Economic Sustainability: A Discussion on Indicators and Measures. Kawa Ng U.S. Forest Service

Transcription

1 Economic Sustainability: A Discussion on Indicators and Measures Kawa Ng U.S. Forest Service

2 Overview Definitions and concepts A review on measures and indicators for Economic Sustainability Discussion: Applications to different policy settings

3 Defining Sustainability World Commission on Environment and Development 1987 (the Brundtland definition ) development that meets the needs of the present without compromising the ability of future generations to meet their own needs Forest Service 2012 Planning Rule the capability to meet the needs of the present generation without compromising the ability of future generations to meet their needs

4 Defining Economic Sustainability One component of the Triple bottom line approach to sustainability Harris 2003; Harris, Jonathan, M. & Neva R. Goodwin, An economically sustainable system must be able to produce goods and services on a continuing basis, to maintain manageable levels of government and external debt, and to avoid extreme sectorial imbalances which damage agricultural or industrial production. Forest Service 2012 Planning Rule (36 CFR ) The capability of society to produce and consume or otherwise benefit from goods and services including contributions to jobs and market and nonmarket benefits Other variations

5 Pledges and Mission Statements We are guided by the mission of supporting small mills in rural communities, bolstering sustainable economic development and job creation. By working directly with local mills, we are able to offer our products at highly competitive prices. ensures timber harvest is ecologically sound, socially and economically beneficial to local communities. The goal to establish an international standard for harvesting timber and managing forests that is both ecologically and socioeconomically sound.

6 Indicators Wanted Evaluate the longer term implications of current decisions and behaviors Monitor progress towards sustainable development goals Establishing baseline conditions and trends Government Agencies: Fulfill legislative / policy mandates Mission statements follow-through Simple and easily-understood measures that do not compromise the underlying complexity of sustainability have been difficult to formulate. Stevens, C. (2005) Measuring Sustainable Development. Statistics Brief. OECD.

7 Indicators for Economic Sustainability Numerous indicators and measures Overarching theme: No one single indicator can measure economic sustainability Move beyond GNP, GDP, other traditional metrics At the least, adjust/supplement GDP measure 3-Broad Types of Indicators 1. Headline indicators / GDP replacement index 2. List and enumerate groups of indicators 3. Composite indices

8 Defining Sustainability Maintaining a stock of natural capital Minimum necessary condition for sustainability: Renewable resources: the rule is to limit resource consumption to sustainable yield levels Non-renewable resources: the rule is to re-invest the proceeds from non-renewable resource exploitation into renewable natural capital. Costanza, R. and Daly, H., E. (1992) Natural Capital and Sustainable Development. Conservation Biology 6 (1)

9 Defining Sustainability Net out capital used up in production A rough measure for the sustainability of an economy: Consumption that is sustainable after putting aside the amount of resources necessary to replace the production capital stock used up in production Net Domestic Product (NDP) = GDP depreciation (depreciation is the consumption of fixed capital) Landefeld, J. S., B. R. Moulton, J. D. Platt, and S. M. Villones. (2010) GDP and Beyond, Measuring Economic Progress and Sustainability. Survey of Current Business, BEA working paper.

10 Genuine Savings (World Bank) Examples of Indicators for Sustainability A sustainability indicator (composite) building on the concepts of green national accounts Measures the true rate of savings in an economy after taking into account investments in human capital, depletion of natural resources and damage caused by pollution. a.k.a Adjusted Net Savings Genuine Savings = Net national saving + Education expenditure - Energy depletion - Mineral depletion - Net forest depletion - CO2 damages - PM damages A sustainable society is denoted by a non-negative measure of Genuine Savings

11 Examples of Indicators for Sustainability Genuine Progress Indicator (GPI) Been suggested as a replacement of GDP GDP + other cost of economic activity (+/-) 26 Indicators economic, environmental and social factors 7 economic indicators

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14 Examples of Indicators for Sustainability The Montréal Process A common framework for member countries to describe, monitor, assess, and report on national forest trends and progress toward sustainable forest management. 7 criteria 54 indicators

15 Criterion # 6: Maintenance and enhancement of longterm multiple socioeconomic benefits to meet the needs of societies 6.1 PRODUCTION AND CONSUMPTION Value and volume of production of wood and wood products production, including primary and secondary processing Value of non-wood forest products produced or collected Revenue from forest-based environmental services Total and per capita consumption of wood and wood products in round wood equivalents Total and per capita consumption of non-wood forest products Value and volume in round wood equivalents of exports and imports of wood products Value of exports and imports of nonwood forest products The Montréal Process Exports as a share of wood and wood products production and imports as a share of wood and wood products consumption Recovery or recycling of forest products as a percent of total forest products consumption 6.2 INVESTMENT IN THE FOREST SECTOR Value of capital investment and annual expenditure in forest management, wood and non-wood forest product industries, forestbased environmental services and recreation and tourism Annual investment and expenditure in forest-related research, extension and development, and education 6.3 EMPLOYMENT AND COMMUNITY NEEDS Employment in the forest sector Average wage rates, annual average income and annual injury rates in major forest employment categories Resilience of forest-dependent communities Area and percent of forests used for subsistence purposes Distribution of revenues derived from forest management 6.4 RECREATION AND TOURISM Area and percent of forests available and/or managed for public recreation and tourism Number, type, and geographic distribution of visits attributed to recreation and tourism and related to facilities available 6.5 CULTURAL, SOCIAL AND SPIRITUAL NEEDS AND VALUES Area and percent of forests managed primarily to protect the range of cultural, social and spiritual needs and values The importance of forests to people (by demographic, qualitative report / survey)

16 Examples of Indicators for Sustainability U.S. Sustainable Development Indicators (SDI) Collaboration by 12 federal agencies Selected 32 indicators for monitoring sustainability in the United States From 450 candidate indicators

17 1. Capital Assets (425): Total value, in dollars, of US tangible reproducible capital, excluding all public infrastructure, as defined in the National Asset Accounts 2. Community Group Participation (40): The average number of hours per week per capita devoted to participation in community organizations 3. Consumption Expenditures Per Capita (125): Total dollar value of goods and services purchased by consumers per year as defined in the National Income Accounts. 4. Contaminants in Biota (432): Chemical contaminants in Land, estuarine, & marine biota 5. Crime Rate (449): Overall crime rate for the United States 6. Energy Consumption Per Capita (158): Total energy consumption divided by total population organized by type of energy source (coal, oil, gas, nuclear, renewable, etc.). 7. Family Function (433): Measure of families effectively performing its basic functions. This serves as a placeholder until a better, more specific measure gets defined. 8. Fish Catch to Growth ratio (428): Total fish landings (including by-catch) divided by the fish population growth rate 9. Greenhouse Climate Response Index (215): Arithmetic average of 1) percent of U.S. with much above normal minimum temperatures, 2) percent of U.S. with much above normal precipitation during the months of October through April, 3) percent of U.S. in extreme or severe drought during the months of May through September and 4) the percent of the U.S. with a much greater than normal proportion of precipitation derived from extreme one day precipitation events (exceeding 2 inches). 10. Greenhouse Gas Emissions (141): emissions of greenhouse gases, which are CO2, CH3, NO2, CFC's, and ozone 11. Groundwater Contamination (353): Area of land with contaminated ground water 12. Income Distribution (133): distribution of income per capita arranged to show the percentage of the population at various levels of income 13. Invasive Exotic Species (23): The total number of invasive species and their distribution in the United States 14. Investment Percentage of GDP (264): Investment share of Gross Domestic Product (%), including research, technology development, invention, and innovation, as defined in the National Income Accounts. This includes both public and private investment. 15. Major Land Use, Including Urban (423): The total land area in the United states broken down by major estuarine and land ecosystem. This includes both urban and agricultural land. 16. Materials Use per Capita (429): Total metric tons of materials in use divided by total population organized by type, including recycled 17. Outdoor Recreation Services (431): Total number of visitor days per person attributed to outdoor recreation and tourism 18. Ozone Depleting Substances (329): Production and consumption of ozone depleting substances 19. People in Clean Air Nonattainment Areas (1): Number of people living in areas that do not meet air quality standards 20. Population Health (451): A placeholder indicator to measure the status of health in the population 21. Receipt of Health Care (452): % of population with adequate access to health care as a function of income level 22. Soil Types (390): Land area organized by soil type 23. Species In Trouble (444): The total number of species in trouble in the United States. 24. Teacher Capabilities (437): The average capacity or skill level of individual teachers to instruct students 25. Test Scores by Economic Group (414): Standardized achievement test scores organized by economic group 26. Timber Harvest to Growth Ratio (427): Total timber harvest divided by total timber growth rate per year 27. Total Managed Waste (422): Total mass of waste managed in man-made facilities in the United States organized by type (including nuclear), by site, and by hazard level. This does not include waste already released in the environment or in abandoned, uncontroled sites. 28. Total Population (442): Total population in the United States organized by geographic area 29. Toxic Land Area (75): Area and percent of land experiencing an accumulation of persistent toxic substances, including superfund and brown field sites 30. Water Consumption to Renewal Ratio (447): Total water consumed per year divided by the total water resource growth rate per year 31. Water Quality Index (446): Index of water quality measuring the appropriate concentrations of selected chemical physical, and sanitary constituents of water at stations 32. Work Force Skill Level (448): The average level of experience, capability, knowledge, and social skills of the individuals in the work force

18 Examples of Indicators for Sustainability NATIONAL (Ireland) ECONOMIC AND SOCIAL COUNCIL National Progress Indicators for Sustainable Economic, Social and Environmental Development

19 Indicators for Economic Sustainability: Labour Productivity Per Capita GNP and Annual GDP Growth Rates Gross Domestic Expenditure on R&D as a Proportion of GDP (GERD) Proportion of Households with Access to a PC/Internet Employment Rate Unemployment Rate Labour Force Participation Rate Percentage of Population Living in Consistent Poverty Households and Persons Experiencing Relative Poverty Retention Rates to the end of Upper Secondary School Disability-Adjusted Life Expectancy at Birth and 60Years Housing Stock and Completions: Local Authority and Private Participation in Adult and Continuing Education and Training Employment Growth Rates by Region Total ODA as a percentage of GDP/GNP Greenhouse Gas Emissions River Water Quality Disposal and Recovery of Municipal Waste Business Investment in R&D IT Graduates as a Percentage of All Graduates Government Appropriations and Outlays on R&D as a Proportion of GDP (Gbaord) Internet Hosts per 1,000 Population Number of Childcare Places per 1,000 children aged under 5 years (pre-school) and 6 to 15 years (after-school) Income Inequality Measure Number and Proportion of Public In-Patients Waiting 6 months or more (children) and 12 months or more (adults) for Targeted Specialities Percentage FDI by region Gross Value Added by Region Per Capita Expenditure on Infrastructure

20 Examples of Indicators for Sustainability Sustainable Society Index (SSI) A composite Index : Human, Environmental and Economic Wellbeing 5 indicators for economic wellbeing: Organic farming (progress of transition to sustainability) Genuine savings (a measure for the true rate of savings) Gross domestic product (a partial measure for the growth of the economy) Unemployment in the labor force (access to the labor market is a condition for wellbeing for all people) Public debt (ability to make independent decisions with respect to budget allocation) Form a single composite metric by normalizing, rescaling and reweighting all indicators.

21 Examples of Indicators for Sustainability Inclusive Wealth Index (IWI) A composite metric A positive Inclusive Wealth Index (IWI) per capita growth indicates sustainability If inclusive wealth per capita annual growth rate < GDP per capita growth rate, the inclusive investment must increase if higher GDP growth rate in the long run is to be sustained. UNU-IHDP and UNEP (2012). Inclusive Wealth Report Measuring progress toward sustainability. Cambridge: Cambridge University Press.

22 Inclusive Wealth Index (IWI) Examples of Indicators for Sustainability Human capital Population by age and gender Mortality probability by age and gender Discount rate Employment Educational attainment Employment compensation Labour force by age and gender Produced capital Investment Depreciation rate Assets lifetime Output growth Population Productivity Natural capital A. Fossil fuels Reserves Production Prices Rental rate B. Minerals Reserves Production Prices Rental rate C. Forest resources Forest stocks Forest stock commercially available Wood production Value of wood production Rental rate Forest area Value of non-timber forest benefits (NTFB) Percentage of forest area used for the extraction of NTFB Discount rate D. Agricultural land Quantity of crops produced Price of crops produced Rental rate Harvested area in crops Discount rate Permanent cropland area Permanent pastureland area E. Fisheries Fishery stocks Value of capture fishery Quantity of capture fishery Rental rate Health capital Population by age Probability of dying by age Value of statistical life Discount rate

23 Challenges Challenges and Opportunities Enumeration of long shopping lists of indicators Data intensive Composite indices Construction of indices not straightforward Theoretical framework Weighting, aggregation techniques Potentially manipulated for desirable output / misleading information Simplistic policy conclusions Stevens, C. (2005) Measuring Sustainable Development. Statistics Brief. OECD.

24 Applications and Uses Measuring national (state/provincial) performance and progress toward sustainability Challenges and Opportunities Establishing baseline conditions and trends High information requirement Demonstrate contribution(s) to sustainability Use as guideline consideration /Proposal justification From firm/organization s management actions Estimate effects on selected measures, where applicable Developing management plans Formulating strategic actions Low information requirement

25 Inclusive Wealth Index (IWI) Challenges and Opportunities Human capital Population by age and gender Mortality probability by age and gender Discount rate Employment Educational attainment Employment compensation Labour force by age and gender Produced capital Investment Depreciation rate Assets lifetime Output growth Population Productivity Natural capital A. Fossil fuels Reserves Production Prices Rental rate B. Minerals Reserves Production Prices Rental rate C. Forest resources Forest stocks Forest stock commercially available Wood production Value of wood production Rental rate Forest area Value of non-timber forest benefits (NTFB) Percentage of forest area used for the extraction of NTFB Discount rate D. Agricultural land Quantity of crops produced Price of crops produced Rental rate Harvested area in crops Discount rate Permanent cropland area Permanent pastureland area E. Fisheries Fishery stocks Value of capture fishery Quantity of capture fishery Rental rate Health capital Population by age Probability of dying by age Value of statistical life Discount rate

26 Considerations for using indicators The Contribution checklist approach Demonstrate contribution to selected components of sustainability Use as guidelines when developing plans Composite indices Also useful as checklist o Attention to functional form / relationships between measures and sustainability index o Describe direction of contribution (+/-) Bear in mind non-traditional metrics Concurrent with social and environmental sustainability measures Triple bottom-line approach

27 Discussions

28 FS Planning Rule 36 CFR 219 consider and evaluate existing and possible future conditions and trends of the plan area, and assess the sustainability of social, economic, and ecological systems within the plan area, in the context of the broader landscape Consider reasonably foreseeable risks to ecological, social, and economic sustainability Expectation to Evaluate the plan area s contribution to social and economic sustainability