Beyond GDP: Day One

The conference so far has exceeded expectations. As we enter into Day Two, I thought I'd share some of my notes from the first day's sessions. If others have more to add, please comment on this post. (You can still catch today's sessions via live webcast at http://www.beyond-gdp.eu/ )

The day began with a technical workshop. I was setting up our display booth, so I could not attend, but it was summarized as follows: About 120 people examined the utility of the GDP as a measure of progress, and reached these conclusions, as reported by Anders Wijkman, MEP, Environment, Public Health and Food Safety Committee:

• GDP is an insufficient measure of progress. The group examined the possibilities of using composite measures or integrated measures. They didn't choose one approach over the other, but wanted to ensure that whatever plan they reached allowed for parallel efforts to develop better indicators, and also allowed for specific indicators to address specific problems -- for some problems, the more precise the indicator, the better.
• How to define well-being differs from country to country. For example, in Rio de Janeiro security may be a critical measure of well-being, while it may not be such an issue in Stockholm. The group would perhaps be better served with several parallel definitions describing a basic set of assets that are indispensable.
• Efforts to "decouple" economic growth from resource use aren't helpful -- we need efficiency gains (in several orders of magnitude) but resource use and economic gain are tied together.
• We have lots of data. Economic data is currently produced monthly or quarterly; environmental data may have a 2-year lag time. Certain areas need more or better data. These include ecosystem accounting, ecosystem services, natural capital degradation, interlinkages, and more. Care should be taken to merge the Lisbon strategy, sustainability strategies, and climate action strategies into one strategy. We also need to increase information to consumers to help spark change. We need more information about living conditions at the parcel level, about the trade-off between work and leisure time, and to better understand human capital and investments in education. We also need to understand taxation systems, which are based on increasing revenue growth.
• Science and education are not optimized. We need better information to the public and to policymakers. It needs to be easily understood, and travel both from the top down and the bottom up.
• We are in a real hurry. Externalities overwhelm us.

The opening session began with remarks from José Manuel Barroso, President of the European Commission. His theme was that global governance needs new data and new analytic tools. GDP alone is insufficient for the policymaking of the 21st century.

Joaquín Almunia, Commissioner for Economic and Monetary Affairs, said that statistics are indispensable. The GDP measure was developed out of the Great Depression in the 1930s and is now the foremost measure of economic activity. Developing something new will be difficult. Because composite indicators require weighted values, they are not seen as objective or transparent. He prefers a system of environmental accounts like the European system of national accounting. The new challenges of this century require a new statistical instrument.

Rui Baleiras, Secretary of State for Regional Development, Portugal, EU Presidency, said we need consensus on sustainable/social welfare concepts in order to develop the tools to measure them. New tools have a double role: (1) to help the decision-making process, and (2) to help government and the people understand the new challenges we face. Progress, in a new paradigm, should include economic prosperity, social cohesion, and environmental sustainability. It is more important to have a picture of the overall forest than the individual trees. It is too difficult to have too many indicators all moving in different directions. We should restrict our efforts here to developing a few, high-level indicators. We need to think of the work as a cycle: (1) define progress, based on research; (2) develop progress measures; (3) produce and present indicators of progress; and then cycle back to (1) continue clarifying our definition of progress based on research with the policy makers.

More on the next post .....