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