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Beyond GDP


Simon Upton

Environment Director, OECD

World leaders and policy makers are increasingly aware of the need to explore ways of measuring human well-being beyond GDP (Gross Domestic Product) if progress towards sustainable development is to be assessed. Indeed the Rio+20 conference’s outcome document recognised “the need for broader measures of progress to complement GDP in order to better inform policy decisions” and requested the UN and other relevant organizations to build on existing initiatives.

For almost a decade the OECD has been leading the international reflection on the measurement of well-being and progress. Its World Forum on “Statistics, Knowledge and Policy” regularly gathers decision and policy makers, social leaders, statisticians and academics to discuss better ways to measure and foster societies’ progress. Much of our focus is on exploring what matters most for people’s lives now and in the future, and on bringing related indicators to the attention of citizens and policy makers.

On the occasion of the organization’s 50th Anniversary, we launched the Better Life Index, which lets citizens establish their own measure of well-being by ranking the key factors that contribute to it in member countries, like education, housing, income, environmental quality and health We are also working with national statistical offices to improve the way we measure economic activity and growth through the system of national accounts, such as by better accounting for household income and for those natural assets for which markets exist.

Indicators to monitor progress towards green growth are at the core of the project. It cannot be captured by a single measure, so what is needed is a set of indicators that can be used as markers on the path to greening growth and to indicate new economic opportunities.

At the OECD we have therefore developed a measurement framework and a set of 25 indicators to monitor progress towards green growth and these will support the OECD’s policy analysis and country studies. The indicators complement conventional GDP measures by assessing countries’ progress in moving towards a low-carbon and resource-efficient economy. They look into the economy’s productivity and into how consumption patterns of affluent countries affect global public goods, such as our climate, through the imports they generate.

They explore such questions as: Is economic growth becoming greener? Is there a risk of future shocks to growth due to the deterioration of natural resources and environmental quality? Is greening the economy opening up new sources of growth? And do people benefit from greener growth? The set of indicators — the first of its kind at the international level, is structured around following themes: The economy’s environmental and resource productivity — to indicate whether it is becoming greener and to capture aspects of production and consumption which are rarely quantified in conventional economic models and accounting frameworks. The economy’s natural asset base — to indicate the risks to growth from a declining natural asset base. The environmental quality of life — to indicate how environmental conditions affect people’s well-being.

Economic opportunities and policy responses — to indicate the effectiveness of policies in delivering green growth and describe the responses needed to secure business and employment opportunities. A broad range of indicators, however, carries the risk of losing a clear message — both for policy makers and the public at large. The OECD has therefore launched a process designed to identify a few headline indicators that track central elements of green growth and complement main economic indicators. Those under consideration include:

CO2 productivity (production and demand-based); Non-energy material productivity (production and demand-based); Multifactor productivity adjusted for environmental services; A natural resource use index; Land cover changes; Population exposure to fine particles.

Meanwhile work continues to identify a headline indicator for green growth economic opportunities. The OECD green growth measurement framework and proposed indicators can easily be tailored to national circumstances, policy priorities and statistical capacities. Several countries have already applied them (Czech Republic, Korea, Mexico, the Netherlands), while others are in the process of doing so (Colombia, Costa Rica, Ecuador, Guatemala, Paraguay, Kyrgyzstan). Work is also planned in Peru, East Asia and the Mediterranean region.

To support the indicator set, we have brought together relevant economic and environmental data and established a green growth database. Apart from providing data on what we know, this has also revealed important gaps in information in such areas as biodiversity, industrial performance, and the stocks and flows of natural assets. Even where data exist, they

are often not comparable across countries and difficult to combine due to differences in classifications, terminology or timeliness

Environmental data particularly lag behind. If we are serious about achieving inclusive green growth, we need to rethink how we analyze our economies, we have to make sure that all important elements get measured and are made statistically and economically visible, and we need harmonized tools to assess progress in all countries and indicators based on internationally comparable data. This is a collective challenge for the next decade after Rio+20 and for the post-2015 development agenda. The OECD continues to work with countries and international partners — such as UNEP, UNIDO, other UN agencies, the World Bank, and the European Commission — to advance the green growth measurement agenda. It seeks to fill gaps, capture the contribution that natural resources and ecosystems make to growth, make environmental and economic data more coherent, and converge around common core indicators for the green economy.

Placing these measurement efforts in the framework of the System of Environmental — Economic Accounting that was recently adopted as an international statistical standard to parallel the System of National Accounts, will maximize consistency and international comparability. And in October the 4th OECD World Forum, organized jointly with the Government of India, will provide another important contribution to this subject.

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