By challenging short-sighted decision making, a new study from the China Council for International Cooperation on Environment and Development (CCICED) seeks to establish a common language and pathway on how to measure well-being for people and the planet.
Gross domestic product (GDP) has become the main guidepost used by countries to determine development progress and allocate resources. However, it does not account for human well-being, environmental sustainability, unpaid household services (such as care work), and the uneven distribution of economic benefits.
Moreover, it fails to capture the human and environmental destructiveness of some economic activities. Harmful practices, such as deforestation, overfishing, and the burning of fossil fuels, often contribute to increases in GDP but reduce well-being.
To address the triple planetary crisis of climate change, pollution, and biodiversity loss, a fundamental shift in how we measure progress is urgently needed. The world is facing catastrophic and interconnected crises. Climate change, biodiversity loss, mountains of public and private debt, frayed social relations, democratic deficits (and more) all point to the need for a new basis for assessing national progress.
The UN Sustainable Development Goals Badly Off-Track
The theoretical models of industrialization and urbanization have had severe impacts on sustainability. Those will be investigated in the scoping study to focus on reshaping the relationship between the environment and development under the paradigm of ecological civilization, representing China’s endeavours to address the unsustainability crisis.
Using GDP or income growth as a proxy for development fails to recognize that sustainable development is multidimensional and affected by many different but often connected factors, such as access to resources, productivity traps, social and environmental dependencies, inequalities, vulnerabilities, and challenges related to institutional capacity. There are significant vulnerabilities that may exist in countries with high levels of GDP. Similar levels of national GDP can obscure the very different development realities, vulnerabilities, and challenges that exist in different countries.
Going beyond GDP to accurately measure what is valuable and enhance decision making in the best interests of people, the planet, and the future, can fundamentally change the way governments make policies and allocate resources. It could spur investments to accelerate the achievement of the UN Sustainable Development Goals (SDGs) and the realization of the commitment to leave no one behind.
Sadly, the current fixation on GDP serves to amplify the natural tendency of humans to be short-sighted in decision making. The electoral cycle-driven political imperative has the same effect. These forces have contributed to the drawing down of national wealth—especially natural wealth but also financial and social wealth in many countries—in the name of boosting short-term economic growth. Such policies might have been acceptable in the relatively less populated world of the 1940s, but they are completely unacceptable today.
From GDP to ”Comprehensive Wealth”
While development is a complex process, in all countries, it rests on the same basic set of capital stocks: human, natural, social, produced, and financial capital. Together, these stocks make up the comprehensive wealth portfolio. Each country is endowed with its own comprehensive wealth portfolio to manage.
The effectiveness with which countries manage their portfolios to generate “consumption” opportunities for their citizens (consumption being understood broadly here to include both market and non-market goods and services) largely determines the well-being prospects of the nation. If stocks are growing and used productively, well-being will be high and sustainable. If stocks are declining or used unproductively, well-being will be lower and unsustainable.
Given this, it seems clear that countries should be measuring comprehensive wealth. However, they do not. Too much effort is put into measuring GDP and ensuring its growth and not enough into measuring the comprehensive wealth stocks that underpin long-term well-being.
The UN initiative Our Common Agenda underlines the need for a framework to progress beyond GDP. In both the 2030 Agenda for Sustainable Development and Our Common Agenda, it is recognized that a harmful anachronism exists at the heart of global policy-making, which is that our economic models and measurements overlook many aspects that sustain life and contribute to human well-being. While placing disproportionate value on activities that deplete the planet. The intention of the proposals from the UN Secretary-General is not to replace GDP but to outline a path to develop complementary metrics in which what matters to people, the planet, and the future is more fully recognized.
No Beyond GDP Pathway Agreed
There is not yet any commonly agreed pathway beyond GDP. The UN Secretary-General mentions measuring comprehensive wealth as one possible pathway. This CCICED scoping study will look at comprehensive wealth from this perspective, with a particular focus on how it might be compiled and used in China.
The SDGs and their indicators, universally adopted by UN member states, were consciously crafted to address the shortcomings of GDP-focused development. Even if the goals and their indicators are the most comprehensive “Beyond GDP” framework agreed to and measured today, it is far from sufficient.
Moreover, in Target 17.19 of the SDGs, member states are specifically urged to build on existing initiatives to develop measurements of progress on sustainable development that complement GDP and support statistical capacity building in developing countries by 2030.
Beyond GDP: Recommendations for a new conceptual framework
The UN Secretary-General calls for the member states to make an explicit commitment to go beyond GDP by agreeing on a new conceptual framework, firmly anchored in the 2030 Agenda, by the time the Summit of the Future is held in 2024.
The framework should also pave the way for transformation across social, economic, and environmental dimensions toward participatory governance and stronger institutions, innovative and ethical economies, and environmental resilience.
On the social dimension, the framework should help us steer toward equitable, inclusive, and safe societal conditions in which everyone is empowered to participate and contribute and from which everyone can benefit safely and effectively.
On the economic dimension, the framework should advance innovative approaches to find collective solutions to our challenges. On the environmental dimension, it should help strengthen our preparedness for climate and environmental change.
In conclusion, we recommend that the framework should be designed to achieve three main outcomes.
- First, well-being and agency. Putting the focus on people and promoting meaningful participation to ensure that decisions reflect people’s needs and enable everyone to contribute to transformational change.
- Second, respect for life and the planet. Safeguarding the planet and ensuring possibilities for life and well-being in the future.
- And third, reduced inequalities and greater solidarity. Making efforts toward a more equal distribution of well-being.
Op-ed by Eva Svedling, CEO at Global Challenge and CCICED Council Member
The views expressed are the author’s and not necessarily those of CCICED.