Three pillars are essential to developing sustainable policies: economic, environmental and social. True progressive sustainability requires a balance of these three pillars which, in turn, allows for sustainable development in each area.
Economic development is most commonly measured in terms of Gross Domestic Product (GDP), and its growth or regression is predominantly expressed in percentage change instead of absolute terms. This infers that a constant GDP growth rate actually reflects an exponential absolute GDP growth. In other words, constant absolute GDP growth is translated as decreasing rates of growth. In this light, aiming for a constant GDP growth rate clearly cannot be sustainable as it would lead to ever-increasing absolute GDP growth, reinforcing the imbalances between the economic, social and environmental pillars of sustainability.
Now, of course, GDP can grow through many different factors: consumption, investment, lower imports and higher exports or alternatively an increase in value added, derived from transforming input goods, labour and capital, into products and services. This however, avoids a very crucial part of economic activity today which is the use of resources or natural capital, which remain unaccounted for in traditional economics. It is, however, a key element of achieving environmental sustainability to decouple natural resource use from economic activity, because resource abstraction and use causes severe environmental damage, impacting humans and ecosphere alike.
In a first step, decoupling will come through increased resource efficiency, leading to lower rates of resource intensity per unit of GDP. Yet even if we achieve higher resource efficiency and lower the resource intensity of economic activity, this does not necessarily translate into absolute decoupling or an absolute reduction of resource use from economic growth.
In some countries, accelerated demographic growth creates a momentum for continued high levels of resource use. Other drivers are income related, implying that households with a higher income will tend to use more natural resources. And some are simply cost-driven: the so-called rebound-effect describes situations where higher resource efficiency leads to lower costs per unit consumed, which can eventually entail higher resource use, not only nullifying the potential savings, but even increasing the absolute level of resource use. Therefore, next to regulation targeting production, consumer behaviour is increasingly seen as a key step towards achieving environmental and social sustainability. The key message here is that more is not always better, i.e. that the ability to consume more cannot be a measure for progress.
This is a fundamental paradigm shift. We must acknowledge that we won’t be able to simply shift from one input to another, substituting more environmentally harmful inputs and processes with less harmful, i.e. switching from fossil-fuel powered cars to electric vehicles. The pressure caused both by behavioural routines and the global demographic trend compels us to understand that we need to cut back resource use in absolute terms.
Cutting back on resource use does not necessarily mean abandoning the idea of progress and growth altogether, but it requires a shift in the interpretation of what progress and growth will mean.
Growth is not simply limited to measuring GDP units; growth can be measured in many other ways, including, alongside the economic dimension of sustainability, also its environmental and social pillars. The discussion on measuring wealth, happiness or simply progress – subsumed under the slogan ‘Beyond GDP’ has led to the development of many alternative measurements. Each one of those has a different focus, different approaches, but also shortcomings.
Unfortunately, there is no simple right or wrong. None of the measurements is perfect or free from flaws, including the GDP. An indicator can only measure what it is made for and will only be able to quantify what is quantifiable.
Instead of hoping for one ‘perfect’ index to measure all ‘real’ progress of society, we need to understand that a precondition of finding an appropriate measurement is to define what our understanding of progress actually is. Once we can agree on the goals and their hierarchy, then we will be able to find measurements which will deliver guidance for sustainable policies.
The definition of goals needs to be clear and realistic, therefore also stating our priorities. Aiming for diverging or conflicting goals in parallel efforts will only result in failure and disappointment. Harmonising and pacifying terms such as ‘green growth’ or ‘green jobs’ create an illusion that we will be able to achieve everything simultaneously without making difficult choices. This requires visionary leadership which is frequently lacking in today’s policy-making environment.