussion on the role of statisticians, whether policy-makers, key institutions and business, and statisticians have done their job once they have other stakeholders? I think that is the summary and compiled the data and statistics, or should they I am sure (I was watching and listening to panel be doing a little more. Certainly the role is not of number 1) that it is not easy to summarise along course conﬁ ned to statisticians. Other players have the lines of these questions, but I hope that you perhaps an even more important role to play, in will give some provoking statements to which the other words, to take the results from statisticians panellists will be able to react. So let me start. and then to communicate really to different levels of communities. I also wanted to emphasise that Mr Blokland, welcome. Let me start by asking the there is a question of integrating data users, indica- rapporteurs to react. I am starting with the rap- tor users, from the beginning, from the beginning porteur for Panel 1, Fulai Sheng. He is an econo- of a process, to compile meaningful indicators. mist working for UNEP, focusing on integrated policy-making. Previously he worked for the World The third stream of thinking from the group is Wildlife Fund, actively involved in taking nature something I would describe as the diversity of into account. I am ready to listen to the report ideas. Diversity of ideas, or perhaps it is rather a from panel 1. plea, a plea for cooperation, a plea for tolerance, for the diversity of ideas. And certainly we did hear a number of ideas here. We heard for example that in France there was an idea to put environmental

218 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 4 Collaboration opportunities

price on products. But there were some different • Pieter Everaers perspectives in terms of avoiding multiple prices Chairman and rather to include ecological cost into the pricing mechanisms directly through taxation and I am now giving the fl oor to Anil Markandya, Workshop other instruments. There are ideas of taking the who is working at the University of Bath. I’d like role of environmental certifi cation into account in to ask him to report from Panel 2. the valuation exercise. There is the idea of really including public services, very importantly, in the compilation of indicators, because people’s • Anil Markandya well-being is signifi cantly infl uenced by the kind Rapporteur Session 3 Panel 2 of services that are provided. The discussion showed more convergences than So there are various streams of ideas and dif- I thought would emerge when we started. The ferent ways of articulating what should be in fi rst point was that most people accepted that the indicators. There are also ideas for using GDP is certainly not a perfect, or even a very the data we already have, the kind of indica- good measure of well-being and sustainability, tors we already have to do some projections, to but that it is linked to some important aspects make use of existing indicators to project into of well-being and there are modifi cations pos- the future trends, linking in to several major sible to improve it. These modifi cations are global and environmental outlooks that are possible, and the work in this direction is use- being released this fall or next spring. ful and important. In this context there is also ongoing work in terms of sustainability using In a nutshell, in this stream of thinking, there are wealth accounting and wealth indicators. As to these different ideas, but one issue that seems how good – or imperfect – a measure it is, there to stand out is that it may be very diffi cult to was some difference of opinion. Some thought really measure the individual preferences for it was pretty useless, others thought maybe it well-being or what each individual considers to has some saving graces and can be saved. be well-being, or sustainable development. That remains a major challenge, but the concluding The second broad conclusion was that it is worth remark on that stream of thinking is that a lot trying to develop some other synthetic indica- of these ideas are not mutually exclusive. We tor of well-being which can complement or run should really try to identify synergies and build alongside the modifi ed GDP indicator. The exact on the synergies rather than try to compete determinants of such a synthetic indicator were with one another. not provided in the discussion we had, but most people’s comments suggested that a lot of work The fi nal stream of thinking coming from this needs to be done to develop such an indicator. group is really an emphasis on how to move A few points were made which are relevant to the technical part of this work forward. There this. One was that the process of selecting the is an emphasis on having a limited number of components and the weightings should be demo- indicators. There is emphasis on the importance cratic. There should be some degree of public of linking the indicators to national accounts, accountability, public discussion as to exactly and to achieving international comparability. what goes into such an indicator. It is important, There is also an emphasis on the importance agreeing with the previous rapporteur, that issues of having indicators from authoritative bodies, of information and knowledge about the indicator to be published by authoritative bodies. There are also important and need to be stressed. The is also an emphasis on a stepwise approach, on issue of where and how to apply these indica- trying not to rush into this exercise. tors, and when to use them and for what purposes, needs to be clarifi ed and discussed. This, Finally there is a plea for simplicity. Again, back of course, applies also to the modifi ed GDP indi- to the fi rst point of using the indicators in order cator. Even with these modifi cations it will not be to be able to communicate, to mobilise different the appropriate indicator for all policy purposes, communities of people. but it will be for some, and where it is appropriate and where it is not, are issues that need to be worked on. As to the areas that we need to cover in developing or modifying the existing structure or developing new structures, one that was raised was the distributional question: how

19 & 20 November 2007 219 OPENING AND DISCUSSION OF WORKSHOP

issues of the distribution of well-being in society are know that aggregation is needed. Somehow the picked up; and obviously issues related to changes fi rst opportunity is there: how can we aggregate in the environment, green growth and especially data in a meaningful way to get a limited set of of course greenhouse gas emissions; questions of indicators? We know that there are problems with sustainability more generally and questions relating aggregation but as long as we know what is behind to the development of human and social capital. Are there, communication can continue. So that would we able to pick these things up in our indicators? be the fi rst opportunity. In some of the discussions there was brief mention about the use of subjective indicators, indicators of The second opportunity is that we know that we happiness, and things like that. Some doubts were live in a world of wasteful usage of resources, but expressed on that front. we also know that there are many countries with high GDP who are much less wasteful than other The last point I would make is that a number of countries with high GDP. And the same applies for speakers noted that the indicators that we need countries with low GDP. So how can we decouple of course have to be linked to what use is made of growth and GDP with more effi cient resource allo- them. But not only are those indicators relevant at cation? This is a very important opportunity. national level, it is also important to have indicators that are appropriate for decision-making at The third opportunity has nothing to do with meas- a regional and local level. The structure between urement. It is well known by most politicians by the regional, local and the national also needs a now what to do about certain aspects of well-being, degree of clarifi cation. for instance, in particular about the climate. So how can we use these instruments, in particular pricing instruments, which every scientist knows • Pieter Everaers is the thing to do, but every politician knows is Chairman diffi cult to implement? So these are the groups of opportunities. We are now going to Panel 3, and I am happy to introduce Marcel Canoy, who is working at the Then there was another question related to what Bureau for European Policy Advisors, which is the are the short-term and medium-term goals that think tank advising President Barroso. we can achieve. Here again, I did not look for consensus. I just picked up a couple of interesting thoughts because they can steer the debate. • Marcel Canoy One thought was very concrete. It says: OK, in Rapporteur Session 3 Panel 3 2020 (or you can have another date) 75% of all multinationals should report on sustainability. Now, In selecting the input from the group as a rappor- this is a different way of approaching things. First teur I have decided to concentrate on the more of all it focuses on business, which is an impor- concrete results, because there is always a certain tant aspect which is sometimes neglected in the risk in this type of conferences that everybody debate, and it is very concrete. Similarly, not only agrees more or less. Environment is very important, 75% of multinationals should report but also gov- social stuff is important as well, and we share the ernment bodies. Governments can report on their experience almost like Hare Krishnas and eve- own impact, and not another policy report which rybody goes home with a warm glow. So I think states that we want to do this and this, but what the purpose of this conference is not only to go is the ministry of fi nance in Germany’s imprint? beyond GDP but also to go beyond warm glow as How much paper does it use? Just to give you an it were. I will just go through the three questions example. SMEs, similar story. So this is a very and take them one by one. concrete idea, to which I would add: policy-makers when they draft policy papers should also target First one was: what are the opportunities or chal- themselves: a minimum something percent and lenges? Starting with what are not opportunities or they should mention indicators other than GDP. challenges according to the group: there is no lack Then they are setting a good example. I mean of data. There is no lack of indicators. We really leading by example is always a good thing. have a lot of information available, more than at any other time in the past. So the opportunity then Still another very concrete idea that came up was comes not from gathering extra data, but group- that by 2020 we should achieve a 3% reduction ing it together in a meaningful way. We all know in resource usage (you have other ways of calcu- that aggregation has its problems, but we also

220 Beyond GDP: Measuring progress, true wealth, and the well-being of nations 19 &20 November2007 really helptosteerthe debate. sion betweenwasteful usageandGDPcould thorough debateonhow toovercome thisten- these alternative indicators, butalsohaving a Finally, notonlyisitimportantto articulate bit intothebackground. maybe thisothermessagegetspushedalittle long asthecoremessageisgrowthandjobs, of indicators.Societywilldeliver them.Andas articulate very clearlywhat theyneedinterms from theEuropeanCommissionorelsewhere, could helpus,isifEuropeanpoliticians,whether sions ofwell-beingarenotthere.Ithinkwhat growth andjobsisallvery well,butotherdimen- Commission, therewas somebodywhosaid:OK The secondoneisthatlookingattheEuropean board. this wouldbeoneway ofgettingpoliticianson we canalways gobacktowhatisbehind.But least whatisbehindit,soiftherearedebates, to it,asimpleindicator, inwhichweknowat more orless,buttherecouldbeanequivalent Europe becausethecountriesareallsame ment”. Humandevelopment, may notworkfor Fulai Sheng himselfcalled“avulgarinstru- like thehumandevelopment indicator, which ple aggregateindex,whichweknowhas European humandevelopment indicator, asim- First: canwenotgoforwhatIcallasortof Three typesofproposalwerementioned. decisions aretaken. Collaborationopportunities get themessagethroughtolevels where a lotofmaterialbutapparentlyitisdif there? Becausewestartedbysaying thereis ers toactuallyusetherichmaterialthatisout we convince policy-makers orotherstakehold- Another questionthatcameupwas: howcan I have justpicked outafewconcreteresults. That was thestrand ofquestionsontargets,and that canbeworked on. showing adifferenttruth.Thisisalsosomething thing, theygive GDPandthenanothernumber would begreatifevery timetheyreportsome- Financial Times,orotherequivalent outlets,it be thatwhenever thereisareportin,say, the Another totallydifferenttypeoftargetwould is somethingthatpolicy-makers canaimat. lating this).Thisisalsovery concreteandthis Session 4 fi cult to cult fl aws, see page214. fi discuss. national level, couldbeinterestingissuesto with politicians,butalsodowntoalowerthan perspective wheredemocracy andcooperation munication perspective butalsofromapolitical possibilities toreactthat,notjustfromacom- a termwhichwas used.Ithinktherearealso approach was mentioned:“empowering”was nication withthegeneral public.Democratic from atleastthe If Ilookatcommunication,animportantpoint terms usedbythepanels. grating systems,astep-by-step approachwere a certaindirection,compositeindicators,inte- to beenoughdata.Integration, orworkingvia side. Whatcameupisclearlythatthereseemed is clearthatwehave avery goodpanelonthis In listeningtotherapporteurs, atleastformeit • For thespeechofBedr useful. debate thismorningwhichwas very richand some viewsonthat,alsofromlisteningtothe books, soI may sharesomeexperienceand more than10 years. We have publishedsome been inthisindicatorsbusinessforsomething a moretechnicalpointofview, becauseIhave In fact,Iwas planningtosay somethingfrom • on thepoliticalissues.SoIamgiving could imaginethatMr Blokland wouldfocus centr I wouldbevery happyifMr de Backer wouldcon- maybe on themoretechnicalissue. Charles University inPrague, toconcentrate and directoroftheEnvironment Centreofthe Bedr listening andlookingthepersons,Iwouldlike to concentrate onjustoneoftheissues.Ithink thought, butIwouldlike toaskthepanellists I thinkforthepanelthisisenoughfood rst toBedr Chairman Pieter Everaers Charles University, Czech Republic Bedr ˇ ich Moldan, whoisuniversity professor ate onthecommunicationissue,andI ˇ ich Moldan ˇ ich. fi rst twopanelswas commu- ˇ ich Moldan, fl oor 221

Workshop OPENING AND DISCUSSION OF WORKSHOP

• Pieter Everaers • Johannes Blokland Chairman Member of the European Parliament

Thank you, Bedrˇich, for these very concrete rec- Before I became a member of the European ommendations. When introducing you, I forgot to Parliament, I had a long history as an economist in say that you, of course, have been for many years different institutions, and also as an environmental the chair of the scientiﬁ c board of the European economist. So I am not only a politician. I will give Environment Agency in Copenhagen, and I think you some small experience from the past. this experience is very much appreciated in this context. For the speech of Johannes Blokland, see page 217. For the second part, I would like to give the ﬂ oor to Mr de Backer. Willy de Backer is as an independent businessman, working on environment, energy • Pieter Everaers and economy. He has worked for the Parliament, Chairman even been in the Parliament, but that is ten years ago I understand. So you also have some links I think as a statistician you are speaking from my to politics. own heart, I would almost say. Being responsible for the system of economic and environmental For the speech of Willy de Backer, see page 215. accounting in Eurostat, this is a way which we naturally see as one of the options, and the option on which most of the emphasis can be put. Anders, • Pieter Everaers I think it is your turn, to try to summarise what Chairman came out of this expert workshop. We invite you to tell the audience. Thank you very much, Willy, for these ideas, some – in the context of statisticians – quite innova- tive ideas. The word is now for politics, for the Parliament. Mr Blokland, please.

222 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 5 Workshop conclusions Workshop

Anders Wijkman Member of the European Parliament

Conclusions by the chair

It has been a rich discussion, in all three working means for the economy, for development, for groups. I will now try to summarize what I heard the ecology and for the atmosphere. So we need this morning, both from the working groups and accounting at different levels, and I would suggest from the ﬁ ve speakers in the ﬁ rst session. I will not we need a combination of a top-down approach be able to cover everything, but I hope to capture and a bottom-up approach. We cannot manage the main points. with one or the other.

Firstly, there seems to be total agreement that Another area where we need more information GDP is not sufﬁ cient as an indicator of welfare and and better understanding concerns the interlink- well-being. Some people even think it is useless. ages between different areas, including the unin- Others say: let’s keep it and let’s complement it tended consequences of various policy decisions, in important policy areas where we face particular as Jacqueline McGlade put it. And that of course problems. There are some of you who dream of goes to the heart of policy-making. In the European or aspire to a corrected GDP, call it sustainable Parliament or in the European Union, we have three national income or whatever. Others, and that parallel processes ongoing, with high relevance for seems to be the majority, say let us instead use the theme of this Conference: parallel indicators and present them in a way so that the linkages are well understood. - The Lisbon Strategy, which aims at strengthen- ing jobs, growth, competitiveness, etc; There seems to be a general impression, particularly from the point of view of statistics that we - Parallel to that there is the Sustainable Development have good data in many areas. How to package Strategy. A few of us said early on, in 2001 – when and present the data then becomes the critical both strategies were being launched - let us merge issue. Also, it was pointed out that in some areas them. Very few listened to that message and it there are statistics available for each quarter or did not happen. Today the argument in favour of annually, while in other areas we do not have a merger is even stronger, if not overwhelming. the same kind of precision when it comes to time But we still have two parallel tracks, although I limits. It appears to be very important to get a see a “narrowing trend”; balance here. - The third strategy, of course, is climate change Now we have also heard that in several areas we mitigation. do not have information, we do not have the data required. One such area, obviously, is ecosystem How we are organised in relation to these three services and natural capital. We need ecosystems objectives is critical! Of primary importance, of accounting, at local level, national level, and glo- course, is for the experts to tell us about the inter- bal level. We have heard a lot of discussion about linkages between these policy areas. But then it is bottom-up approaches and participation, and the up to us, as politicians, to draw the right conclu- need for people at local level to be informed. sions when it comes to the way we are organised. And here we still have a long way to go! That being said, I would submit that if I go to a small village in Sweden, and start discussing these Yet another area where information has to be issues, they will have difﬁ culties understanding the improved concerns information to consumers about global linkages. They will not be able to understand the consequences of the choices they make in by themselves what outsourcing in China or India their daily lives. There was a representative from

224 Beyond GDP: Measuring progress, true wealth, and the well-being of nations Session 5 Workshop conclusions

France, referring to recent debates in France – which obviously have been interesting compared with the past – where consumers call for information both about the market prices Workshop of products, but, as well, about the “shadow prices”, in order to obtain information about the hidden environmental cost. Obviously we don’t have enough data to do that properly today, but it’s an interesting approach and we have to improve whatever we do in the ﬁ eld of consumer information - whether we call it eco-labelling, information based on lifecycle analysis, etc. The European Commission is coming out with some proposals early next year, one on sustainable consumption, one on sustainable production and one representing a review of the European Ecolabelling System.

Then, from a social point of view, I was struck by the plea to understand better – at a disaggregate level – what is happening at household level, both in terms of income but also about access to public sector services. It goes without saying that a lot needs to be done here in order to respond to people’s needs, to improve their well-being.

We also touched upon the apparent tension between leisure time and time with your family on the one hand, and the fact that all governments in Europe now want as many grown-up people to work full time as possible. There is a tension here and many families experience a lot of stress, a lot of unhealthy living, etc. These are dimensions of measuring welfare and well- being that have to be better captured.

I also picked up, that when it comes to human capital – education and investment in education, knowledge and skills – we need to improve the statistics.

One comment made early on shows how dif- ﬁ cult it may be to agree on a precise deﬁ nition of well-being and happiness. It was a lady from Brazil who said, that ‘in my city, Rio de Janeiro, probably the most important thing for happiness is to feel secure.’ In my country, Sweden, I can say that most people feel secure. So for us “security” would come ‘way down’ whereas in Brazil it comes ‘way up’ on the list of priori- ties. That is just one example.

Lastly but not the least, let me make a general point with regard to the interface between growth and the environment. I am a little bit hesitant regarding this notion of “decoupling” economic

225 19 & 20 November 2007 Workshop

appreciate that in Japan for instance they are much Another important suggestion was: set clear goals more efﬁ cient in their resource use than what is the on where we want to be in ﬁ ve and ten years. case, for instance, in the United States. The differ- Maybe the conference could try to address some ence is almost a factor of three. of those goals tomorrow afternoon.

On the other hand, if we start describing “decou- Then, fi nally, a few personal comments. I strongly pling” as the solution, we give the impression that think we have to take a fresh look at how taxation you can somehow grow without using energy and is being organized. Finance Ministries depend on resources and you cannot. Of course, we can and the system we have in place today and they are should make resource use much more effi cient, normally dead scared of changes in the way the but we cannot separate the economic model from economy is organized – so here we need specifi c the natural world and this notion does not seem studies. to be well understood by people in general. There are limits to growth! I also think that we have to take a fresh look at education. If we don’t give people a better pos- Finally, how do we package information once we sibility to understand how things are interlinked, have all that beautiful data? Information and knowl- how can we then expect them, in their professional edge result in very little action unless they lead to capacities, to address those linkages with a view better understanding – so that is of course a very of policy integration? important challenge. One of our speakers shared some experiences from the media world and we all I would particularly single out economists. I trained know how diffi cult it is. When asked to comment as an economist. I would submit that in most to the media on issues related to growth and the schools of economics in the world, it is not compul- environment we are asked to express things very sory to learn anything about the atmosphere and briefl y – normally ten, fi fteen seconds – whereas the biosphere and the interconnections between what we are called upon to explain is very com- economics and the natural world. To me this is an plex and can hardly be done in the form of “sound unacceptable situation! How can it be like that? bites”. The market economy is said to be good at deal- We need better information for policy-makers like ing with scarcity. This may be true for products me, but also for people in general and this is a huge traded in the market, but it is defi nitely not true challenge. I think we should employ some of the for environment scarcity. Here we need an instant best marketing companies in the world to help us reform of the economic model to help us address do this, because otherwise we will fail. the depletion of natural capital and ecosystem services. There were a few interesting suggestions from the discussions in terms of information. One was to put Let me close there. Once again, many thanks pressure both on governments and companies to for your active participation and many valuable spell out more clearly how they are using resources contributions. I am looking forward to seeing you and how the trends are going in terms of effi ciency. all at the Conference, starting immediately after That’s a very simple message that would help us lunch! to elevate the discussion on these issues.

226 Beyond GDP: Measuring progress, true wealth, and the well-being of nations