2.2.
Keep it simple: pitfalls of watching a single indicator
A critique of popular indicators of development: missing vital information
Paraphrasing Albert Einstein, indicator sets should be as simple as possible, but not simpler. The simplest solution would be to agree on a single indicator. Would that work?
For ages people have been judged by a single indicator: their wealth. But that single magic figure of x million dollars, or y hundred hectares of land, or z head of cattle implicitly expressed much more than property: it expressed the ability to buy sufficient food, to build a comfortable house, to feed even a large family, to live in luxury, to educate children, to pay for health care, and to support oneself in old age. And it implied that under these circumstances
one could be reasonably happy. In other words, under prevailing conditions, wealth could be used as an aggregate indicator for completely different dimensions of life contributing to general happiness. But it could not account for personal tragedy or disability, and wealth would fail as an indicator for happiness if, say, the children were killed in an accident. In real life we usually need more than one indicator to capture all important aspects of a situation. A single indicator can never tell the whole story.
A single indicator like GDP cannot capture all vital aspects of sustainable development
The fascination with a single indicator has carried over to economics and national development, with a rather bizarre twist: economists have not focused on per capita wealth (of financial assets, land or resources), but—in addition to watching inflation and unemployment rates—devote most of their attention to an indicator that essentially measures the rate at which natural resource wealth is being depleted—the faster, the better. This is the GDP indicator—gross domestic product—the total money value of the annual flow of goods and services produced in an economy. This includes all goods and services, irrespective of their contribution to national development: social goods (such as education, food and housing) as well as social bads (such as cost of crime, pollution, car accidents, disability and poor health). Since, with current technology, each of these goods and services is associated with significant consumption of non-renewable resources and generation of environmental pollution, GDP is now mainly a measure of how fast resources are squandered and converted into money flows, irrespective of their effect on society.5 Hardly an indicator of national wealth and well-being!
Aggregate indexes are an improvement, but aggregation can conceal serious deficits
In response to these obvious shortcomings of the popular GDP, various groups have sought to define aggregate indicators that present a more accurate picture of material well-being.6 In the Index of Sustainable Economic Welfare (ISEW— later evolved into the Genuine Progress Indicator, GPI7), GDP is corrected by subtracting (rather than adding) social bads (like the cost of pollution clean up or car accidents), and adding (rather than ignoring) the value of unpaid services (e.g., in households and communities). Other aggregate indicators include con- cerns beyond money flows. The UNDP’s Human Development Indicator (HDI), for example, includes literacy and life expectancy.
These are important improvements but they cannot remove a fundamental deficiency of aggregate indicators: aggregation may hide serious deficits in some sectors, which actually threaten the overall health of the system. And aggregate
indicators become even more questionable when they require adding apples and oranges (as in the HDI), i.e., items that cannot be measured in the same units (such as money flows). Why not use separate indicators in the first place?
Measuring sustainability: ecological footprint and barometer of sustainability
An aggregate indicator that makes physical sense is the Ecological Footprint or the almost equivalent Sustainable Progress Index (SPI).8 It measures the total land area that is required to maintain the food, water, energy and waste-disposal demands per person, per product or per city. This is an excel- lent summary indicator of the major environmental impacts of economic activity, but it does not—and is not meant to—capture the social dimen- sions of sustainable development, for example.
In order to evaluate simultaneously both the environmental and social com- ponents of sustainable development, the barometer of sustainability has been developed.9 In this two-dimensional graph, the states of ecosystem well-being and human well-being are plotted on relative scales from 0 to 100, indicating the range from bad to good conditions. The location of the point defined by these two values gives an indication of sustainability (or unsustainability). In an application for Manitoba, Canada,10 ecosystem well-being is computed by aggregating six indicators, while human well-being uses 28 indicators.
Ad hoc or trial-and-error selection of indicators is inadequate
In response to the deficiencies of the aggregate indicator concept, some researchers prefer to use more or less extensive lists of indicators covering the problem area under investigation.11 While they are an improvement over the aggregate indicator concept, these lists must be criticized on several counts: (1) they are derived ad hoc, without a systems theoretical framework to reflect the operation and viability of the total system; (2) they always reflect the specific expertise and research interest of their authors; (3) as a consequence of (1) and (2), they are overly dense in some areas (multiple indicators for essentially the same concern), and sparse or even empty in other important areas. In other words, they are not a systematic and complete reflection of the total system, i.e., human society in interaction with its natural environment.
Pressure–state–response frameworks fail to account for system relationships and dynamics
In an attempt to be more systematic, the PSR (pressure, state, response)12 and PSIR (pressure, state, impact, response) frameworks have been introduced and are widely applied to sustainable development problems.13 In this approach, isolated chains of cause and effect are identified for a particular environmental problem and corresponding indicators are monitored. For example: CO2-emissions (pressure) → ( CO2 concentration of the atmos- phere (state) → ( global temperature (impact) → ( carbon tax (response).
The most serious objection to this approach is that it neglects the systemic and dynamic nature of the processes, and their embedding in a larger total system containing many feedback loops. Representation of impact chains by isolated PSIR-chains will usually not be permissible, and will often not even be an adequate approximation. Impacts in one causal chain can be pressures, and in another can be states, and vice versa. Multiple pressures and impacts are not considered. The real, usually nonlinear relationships between the different components of a chain cannot be accounted for. States, and rates of change (stocks and flows) are treated inconsistently.14 For example, a PSIR chain of the CO2-emissions problem would not account for the facts that CO2-concentration is only partially caused by human emissions, that global temperature is only partially determined by CO2-emissions, that a carbon tax may be introduced for other reasons, and that this tax has many other (economic and social) repercussions besides affecting CO2-emissions.
A systems approach is required to structure the search for indicators
The conclusion from this brief look at indicator schemes is that none of them is adequate for the purpose defined in the previous section: (1) to provide all essential information about the viability of a system and its rate of change, and (2) to indicate the contribution to the overall objective (e.g., of sustainable development). There is a general awareness of these shortcomings in the research community, and it has led to the formulation of the Bellagio Principles as “guidelines for practical assessment of progress toward sustainable development”15 (see Box on Bellagio Principles).
Realizing the inadequacy of current approaches to indicators of sustainable development, we must analyze the entire complex of problems and tasks more carefully. This requires a reasonably detailed (mental or formal) model of the total system and its components. There are three separate tasks:
1. We must identify the major systems that are relevant in the context of sustainable development;
2. We must develop an approach for identifying indicators of viability and sustainability of these systems; and
3. We must think about how to use this information for assessing viability and sustainability of human development at different levels of societal organization.16