Wealth and Well-Being
November 22nd, 2007
Hurricane Katrina swept in off the Atlantic on 29 August 2005. Its effects were dramatic: 1,800 people lost their lives, 80% of New Orleans was flooded, and the damage has been calculated at 80 billion dollars. But the reconstruction activities that followed means that measured in terms of its effect on GDP, Katrina was “a success”.
At the beginning of this week I hosted the conference “Beyond GDP” which aimed at finding a better way to measure the true wealth and well-being of nations. It was very encouraging that what could have been seen as a rather academic subject really captured the imagination. Over 600 people from 53 countries came to the event and President Barroso from the Commission and President Pöttering from the European Parliament delivered the key note addresses.
The public, the press and politicians all need clear and simple indicators to understand if progress is being made (or not). And since the 1930’s the indicator of choice has been GDP. This is fine for measuring material growth - but this is all it does. GDP cannot measure welfare. It doesn’t pick up on issues that are vitally important to the quality of our lives such as a clean environment, social cohesion or even how happy people are.
The most important outcome of the conference was a political consensus that there is a need to go beyond GDP and develop complementary indicators that will let us better understand social and environmental issues.
A lot of work is being done in this area by researchers, businesses, NGOs and statisticians. To take one example, Wales is already using the ecological footprint to measure their progress. But if we are really going to change the way that people think about the world they live in then this work needs to be accelerated and also brought together. This was why in my speech to the conference I was pleased to announce that next year the Commission will produce a road-map for how to take this challenge forward.
To find out more you can see a short film that was produced for the event on YouTube.
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November 22nd, 2007 at 4:29 pm #
Dear Commissioner,
your initiative is highly appreciated. People increasingly fail to understand why their lives get more difficult whilst economists praise the benign effects of globalisation. This disconnection is politically very dangerous. (And don’t get me wrong: The reality check is needed for the economists, not for the people.)
Unfortunately, the Commission seems to speak with a split tongue. The Commission issued only 3 weeks ago a competitiveness report that makes a complete fetish of GDP.
Who are we to believe: You or our own eyes, to quote Marx (Groucho, that is) ?
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My country: Belgium
November 22nd, 2007 at 9:06 pm #
Thank you! You’re doing a good job.
Now, on biodiversity - part of your job I supposed - when is the EU going to bring the allowed bluefin tuna catch to zero? Look at what happens when you touch on ocean and sea biodiversity:
http://news.bbc.co.uk/2/hi/uk_news/northern_ireland/7106631.stm
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My country: France
November 28th, 2007 at 6:33 pm #
I was also at the “Beyond GDP” conference and I can confirm that it was a very interesting event. However, I feel that it wasn’t always properly emphasized that there might be trade-offs between well-being and sustainability. The two are not one and the same, as one refers to a level and the other to a future path. Some measures (such as curtailing the use of specific natural resources) can improve environmental sustainability while decreasing well-being, whereas others (such as improving living conditions for the mass of people that currently live below the poverty line) could strain the planet’s resources.
Let no one pretend that there is a simple way to balance both and that a lack of political will is the only culprit for the world’s woes! Even if we could surely do better with a little more of it…
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My country: Portugal
November 28th, 2007 at 7:05 pm #
The Footprint tells a lot and is clear for everyone.
The quality of life for our (grand)children is in danger. So the conference was urgently needed and very good, and I agree with the question about clear and simple indicators. Our Eco-center has good experience for 9 years with using the global eco-footprint. We use a quick scan, as well as separate scans for food, holidays, mobility and one for the climate footprint. See http://www.dekleineaarde.nl. They are in Dutch but you can see the system. I would like to see a European communication project with the footprint, and hope that the different countries will start to use the footprint besides the GDP figure.
November 28th, 2007 at 8:02 pm #
This has been a pleasure to attend this conference, we have to move beyond economic growth. It is a first step to acknowledge that well-being and ecology also need to be taken into account. However, we did not really explore the fundamental problem of economic activity increase in the rich countries, the fact that efficiency (and even sufficiency) increase will not succeed in an expansionist world view, the dangers of the enormous economic capital expansion potentially usable for material purposes again.
It may be democratically wise and scientifically rational to deal with the constraints to growth and explore sustainable scenarios of economic DEgrowth in the OECD countries. Please contribute to the call for abstract of the Paris conference on the 18th-19th of April 2008 on the subject of “Economic Degrowth for ecological Sustainability and social Equity”. Site : http://www.int-edu.eu/degrowthconference/en/, The deadline for abstracts is postponed until end of 2007.
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My country: France
December 1st, 2007 at 11:22 am #
The “Beyond Gdp” meeting in Brussels put together environmentalists and economists on the concept of sustainable development and the ways to measure it. The old Gross domestic product is not perfect, but instead of quarreling ideologically around it, it is much better to work together researching new measures of the human progress. But the task will not be easy: it requires acceptance by the politicians and capacity to use the new indicators for better policies.
Full post in Italian: http://blog.donatosperoni.it/2007/11/22/beyond-gdp-ambientalisti-ed-economisti-a-confronto/#more-48
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My country: Italy
December 2nd, 2007 at 4:24 pm #
Dear Commissioner Dimas,
This was an interesting conference, and it was great that you live-streamed it. I was able to follow most of the conference, including the speeches by you, President of the Commission Barroso, and Commissioner Almunia. I commend you for backing this important development, and for intending to follow up. I would highly recommend coordinating your roadmap with the OECD to a large extent. The OECD is doing a lot on moving beyond GDP as well, and you should avoid double work and differing standards wherever possible.
The idea that GDP is a ‘clear’ and ’simple’ indicator is a chimera, certainly when we talk about the ‘purchasing power parity’ (PPP) version of GDP often used in the press and by governments. There are huge methodological problems with the measure. The clarity of GDP, which you, Barroso and Almunia referred to is only appearance. In addition to developing complementary measures, we need to resolve the methodological problems of GDP. Moving to a better measure such as net national income (NNI) could be a part of that solution.
One theme which was raised several times during the conference, and which I think is vital, is that we have a transparent and democratic definition of what our goals as a society are. This must precede the elaboration of measurements, indicators, methodologies, etcetera. In that regard, I would like to point to the ’social reality stocktaking’ undertaken by the Secretariat-General of the Commission. The feedback to this stocktaking and the results of the stocktaking, due in early 2008, should be of great assistance.
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My country: Germany
February 13th, 2008 at 2:39 pm #
Dear Mr. Dimas,
For a follow up of ‘Beyond GDP’ I like to propose the following steps.
1. To calculate (with help of N. Stern) the extra costs of climate change and add them to the price of fossil fuels, by proportion of the CO2-emissions. And do the same with imports to the EU. In this way we get a fair competition for solar and wind-energy, and for inventions for saving energy.
2. We need as well fair competition for mobility and agriculture, for a big step towards sustainable development. In Holland a report was published already in 1989 with the result that organic product will be relatively cheaper on the market if the polluter would have to pay the real costs in agriculture! In Holland it did not happen yet. We need the EU for this!
3. To propose to all member states to follow the good practice of Wales: starting to use the model of the global ecological footprint. Then we can compare countries in Europe. And educational work with the footprint can grow even faster, in cooperation. We have started already….
With kind wishes,
Jan Juffermans, De Kleine Aarde/The Small Earth.