Helen Clark: Beyond GDP - Measuring the Future We Want
Helen Clark, Administrator of UNDP
“Beyond GDP: Measuring the Future We Want”
Opening Statement at UNDP Event on Measurement of Sustainable Development at Rio+20
20 June 2012, 11am-12:30pm, Rio Centro, Room P3-6
It is my pleasure to welcome you to this UNDP side event Beyond GDP: Measuring the Future We Want.
Nobel Laureate Joseph Stiglitz has argued that, “what we measure affects what we do. If we use the wrong measures we will strive for the wrong things.” The High Level Panel on Global Sustainability appointed by the UN Secretary General noted that “if it cannot be measured, it cannot be managed.”
In an age when the world is still struggling to get traction on sustainable development, appropriate measures of progress are urgently needed. In my comments today, I will make the case for going beyond reliance on GDP as a measure of progress and look at what measures might be more appropriate.
Gross Domestic Product, or GDP, became the dominant measure of countries’ progress from the mid-1940s. It should be noted that the chief architect of the measure, economist Simon Kuznets, himself recognized from the outset that the welfare of a nation and the well-being of its citizens could not be inferred from a measurement of national income.
Over decades in public life, I have seen GDP levels used as the basis for the classification of countries, channeling official development assistance (ODA), and extending preferential trade treatment. But clearly it has always had limitations as a proxy for assessing human progress.
Equity, dignity, happiness, sustainability – these are all fundamental to our lives, but absent in the GDP measure. Progress needs to be defined and measured in a way which accounts for the broader picture of human development and its context.
No finer rationale for why that is appropriate can be found than that provided by the late Robert Kennedy. He said in 1968 that:
“Our gross national product counts air pollution and cigarette advertising,… the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl… Yet [it] does not allow for the health of our children [or] the quality of their education. It measures neither our wit nor our courage; our wisdom nor our learning; it measures everything, in short, except that which makes life worthwhile.”
While income is a crucial contributor to well-being, it is far from being everything. The first global Human Development Report (HDR) launched by UNDP in 1990 defined human development as a process of enlarging people’s freedoms, choices, and capabilities to lead lives they value. UNDP has long argued accordingly that a measure of progress which is broader than GDP is needed. That measure emerged from the human development paradigm in the form of the Human Development Index, which since its inception in 1990 has incorporated health and education components alongside that of GDP per capita.
But UNDP is not alone in looking for alternative measures. In recent years, the Kingdom of Bhutan has championed gross national happiness as an alternative measure of progress, and Canada has launched its Index of Well-Being. A “Happiness index” to measure National Well-Being in the United Kingdom has also been developed. The Sen-Stiglitz-Fitoussi Commission, established by the President of France, looked at measuring economic performance and social progress to identify the limits of GDP and consider what additional information and tools could be added to create a more holistic picture.
The focus here at Rio+20 is on sustainable development. Measurement of progress across its strands is complex; yet it is also fundamental to providing an evidence base for policy-making.
Concern about the absence of sound data and indicators of sustainable development to guide decision-making was raised at the Earth Summit, twenty years ago. The last chapter of Agenda 21, Information for Decision-making (chapter 40), focused on the need to bridge the data gap and improve information availability at different levels. Article 40.4 reads: “Commonly used indicators such as the gross national product (GNP) and measurements of individual resource or pollution flows do not provide adequate indications of sustainability.” Among other things, the chapter called for new indicators to be developed which consider the interactions between different sectoral environmental, demographic, social, and developmental parameters.
Since then, much work has been done.
Measuring sustainable development
Various approaches have already been taken to measure elements of sustainable development, to complement or provide alternatives to GDP.
On environmental sustainability, for example, green national accounting adjustsGDP to take into account the environmental costs of economic activity. GDP is based on the market value of goods and services, and so takes no account of things which are clearly valuable – like unpolluted air – but which are not bought and sold. Green national accounting endeavours to address that.
The Ecological Footprint, of the Global Footprint Network, looks at the natural resources required to maintain current consumption patterns. A key message from the ecological footprint work is that patterns of consumption and production are unsustainable at the global level and imbalanced regionally.
The Environmental Performance Index (EPI), developed by the Yale Center for Environmental Law and Policy (YCELP) and the Center for Earth Information Science Information Network (CIESIN) at Columbia University, ranks countries on 22 performance indicators spanning ten categories, including agriculture, climate change, and energy. It tracks performance and progress on environmental health and ecosystem vitality.
The Happy Planet Index (HPI), developed by the New Economics Foundation, captures the degree to which people are able to live long and happy lives, per unit of environmental impact. It uses life expectancy data from UNDP’s Human Development Reports, well-being data from the Gallup World Poll, and the ecological footprint data described above to rank countries according to their ability to promote human well-being while ensuring that their environmental impact is minimized.
UNDP believes that the Human Development Index could also be a starting point for designing a more comprehensive measure of sustainable development. Over the past two decades, it has become a mainstream tool, used by governments, civil society, and researchers. More recent Human Development Reports have added new indices in an endeavour to capture nuances of human development better and reflect income, health, education, and gender-based inequities.
Work has begun within UNDP to explore options for an adjusted HDI which could capture more dimensions of sustainable development.
In this process, and to guide our discussion today, the following questions could be asked:
- What should be measured, and what indicators could be used, which would be relevant to policy makers and internationally comparable?
- What are the overriding principles, for example, equity, human rights, and universality, which could help guide this work?
- What do policy-makers need to know to craft sustainable development pathways, and could a new measure help provide such information to complement traditional measures such as GDP, inflation, and unemployment?
The Secretary General’s High Level Panel on Global Sustainability, to which I referred earlier, recommended that: “The international community should measure development beyond gross domestic product (GDP) and develop a new sustainable development index or set of indicators.” Today’s discussion responds to their call.
I am delighted that we have distinguished leaders to begin today’s conversation; the Director of the Human Development Report Office at UNDP to expand on the work of his office on new measures of progress; and an informed audience to stimulate further discussion.