The Mismeasure of Wealth

CAMBRIDGE – Despite many successes in creating a more integrated and stable global economy, a new report by the United Nations Secretary-General’s High-Level Panel on Global Sustainability – Resilient People, Resilient Planet: A Future Worth Choosing – recognizes the current global order’s failure, even inability, to implement the drastic changes needed for true “sustainability.”The Panel’s report presents a vision for a “sustainable planet, just society, and growing economy,” as well as 56 policy recommendations for realizing that goal. It is arguably the most prominent international call for a radical redesign of the global economy ever issued.But, for all of its rich content, Resilient People, Resilient Planet is short on concrete, practical solutions. Its most valuable short-term recommendation – the replacement of current development indicators (GDP or variants thereof) with more comprehensive, inclusive metrics for wealth – seems tacked on almost as an afterthought. Without quick, decisive international action to prioritize sustainability over the status quo, the report risks suffering the fate of its 1987 predecessor, the pioneering Brundtland Report, which introduced the concept of sustainability, similarly called for a paradigm shift, and was then ignored.Resilient People, Resilient Planet opens by paraphrasing Charles Dickens: the world today is “experiencing the best of times, and the worst of times.” As a whole, humanity has achieved unparalleled prosperity; great strides are being made to reduce global poverty; and technological advances are revolutionizing our lives, stamping out diseases, and transforming communication.On the other hand, inequality remains stubbornly high, and is increasing in many countries. Short-term political and economic strategies are driving consumerism and debt, which, together with global population growth – set to reach nearly nine billion by 2040 – is subjecting the natural environment to growing stress. By 2030, notes the Panel, “the world will need at least 50% more food, 45% more energy, and 30% more water – all at a time when environmental limits are threatening supply.” Despite significant advances in the past 25 years, humanity has failed to conserve resources, safeguard natural ecosystems, or otherwise ensure its own long-term viability.Can a bureaucratic report – however powerful – create change? Will the world now rally, unlike in 1987, to the Panel’s call to “transform the global economy”? In fact, perhaps real action is born of crisis itself. As the Panel points out, it has never been clearer that we need a paradigm shift to achieve truly sustainable global development.But who will coordinate an international process to study how to encourage such a shift, and who will ensure that scientific findings lead to meaningful public-policy processes?First, there must be a significant international and interdisciplinary research effort to tackle these issues comprehensively; the Panel’s recommendation to establish an international science panel is therefore a step in the right direction. But creating such a body will take time, and the challenge is to get the best science to policymakers quickly.The 2010 Report by the Commission on the Measurement of Economic Performance and Social Progress, commissioned by French President Nicolas Sarkozy, echoed the current consensus among social scientists that we are mismeasuring our lives by using per capita GDP as a yardstick for progress. We need new indicators that tell us if we are destroying the productive base that supports our well-being.The United Nations University’s International Human Dimensions Program (UNU-IHDP) is already working to find these indicators for its“Inclusive Wealth Report” (IWR), which proposes an approach to sustainability based on natural, manufactured, human, and social capital. The UNU-IHDP developed the IWR with support from the United Nations Environment Program, to provide a comprehensive analysis of the different components of wealth by country, their links to economic development and human well-being, and policies that are based on social management of these assets.The first IWR, which focuses on 20 countries worldwide, will be officially launched at the upcoming Rio+20 Conference in Rio de Janeiro. Preliminary findings will be presented during the Planet under Pressure Conference in London in late March.The IWR represents a crucial first step in transforming the global economic paradigm, by ensuring that we have the correct information with which to assess our economic development and well-being – and to reassess our needs and goals. While it is not intended as a universal indicator for sustainability, it does offer a framework for dialogue with multiple constituencies from the environmental, social, and economic fields.The situation is critical. As Resilient People, Resilient Planet aptly puts it, “tinkering around the margins” will no longer suffice – a warning to those counting on renewable-energy technologies and a green economy to solve our problems. The Panel has revived the call for a far-reaching change in the global economic system. Our challenge this time is to follow words with action.Sir Partha Dasgupta is Professor of Economics at the University of Cambridge and Fellow of St. John’s College, Cambridge. His most recent book is Human Well-Being and the Natural Environment.