HOW IS SUSTAINABILITY MEASURED?
Sustainability is widely recognized, as evidenced by many national and local initiatives around the world. The founding principles of the ecological economy are strong sustainability, the vision of the economy as a system embedded in socio-cultural systems and ecosystems. It makes a great contribution to the discussions on indicators such as the immeasurability of values.
Ecological economics thus inspires work on the reform of national accounts and its flagship totals.
Indicators based on original units of account, such as ecological footprint or other types of footprints, include; material and energy flow accounting and biomass allocation or alternative monetary indicators such as the development of energy efficiency indicators or the real progress index.
It is clear that many of the indicators that ecological economics put forward are slowly gaining recognition beyond the academic realm. The General Commission for Sustainable Development has done a lot of work in this area. This text illustrates some aspects of the ecological economy’s contribution to the creation of sustainability indicators.
Monetary Indicators
The use of the monetary unit of account is often associated with a weak vision of sustainability. (Accordingly, different forms of produced, human, natural and social capital can be used interchangeably.)
However, while the affinities are good, there are monetary indicators backed by a strong sense of sustainability. (Ranking the different types of capital is a sine qua non for sustaining natural capital). The normative principles that guide monetization are decisive here.
The best-known monetary indicator of sustainability is probably the adjusted net savings proposed by the World Bank in the early 1990s and calculated for 150 countries today.
From a nation’s gross savings, four types of adjustments are made: taking into account the depreciation of fixed capital (net saving), adding investments in human capital (similar to education expenditure), deducting a decrease in stocks, damage caused by natural resources (energy, minerals, forests) and pollution. (including CO2 emissions).
Therefore, it is a poor indicator of sustainability: Environmental degradation can be compensated for by investment in people or capital. If negative, the economy is unsustainable.
However, current calculations show it to be positive for the vast majority of countries. It shows that the others are mostly poor and natural resource extractor.
More recently, the Inclusive Wealth Index (IWI) is a different version of the app developed within UN agencies. This summarizes the monetary value of a nation’s capital, which forms the productive basis of the economy. These two approaches have the same limitations.
Reducing all dimensions of sustainability to capital stocks or assets is an economism that is more open to criticism, as the calculation of monetary values of capital is extremely flawed.
It is based on unrealistic assumptions. It makes extensive use of market prices, despite its very limited capabilities in providing sustainability-relevant information.
The mainstream indicators presented above require fundamental changes in national accounts.
To stick to theory, national accounts should ideally record all natural elements, renewable and non-renewable resources. It should also provide monetary valuations of these assets.
National accountants are often reluctant to fit accounts to the requirements of neoclassical economic theory. For them, national accounts have a recording function, not a modeling function.
From this point of view, the monetary value of various capitals is problematic insofar as it aims to pre-project their value for present and future generations.
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However, there are ways of green national accounting that are both less theoretically ambitious and more realistic from an accounting point of view. Some are closer to the ideas of ecological economics.
Thus, a Dutch economist has long advocated the adoption of a sustainable national income.
Rather than attempting to evaluate all capital in monetary terms, it is necessary to establish from the outset the collective preference for environmental protection. He proposes to calculate the monetary costs of such protection. This will limit the number of monetary transactions to be processed.
Yaşam Ayavefe
