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It is argued that, because environmental assets are free or under-priced, they tend to be overused and abused, resulting in environmental damage. Because they are not owned and do not have price tags then there is no incentive to protect them. The solution offered is to put a price on the environment so that it can be incorporated into the economic system and taken seriously by those who make decisions.

Environmental values will then be integrated into economic decisions, market failures will be repaired and sustainable development assured. Cost-benefit analysis or CBA is one of the key ways in which environmental values are incorporated into economic activities. Another is through economic instruments. Economic instruments include taxes and charges on polluters that aim to internalise environmental costs into the decisions of companies and individuals and therefore provide an incentive to curtail environmentally damaging behaviour.

The measurement of environmental gains and losses is assessed in money terms. Direct costs and benefits are the easiest to estimate. These might include estimating the value of production foregone because of environmental damage, the value of earnings lost through health problems associated with air and water pollution, health care costs, and the value of decreased growth and quality of crops because of soil degradation.

These direct monetary costs tend to underestimate the full costs and benefits provided by the environment. For example, improved health resulting from a cleaner and safer environment is worth more than just the medical bills saved. Similarly, a clean beach is worth more than the just the value of having healthier beach goers. Economists attempt to measure these additional dimensions by considering the preferences of individuals for things like cleaner air and water, less noise and protection of wildlife. This is done in various ways Beder, , chapter 7.

The most popular is Willingness to Pay or Contingent Valuation. Market demand may be derived from surveys to find out how much people are willing to pay to preserve or improve the environment, how much they will pay to visit a particular environment, or how much compensation a person is willing to accept for loss of environmental amenity 'willingness to sell'. Both methods, 'willingness to pay' and 'willingness to sell' have problems because they are based on surveys which are likely to be inaccurate because people may inflate or deflate the amounts they are willing to pay or accept.

The concept of willingness to pay assumes that the environment does not already belong to the community, but that they must buy it. Willingness to sell, on the other hand, assumes the environment belongs to the community and they must be compensated for any losses. However, economists tend to prefer willingness to pay because willingness to sell surveys 'tend to generate very high dollar values, to the point where many people find them implausible' Streeting and Hamilton, ; A major problem with valuing the environment according to individual willingness to pay is that the preferences of future generations and indeed other species are not taken into account.

For this reason, the market value might not be consistent with long-term welfare or survival. Bryan Norton, Professor of Philosophy, argues that placing of dollar values on species so that they might be weighed against such things as 'the value of real estate around reservoirs and kilowatt-hours of hydroelectric power' is inappropriate because biodiversity is necessary for survival , p. He compares such reasoning to hospital administrators trying to work out which parts of a life-support system can be disconnected and sold to raise money for the hospital.

They do not really know which part is necessary for the continued operation of the support system, and guess which parts will not be missed. For many people, not just environmentalists, putting a price on nature is as abhorrent as putting a price on family and friendship.

Economy and the Environment

It represents the further creep of the market and economics into areas of life that have traditionally been considered above material concerns. Like the packaging and marketing of religion and body organs, it is somehow unsavoury and definitely unwelcome. The usefulness of economic theory can be pushed too far.

Herman Daly and John Cobb note that resource economists have found people are often reluctant to co-operate with contingent valuation surveys. They quote a researcher who argues that 'respondents believe that environmental policy - for example, the degree of pollution permitted in national parks - involves ethical, cultural, and aesthetic questions over which society must deliberate on the merits, and that this has nothing to do with pricing the satisfaction of preferences at the margin' p. While many economists argue that the market is democratic because individual consumers can vote by choosing how they spend their money, the move towards a market allocation of environmental resources is in reality a move away from democracy.

Currently, communities can influence governments to protect the environment through legislation and intervention by campaigning and demonstrating as well as by voting. But in a system where the optimum level of environmental protection is decided by a market, influence is wielded by the wealthy—those with most market power. Where economic instruments are used, private firms can choose to pay the charge and continue to damage the environment. The political process has traditionally determined environmental questions. Some economists and bureaucrats want to avoid this process because they argue it is economically inefficient.

They claim that markets are more efficient at giving people what they want than governments but this assumes that there is no such thing as the common good outside of individual wants and preferences. However, Peter Self, a professor of public administration, argues that:. Economic markets follow an instrumental logic whereby, under the right conditions, rational egoistic behaviour is socially legitimated and acceptable -- In politics, by contrast, it is or was a general social belief that individuals should have some regard to the 'good of society' and not just their own private wants.

Self , p. Humans are first and foremost social animals and although their personal spending may reflect their individual self-interests, their participation in the political process through voting, demonstrating and lobbying often reflects broader and more long-term communal values. Moreover economic efficiency does not necessarily equate with social or environmental welfare.

Just because the benefits of an action outweigh the costs, it does not mean that the decision is morally correct or politically acceptable. For example, child labour or slavery would be considered immoral even if the economic advantages to the whole society outweighed the costs to some individuals.

Pricing mechanisms and markets tend to ignore distributional issues such as who gets the benefits and who bears the costs. As long as the sum of the benefits outweigh the sum of the costs, even if a small group of people get the benefits and a whole community suffers the costs, economists assume the society as a whole is better off. There is an exacerbating tendency in our society for poor people to be the ones that suffer the costs of hazardous, dirty or unwelcome developments.

Siting a dirty industry in an already dirty area will be less costly than siting it in a low-pollution area because the costs of pollution, if measured in terms of decline in property values will be lower. Similarly, siting the polluting industry in an area that already has depressed property values, will also be less costly by this method than siting it in an affluent area. In this way the poor are continually disadvantaged by market-driven environmental choices. Because it is based on individual preferences, environmental valuation tends to reflect and therefore maintain the prevailing distribution of income.

Wealthier people are willing and able to pay more and therefore their votes count more in a market. When market-based approaches to the environment are allowed to by-pass the political process they perpetuate the root causes of environmental degradation because the environment is simply treated as an adjunct to production. Attempts to assign dollar values to segments of the environment are ways of reaffirming the market as the primary social decision-making mechanism - a mechanism that relies on individual self-interest to achieve maximum social welfare.

It does not occur to us that by assigning value to diversity we merely legitimize the process that is wiping it out, the process that says, 'The first thing that matters in any important decision is the tangible magnitude of the dollar costs and benefits' Ehrenfield,, p.

Both the Limits to Growth approach and the Sustainable Development approach have neglected the ethical and political dimensions. The limits to growth advocates of the s and 70s tended to avoid the social implications of aborting economic growth in low-income countries and the issue of which nations were responsible for most resource use. The sustainable development advocates of the present similarly want to avoid the ethical issues by falling back on economic calculus to make decisions as if values can be determined by doing the sums correctly.

They also avoid the distributional issues by advocating economic growth for all in the hope that this will solve the problem of equity. On top of this the sustainable development approach makes further environmental degradation inevitable. It is apparent there is a need to go beyond these two failed approaches and find a third one which embraces the ethical dimension. At the start of the 19th century, philanthropists often physicians or clergymen were using statistical data on housing, living and working conditions, income, alcoholism, prisons, etc.

In the United States, the first known use of social indicators for the purpose of social reform goes back to around , with the production of statistical data for five consecutive years on the number of inmates awaiting trial in Philadelphia prisons Cohen, Observers, among them Gadrey and Jany-Catrice , Perret and Sharpe were numerous in remarking on the recent proliferation of attempts—if not at replacing GDP—at least supplementing it with a more adequate synthetic measurement of well-being. Box 1 gives a brief presentation of these various indices 3. For an exhaustive census of welfare and quality of life indices or macro-indicators, see Gadrey and Jany-Catrice's and Sharpe On closer examination, it is not so much indicators that come up against a degree of opposition in particular from the scientific community but rather indices or synthetic indicators.

There is no opposition, quite the contrary, to the proliferation of scoreboards of every variety, i. However, the construction of indices, in particular the Human Development Index, sets off reactions such as the one by Baneth, for example, who goes so far as to say: " It was a vain, pretentious and slightly ridiculous endeavour to try to sum up human development in all its complexity and multiple dimensions with a single figure.. In other words, a synthetic index is no more or less than a scoreboard to which is added an extra indicator made up of the aggregation of the data contained in it.

But it would seem that for some people, this ultimate phase is all the difference between a rigorously serious and scientific effort and a subjective, ideological and fanciful exercise. The concept of poverty, for example, covers a material dimension, but also a social one exclusion, marginalisation and also a cultural dimension level of education, means of expression. The material dimension is itself multi-faceted; it includes financial components income, level of indebtedness, other financial burdens and non-financial ones health, housing, rights.

Each of these material dimensions is itself more or less composite. Income, for instance, may or may not be monetary. A further point is that the regular or precarious nature of income matters more sometimes than the level of income at any particular time. While the selection of indicators is often based on an assessment of observation and measurement constraints, it does nevertheless always include theoretical elements.

For example, again on poverty, there is a theoretical question which conditions the nature of the income indicator, i. In other words, should people be considered poor if they do not have the minimum income to cover needs considered to be essential, or if they have considerably less income than other people? In the first case, the poverty threshold will be arrived at by calculating the amounts necessary to cover the needs considered to be essential, which will have to be previously defined.

Then must be decided the level of precision, accuracy, spatial and temporal scale as well as which units are to be used. More often than not, indicators do not have the same degree of precision and are not measured with similar units, which of course complicate the process of aggregation of measurements into a synthetic indicator. For example, the concept of social status, operated by indicators such as length of schooling, level of education, income and type of job, is a mix of purely quantitative income , semi-quantitative level of education and purely qualitative data job.

As a result, it is often necessary to bring down units and measurement scales to the most elementary and least demanding levels, with all that this implies in terms of loss of information. When testing a scientific hypothesis the situation being different in the case of social indicators only the synthetic indicator is considered significant; basic indicators being meaningless individually; they are just pieces of a puzzle of which only the whole is significant.

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But, as we have already mentioned, to become aggregated, indicators must be capable of expression in a common unit. This is obviously the case for monetary indicators such as GDP, the price index, etc. But if there is no natural common unit such as currency, the different indicators have to be standardised.

This type of standardisation is done before a great many statistical modelling exercises but is unfortunately inapplicable in the context of social indicators because each new observation involves a new calculation of the mean followed by a new standardisation. One of the more common ones consists in using as a base for calculation a base-year for example the year when the statistical survey began and expressing all the subsequent values as a percentage of variation from the initial value.

This approach is useful for an analysis in terms of progress or regression from an initial situation. Another method consists in attributing a 0 value min to the observation considered as the worst case and 1 or 10 or to the one corresponding to the best score max. The main problem with this type of standardisation is the variability of the minimum and maximum boundaries. If a new observation spills over, either at the top or the bottom of the scale of observations up to that time, all the variables need to be re-standardised, failing which any new observation will be outside the range. The situation from which there needs to be differentiation is given the value 0, and the situation which is viewed as ideal which may or may not correspond to a strategic objective is given the value 1.

The logistical and hyperbolic tangent functions are those most frequently used. However, such manipulations are not recommended for social indicators, firstly because they distort to a certain extent the original distribution, but mainly because they lack transparency for a non-professional user. Clearly, the choice of a method and the maximum and minimum boundaries used for standardisation are not without consequence as regards the interpretation and the use of indicators. Bouyssou et al.

Take for example the Human Development Index: one of the three components is life expectancy at birth, the observed values of which are standardised with a lower boundary set at 25 years and an upper limit at What would be the result if instead of using 85 years as the upper limit we were to choose 80?

Voices of sustainability rise toward a crescendo

The interval between the maximum and the minimum value would change from 60 to 55, i. A year life expectancy, instead of being worth 0. As a consequence, the more or less arbitrary nature of the choice of min and max values, even in the case of empirical standardisation 6 , pleads in favour of the adoption of a normative approach and therefore for maximum values to be chosen so that they effectively correspond to the goals to be arrived at. This supposes that the following questions receive an answer.

Should the same weight be given to all the criteria constituting the index? Or should they be given different weights? And if so, how? What is the relationship between the index and the indicators? Is it a sum, a product, or something more complicated? In practice, both questions usually come down to a dilemma between a simple and a weighted average. The question of weighting is a crucial and distinctly difficult one. It consists in attributing a weight, and therefore a specific value to the various dimensions of the concept.

For instance, in the case of a poverty index, it could consist in giving more weight to the material dimension than to the social isolation, exclusion or cultural dimensions. Dimensions and indicators making up an index can be represented in the form of a tree diagram, the concept being the trunk of the tree and each branch representing one of the dimensions, with each branch breaking down into sub-branches ending up with the leaves representing the actual indicators. At each branching out, a weighting can be attributed to the branches arising there, with at the end the leaves to which is attached a weight equal to the product of the coefficients of the sub-branches and the branches from which they arise.

Figure 2 is an example of a tree diagram of this kind where the concept of sustainable development is broken down into three dimensions corresponding to the famous: Economic, Social and Environmental pillars. Only the Economic branch is further developed, with two constituting dimensions, Performance and Resilience.

Performance is evaluated with the help of two indicators: two growth rates GDP and Productivity. The Resilience sub-branch also gives rise to two dimensions: Diversity and Innovation. The cascading weighting process is illustrated by the final weight of each indicator, which is the product of all the previous weights and its own. Thus the GDP growth rate is given a 0. As Bouyssou et al rightly remarked, the construction process of indicators is, in fact, a multi-criteria or multi-attribute decision problem. The matrix is then interpreted so as to obtain a classification of the various alternatives and identifying the one which is the closest to satisfying the requirements.

In the case of a monocriterion or aggregative approach, the entire matrix will be synthesised into a vector comprising only one value per alternative. In a multicriterion approach, although the entire matrix may not be considered, there will at least be consideration of a number of criteria greater than 1.

It will start by selecting a series of economic, social and environmental indicators 8 , collect the relevant data over a certain number of years and examine the performances of the various countries in terms of sustainable development. Depending on such performances, it will be able to determine the ideal location for its headquarters. This is in fact a decision-making problem where the criteria to consider are indicators which may be weighted and aggregated or, at the very least, synthesised so as to be able to classify the alternatives the countries.

Two consequences arise out of the similarity of situations: on the one hand, the methods and tools developed as part of the aid to decision-making can equally apply to both the weighting and the aggregation of criteria for sustainable development and therefore to the indicators which account for it; on the other hand, were no aggregated indicator to be produced, this would be comparable to deciding not to classify the various alternatives.

Economy vs environment

Clearly, in the case of sustainable development indicators, this is a matter for collective decision, therefore of social choice, and it is in these terms that it must be considered. Perret , p27 rightly remarked, "The intrinsic theoretical weakness of synthetic indicators is obvious a rational justification of the weightings used is difficult ".

Does this not suppose that the crucial question of possible substitutions between various kinds of assets has been solved? It is understood that certain aggregation conventions called "non compensatory" can limit the risk of erroneous interpretation see for example Bouyssou and Vansnick, , but nevertheless current scientific knowledge cannot in itself justify any weighting structure applied to such different sectors.

Are we not confronted with an insurmountable obstacle because of the intrinsic incommensurability of the sectors we are trying to compare? On this subject, Martinez-Alier et al. Why not then abandon the idea of weighting altogether? This is exactly what certain multicriteria and multi-decider analysis techniques do, e.

And yet, every decision, be it individual or collective, contains some arbitrary options, more often than not subconscious and implicit, such as choosing between today or tomorrow, us or them, economic growth or protecting the environment, employment or quality of life, etc. In the realm of public policy, weighting is therefore in the last analysis, the reflection or the echo of the relative power of the various social groups.

But the requirements of sustainable development in fact imply an evaluation of these arbitrary choices, in the context of democratic debate and in the light of ethical and scientific criteria. And it is precisely because it forces us to put on the political agenda an evaluation of these choices and weights, which are the components of life in society, that constructing synthetic indices for sustainable development is necessary.

It is only through democratic debate between randomly selected citizens independent of any pressure group, that abides by proven procedures in mechanisms such as citizen juries, planning units and hybrid forums Callon, Lascoumes et Barthe, , that real collective intent can be expressed. Existing consultative bodies are, from this point of view, the worst of all solutions, as J.

Economic Growth and Environmental Sustainability: The Prospects for Green Growth

Rousseau had long ago stated:. But when factions arise, and partial associations are formed at the expense of the great association, the will of each of these associations becomes general in relation to its members, while it remains particular in relation to the State: it may then be said that there are no longer as many votes as there are men, but only as many as there are associations. For example, the argument given by Baneth , in opposition to synthetic indices, which reads: "A pilot flies an aircraft using data supplied by a large number of instruments and that data cannot be summed up in a single indicator", is only acceptable if you consider that only pilots, not passengers, need indicators.

The aircraft metaphor is irrelevant because the difference between it and a human group or society, is that the passengers of an aircraft are all going to the same destination and all want to get there as safely and comfortably as possible. As a result, once aboard, their only concern is how far they are from their point of arrival and how much time will be needed to get there.

This information is in fact displayed on video screens where flight is symbolised by the picture of an airplane moving across a map. In a human society, things are very different. All its citizens do not have, a priori , the same destination and perhaps most of them do not even know where they are going. Before even thinking about steering the social aircraft, its pilots must try to get everyone to agree on where they are headed.

This is exactly where indicators for sustainable development come into play. The "aggregative" model in liberal democracies sees the political process as a simple choice, by voting, between a priori preferences which were generated before the electoral process.

Business Futures: Sustainable Business Through Green HR

The model is the market Elster, , not the forum. Following this view, there is no common good except if it relates to the least conflictual of the possible specific concepts of good or of the good life 9. In such a context, social indicators would have but a small role to play in a situation where the members of a political system do not need them to verify that decisions taken by the people in charge are in their best interests.

They have personal indicators they can use for that purpose: their income, their employment, their pension schemes, their environment, etc. The vote itself is less important than the deliberative process which is the source of decisional legitimacy, more so than voting or negotiation between parties each seeking to defend their private interests. It is deliberation which makes it possible to transform "pre-reflective" preferences, established ex ante , into ex post reflective preferences, capable of transcending personal opinions and taking the common good into consideration.

While in aggregative democracies the market , preferences are a given and intangible, in deliberative democracies the forum , they are designed and constructed through rational argumentation during the process of developing a general will. Social indicators then have a much more important role to play, in so far as they can contribute to the construction of a common definition of the situation and to prior agreement on the facts. This is the essential difference between administrative statistics and social indicators. The former are a governmental discipline, implemented by the administration in the service and at the behest of central government.

Their primary objective is to inform the authorities and only them of the state of society. It is not, for that matter, by pure chance that the emergence of statistics came to be associated with the name of Machiavelli Vole, Their purpose is not so much to inform government—even though officially reports are addressed to the government—as to allow civil society to evaluate public policies and, in the last resort, government action and beyond that, evaluate society's entire development Unlike official statistics, social indicators are meant to be an instrument of democratic evaluation just as much as a management tool in the hands of the authorities alone.

The fate of the French Department of Statistics, the Bureau de Statistiques, is an example of the tension which can build up between the two approaches. Its overriding objective was to inform citizens and reinforce democracy, rather than satisfying administrative requirements This was so true that Napoleon, whose sole concern was the availability of the information required for levying taxes and organising conscription, put an end to its activities in The Bureau des Statistiques monographs were therefore an early kind of social reporting 12 insofar as they aimed more at enriching political debate and informing civil society than contributing to the management of public affairs.

They can be an information basis for political decision-making internal use ; in which case we are dealing with traditional statistics: counting, censuses. They can also be components of the collective definition of a common world Callon et al, , or even of a common good goals to arrive at, standards to be maintained and of the means to achieve it measurement of well-being. And yet, we believe it to be essential, particularly as regards sustainable development.

There is however a notable exception to this lack of interest in the role of statistical information in the democratic process: the analysis of the role of social enquiry in relation to politics proposed by John Dewey in his book published in , The Public and its Problems. For Dewey, the public is what is constituted by the awareness of the fact that certain transactions or private activities can generate consequences which affect those who are external to those transactions. Today we would say that the public is born of an awareness of negative externalities.

In other words: " The public consists of all those who are affected by the indirect consequences of transactions to such an extent that it is deemed necessary to have those consequences systematically cared for ". Dewey, , p However, as soon as they are no longer considered to be generating indirect consequences, certain activities which were once part of the public domain can return to the private sector.

For example, religious rites and beliefs passed from the public to the private domain when the members of a social community ceased to believe that the consequences of individual piety or impiety could have an effect on the community.

The four pillars of sustainability

According to Dewey, one of the major political problems of the age of technology is that the consequences of certain individual or group behaviours are so diffuse and remote in time that it is no longer possible to perceive them without recourse to what he calls social enquiry, i. We are of the opinion that indicators may acquire their full democratic legitimacy in the context of this social enquiry which is essential for the constitution of an appropriate public.

While a public state always give rise to some kind of political organisation, it may become inadequate because of the emergence of new publics who may then find themselves deprived of any suitable political organisation. In the preface to the second edition of his book , Dewey considered that relations between nations were in the process of acquiring the properties which constitute a public and that, for that very reason, they needed some kind of specific political organisation which they were lacking at the time.

In a democratic organisation based on the right to vote, every person becomes—because he is a member of the electorate—a public official. Of course, remarks Dewey, "He may fail, [ But in this respect he does not differ from those explicitly designated public officials who have also been known to betray the interest committed to them instead of faithfully representing it. Alterations in material conditions technologies in the main play a major role in such changes. In Dewey's view, the technological changes he was witness to were radically disrupting the situation: "The machine age has so enormously expanded, multiplied, intensified and complicated the scope of the indirect consequences, has formed such immense and consolidated unions in action, on an impersonal rather than a community basis, that the resultant public cannot identify and distinguish itself.

The quest for sustainable development itself was born of growing discomfort in the face of the hitherto unsuspected magnitude of the long term effects of transactions and economic behaviours 13? And is it not scientific developments the social enquiry which have made us aware that some of our behaviours may affect durably and irreversibly human beings very far away from us in space and in time future generations? This explains why certain behaviours which were strictly confined to the private sphere are beginning to enter the public sphere.

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