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Environmental boundaries and the economy – ARO Network report

January 27, 2010

As promised, here’s the first part of the ARO network report, covering speakers from New Economics Foundation (NEF) and Department for Environment, Food & Rural Affairs (DEFRA)

Dr. Eva Neizart from NEF spoke on the Regional Index of Sustainable Wellbeing (R-ISEW); an alternative measure of a region’s performance to the traditional Gross Domestic Product and Gross Value Added. The R-ISEW has been developed by NEF with the regional development agencies (RDAs), led by East Midlands Development Agency. Eva began by noting that a colleague of her’s had floated a similar idea for a presentation to an RDA four years ago only to be told that they weren’t interested! Clearly thinking has moved on, at least a little, in the intervening years.

To remain within our environmental limits and ensure global social justice, NEF calculate that the UK’s GDP must fall by 25% by 2050 on today’s levels. Eva acknowledged that this isn’t a very easy sell (!), and used that as a springboard for an alternative means of measuring our progress as a society. GDP is actually a hangover from measuring national production during World War II, and criticism of its continued use is by no means new. However, climate change’s emergence as a major policy issue has sharpened these concerns in recent years.

The R-ISEW adjusts GDP for negative effects such as those on the environment and society while adding in the value of positive factors which aren’t included, such as voluntary work, health and education expenditure (Wikipedia has useful, basic explainer here). It is currently being used alongside GDP and GVA by RDAs includng our own. In recent evidence to the East Midlands Regional Committee the index is still described as “relatively new” with central government still judging RDA performance through GDP measurement.

This reflects a fundamental issue raised by this discussion. For measures other than GDP to become politically acceptable, a more open debate about our aspirations and priorities as a society is needed. There is also a challenge for economists to come up with a model for the kind of managed ‘de-growth’ implied by a move away from GDP.

Stephen Hall from DEFRA touched on these themes in a presentation on government’s sustainable development indicators. Rather than taking a number of different aspects of sustainability and rolling them into a single index, DEFRA have opted to maintain a suite of separate indicators measuring factors as diverse as individuals’ feelings about their own actions, access to green space and mental health.

Publishing a slimmed down set of ‘wellbeing’ indicators did indeed spark the kind of debate referred to by Eva Neizart, with extensive press coverage and discussion of which aspects of life are most important to our day-to-day happiness. However, Stephen also highlighted that the policy implications of taking these indicators seriously has not yet become clear.

Questions from the floor included challenging the absence of population from the indicators; described as the “elephant in the room”. Eva countered that runaway consumption in rich countries far outstrips population as the key to respecting environmental limits (more on this view here).

An interesting contradiction also emerged around the monetising of environmental and social factors. For some it was an essential pre-requisite to getting such issues taking seriously at the ‘policy table’. However, does such monetisation also prolong an unhelpful view of the world solely in numerical terms? No easy answers, but great points made by colleagues and just the sort of reflection these events are so useful for.

Insightful presentations providing great context for the work being done in this area by the regional observatories. But more of that another time, unless any other bloggers want to take up the task…?

PS An essential starting place for this area is the Sustainable Development Commission’s “Prosperity Without Growth” report from last year. Great primer/overview over on the West Midlands Regional Observatory blog, including a link to the full report.

One Comment leave one →
  1. January 28, 2010 10:20 am


    During this year the RDA group that coordinates the development of use of the R-ISEW has asked nef to reviewed the calculation methodology. Last year we agreed to ‘fix’ the current version for 3 years to allow for its use in monitoring the various Regional Economic Strategies but in parallel run a review. In order to strengthen the Environmental component DEFRA also contributed to the development.

    It seems to me that the inclusion of the R-ISEW in regional strategies is a real step forward but ultimately the driver is the fact that the RDAs key targets from BIS are all still GVA related.

    However some progress is always better than none!


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