Peter Bartelmus 1
More operational concepts of sustainability can be derived by examining the sustainability of providing economic goods and non-economic amenities from the economy, nature and the social system (Bartelmus 1994a). Economic, environmental and social sustainability of supply and production can then be distinguished. Following the supply process through to its final uses and users, permits further distinction between sustainability of supply/production and sustainability of use and users. This categorization links the concept of sustainability to well-defined economic production and consumption activities and to less well-defined qualities of life for human users of goods, services and amenities. Figure 1 describes this linkage in operational terms, by relating pertinent statistics and indicators to different components of the supply and use process. The capabilities of these data to measure the (non) sustainability of these components are discussed in the following sections.
SUSTAINABILITY OF SUPPLY AND PRODUCTION
A significant part of the economic sustainability of production and income generation is already addressed in national accounts, by making an allowance for the consumption of 'capital' in the production processes. New scarcities of natural resources and environmental services of waste absorption, however, call for the extension of the sustainability criterion from produced capital maintenance to the maintenance of natural capital. In addition, the maintenance of human and institutional capital would also have to be considered in a comprehensive discussion of the sustainability of economic production and growth.
Based on possibilities of accounting for the depletion and degradation of natural capital (discussed below), sustainable economic growth can be defined as a positive trend in Environmentally-adjusted net Domestic Product (EDP). Other factors such as technological progress, product substitution, natural disasters, changes in the productivity of human capital, or high inflation and indebtedness also affect the sustainability of economic growth. The above definition therefore only reflects a 'more sustainable' growth concept which requires further refinement and modelling.
The step from economic production to the supply of non-economic amenities (and thus from economic growth to 'development') can be made by introducing two further sources of human welfare: nature and the social system (see Figure 1 ). Natural systems provide amenities such as water, oxygen, nutrient flows, capacities of waste assimilation and recreational services. As long as these goods and services are not scarce, they do not affect the sustainability of economic production, consumption and growth; they have, by definition, an economic value of zero. However, other value systems might give them an 'existence value' due to their ecological, aesthetic or ethical attributes. Changes in stability or quality of natural systems thus affect the non-economic, ecological sustainability of the supply of environmental services. Those changes are typically assessed in non-monetary terms through systems of Environment Statistics (ES) or Environmental Indicators (El), including (physical) Natural Resource Accounts (NRA).
Another source of non-economic welfare is the social system, which includes public efforts to meet development objectives such as equity, freedom, health, security, environmental protection, education, etc. For these 'collective' services, the social sustainability of their supply has to be defined in terms of maintaining the government's institutional and fiscal capability of providing the services. Social Indicators (SI) might provide measures of institutional and social capacities and their sustainability.
SUSTAINABILITY OF FINAL USE
For the analysis of the final destination of goods and amenities, a distinction is made in Figure 1 between (a) final uses and (b) the ultimate receivers (users) of goods and amenities. Such an analysis is more welfare- and people-oriented than the above description of cost/technology-oriented production of goods and services.
National (disposable) income (NI) represents potential claims on final uses, which makes it a better indicator of economic welfare than NDP. The incorporation into national income of further welfare effects from the degradation of the environ- ment would allow a broader assessment of human welfare. The deduction of these (monetized) values from national (disposable) income can provide a welfare- oriented indicator of Environmentally-adjusted National Income (ENI). The sustainability of final demand could then be defined as an observed non-decline of ENI. There are, however, major problems in finding the correct indicators and values for these 'priceless' social amenities. In the absence of a common numeraire, social values are difficult, if not impossible, to aggregate. Of course, if an overall indicator of the quality of life (QOL) could be found, the sustainability of human needs satisfaction, and thus development, could be defined as a non-decline in this indicator.
Figure 1 lists a number of indices which have been proposed for correcting the perceived flaws of national income or product. They include, in particular, an Index of Sustainable Economic Welfare (ISEW) (Daly and Cobb 1989), a measure of Net Economic Welfare (NEW) (Samuelson and Nordhaus 1992) and the ISEW-based Genuine Progress Indicator (GPI) (Cobb, Halstead and Rowe 1995). These indices typically make allowance for (a) the narrow scope of conventional economic aggregates, excluding, among other items, household production, leisure and environmental services and (b) the excessive scope of these aggregates, including 'regrettables' or 'defensive expenditures', (e.g. for environmental protection or defence). The arrows pointing toward the index boxes in Figure 1 indicate the origin of indicators, for index construction, from different data sources and systems.
SUSTAINABILITY OF USERS/POPULATIONS
Indicators of sustainable final demand and human needs already focus to some extent on the people who strive to meet those needs. Indeed, the ultimate objective of sustainability is not to sustain human activity but human beings themselves. Although the sustainability of production and consumption is easier to measure, it should be considered only as a proxy for the sustainability of human well-being. Attempts have been made, therefore, to highlight the human factor in development by (a) expressing economic aggregates in per-capita terms, (b) defining an overall Human Development Index (HDI) and (c) determining the Carrying Capacity (CC) of land for human populations, or its inverse, the Ecological Footprint (EF).
The trend of per-capita national income is usually taken as an indicator of consumption/welfare-oriented economic growth. The sustainability of NI and ENI per capita would thus require a growth rate of these indicators at least equal to the population growth rate. Like every statistical average, per-capita income has little meaning unless assessed in the context of its distribution. The consideration of distributional factors introduces a further development concern of 'equity' in the distribution of the fruits of economic growth and the provision of non-economic amenities. In fact, economic inequities are closely associated with environmental ones. Inequalities within and among countries are exacerbated because of denial of access to increasingly scarce natural resources and uneven spatial and social distribution of the impacts and costs of environmental degradation. In turn, poverty and affluence have both been found to be causes of environmental depletion and degradation, popularly referred to as 'pollution of poverty' and 'pollution of affluence'.2
The key question is how to reflect all these concerns of sustaining human beings in one single indicator. The HDI claims to be a measure of human progress by combining (averaging) per-capita GDP with two other indicators of adult literacy and life expectancy (UNDP 1995; see Box 3N). If the index covers the most relevant development concerns and attaches correct weights to them, non-declining HDI trends would indeed reflect a sustained human development path.
The sustainability analysis could also focus directly on the (number of) people, or the population, that can be sustained by a given territory, i.e. its carrying capacity (FAO, UNFPA and IIASA 1982; Vitousek et al. 1986). Such capacity depends on the desirable quality of life of the population in the territory, which would have to be defined in terms of essential (minimal) or desirable standards of living. In this sense, carrying capacity analyses could provide an assessment of possible trade-offs between natural resource conservation and human needs satisfaction at local levels. In addition, the concept of carrying capacity of a territory for human populations draws attention to non-sustainable trends in population growth, concentration and migration. Alternatively, the non-sustainability of people living in a particular area, notably a city, can be demonstrated by its 'ecological footprint' ; the indicator measures the land area affected by a population beyond immediate land occupation (Rees and Wackernagel 1994).
DATA LINKAGE AND INTEGRATION: STATISTICAL FRAMEWORKS AND SYSTEMS
The above presentation of indicators within a generic process of supply and use of goods and amenities provides some indication of possible relationships between separately developed data and indicator systems. As shown in Figure 1, these indicators refer to three sources of human welfare: nature, economy and the social system. Together, the different sources (stocks) and related processes (flows) can be considered as the main elements of sustainable development. Indicator creators tend to overlook that, for the very same elements, existing statistical frameworks and accounting systems already produce pertinent indicators for sustainable development or at least much of the data required for indicator construction.
For economic statistics, the world-wide adopted System of National Accounts (SNA) (ISWGNA 1993) provides the framework not only for accounting aggregates but also for the underlying statistics in different fields such as industry, agriculture, finance and trade. For social and demographic statistics, an attempt was made to develop a similar accounting system, the System of Social and Demographic Statistics (SSDS) (United Nations 1975). However, the absence of a natural numéraire and of a comprehensive theory for the field, like the market price and Keynesian macroeconomics for the SNA, are the reasons why this system approach was soon abandoned. In its place, a more flexible Framework for developing and integrating Social and Demographic Statistics (FSDS) was adopted (United Nations 1979). As a framework, the FSDS provides a listing of social indicators under the headings of social concerns taken from the original SSDS. In the field of environment statistics, similar problems of data integration prompted the United Nations (1984) to develop A Framework (rather than a system) for the Development of Environment Statistics (FDES). The FDES is a two-way table which relates environmental components (media) to a sequence of socio-economic activities and environmental events, environmental impacts resulting therefrom, and social responses to these impacts.
All these systems overlap to some extent. However, they still fail to fully integrate or link the main subject areas of environment, economy and population. Several attempts were therefore made to reach out beyond the traditional subject matter confines of the established statistical systems. This is illustrated in Figure 2 by means of a Venn diagram where overlapping areas represent the merger of subject areas by alternative data systems.
Conventional national accounts have been blamed for neglecting the role of natural capital in economic production and growth, a key concern in the current sustainability discussion. Integrated environmental and economic accounts, notably those of the System of Integrated Environmental and Economic Accounting (SEEA) (United Nations 1993), address this omission by costing produced and natural capital consumption and by introducing broader concepts of capital and capital accumulation.3 The possibilities of accounting also for the use of 'the other engine of growth', human capital, in social accounting matrices (SAM), are currently being explored by the United Nations Statistics Division (UNSD). Data systems of environment-population interaction are probably the least developed. The Population Division of the United Nations Department for Economic and Social Information and Policy Analysis has, for instance, developed a database on 'Population, Resources, Environment and Development' (PRED), which aims at capturing some of the relations between these areas.
Finally, several attempts have been made to bring together all subject areas of environment, economy and population in Frameworks for Indicators of Sustainable Development (FISD) (Bartelmus 1994b).4 This is indicated in Figure 2 in the core area where all data systems overlap. This is an indication also that any comprehensive indicator framework would have to draw on all major statistical systems.
SEEA: A FRAMEWORK FOR INDICATOR DEVELOPMENT AND INTEGRATION
One of the objectives of integrated environmental and economic accounting, as developed by UNSD (see Chapter 4), is to mould basic physical statistics and indicators into a physical accounting framework compatible with the monetary national accounts framework. This is achieved by fully developing the physical counterpart to the monetary accounting system. Use is made of existing physical Material/Energy Balances (MEB) and Natural Resource Accounts (NRA) which, to some extent, are already based on national accounts concepts, classifications, and balances. Figure 3 describes the data flow from environmental statistics and indicators, represented by the FDES, via NRA and the physical version of the SEEA, into the monetary accounts of SNA and SEEA.
Following this data flow, one can see how integration is increasingly attained. Environmental statistics and indicator frameworks are typically content with the juxtaposition of indicators, organized around categories of stress-response. The advantage of the FDES framework is that it already introduces a separate category of 'stocks and inventories' which facilitates data identification for stock/capital accounting in NRA and SEEA. Physical accounts can then achieve some degree of integration by using 'conversion factors' to express different physical units of measurement in 'equivalents'. For instance, the energy content of different (re )sources can be converted into coal or oil equivalents, or 'contributions' to global warming can be attributed to greenhouse gases in terms of CO2 equivalents.
Full integration (e.g. aggregation or subtraction) can only be achieved by applying an appropriate numéraire to the physical indicators. To this end, the SEEA uses different monetary valuations of environmental assets and changes therein, recording value changes as 'cost' in flow accounts of income and production. As a result, and as indicated in Figure 3, aggregates of Environmentally-adjusted Value Added (EVA), its sum total EDP and capital accumulation are obtained. These and other (physical and monetary) accounting indicators could play a similar role in the analysis and policies of sustainable growth and development as do standard accounting aggregates in traditional economic analyses and policies.5
NOTES
1 The author is a staff member of the United Nations. The views expressed here are his and do not necessarily reflect the views of the United Nations.
2 Pollution of poverty indicates pressures of the poor on marginal lands, forests, water and congested cities; pollution of affluence refers to environmental impacts of high-level and wasteful economic growth and consumption.
3 For a discussion of the objectives, concepts and methods of the SEEA, see Box 3G.
4 This is, of course, the topic of this book. Box ID, in particular, describes the 'driving force- state-response framework' proposed for international indicator development by the United Nations Department of Policy Coordination and Sustainable Development.
5 See Chapter 3 for an exploration of the role of Environmentally-adjusted Economic Indicators in the analysis of sustainable growth and development.
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