Sustainable Development

The Sustainability Paradox and the Environmental Kuznets Curve

Content

Slides 11

Transcript

Appendix

SPLIT WITH GDP

Learning objectives

After this chapter, you should be able to:

  • Explain why “one-number” metrics struggle to capture sustainability.
  • Describe major beyond-GDP approaches to measuring progress.
  • Compare dashboards, well-being indices, and wealth-based measures.
  • Identify what each approach reveals—and what it obscures.
  • Explain why Earth–economy modeling ultimately requires a wealth-based core.

Why GDP’s failure created a measurement explosion

Once policymakers and researchers accepted that GDP is not a measure of well-being or sustainability, a natural response followed:

If GDP is not enough, what should we measure?

The result has been an explosion of alternatives:

  • Human Development Index (HDI)
  • Genuine Progress Indicator (GPI)
  • Social Progress Index
  • Better Life Index
  • Sustainable Development Goal (SDG) dashboards
  • National well-being accounts
  • Natural capital accounts

These differ in detail, but they share a common impulse:

  • Track outcomes people actually care about.
  • Make social and environmental conditions visible.
  • Counterbalance GDP’s blind spots.

This is a healthy development. It is also messy.

Three families of “beyond GDP” metrics

Most alternatives fall into one of three families.

1) Dashboards

Dashboards present many indicators side by side:

  • income
  • health
  • education
  • emissions
  • biodiversity
  • air quality
  • inequality

Examples include SDG dashboards and national sustainability scorecards.

Strengths: - Rich and transparent. - Make tradeoffs visible. - Avoid collapsing everything into a single number.

Limits: - No unifying concept of “progress.” - Hard to aggregate or optimize. - Policymakers can cherry-pick.

Dashboards are descriptive maps, not navigational compasses.

2) Well-being indices

These combine multiple dimensions into a single score:

  • HDI blends income, education, and life expectancy.
  • Other indices include subjective well-being, safety, or equity.

Strengths: - Communicable. - Politically salient. - Move attention beyond income.

Limits: - Weights are normative and opaque. - Environmental dimensions are often shallow. - They do not model dynamics or future risk.

They tell you how people are doing now, not whether the system is sustainable.

3) Wealth-based measures

Wealth-based approaches ask a different question:

Are we building or running down the assets that generate well-being over time?

They track the value of:

  • produced capital,
  • human capital,
  • natural capital.

If total wealth per person is rising, development is sustainable in a strong sense.

This family includes:

  • national wealth accounts,
  • “genuine savings,”
  • and inclusive wealth (next chapter).

Strengths: - Directly linked to sustainability. - Dynamic and forward-looking. - Compatible with economic modeling.

Limits: - Measurement is difficult. - Valuation is controversial. - Requires strong assumptions.

Despite the difficulty, this approach aligns best with an Earth–economy view.

The Earth–economy perspective on metrics

Earth–economy models simulate:

  • stocks of assets,
  • flows between them,
  • and feedbacks across systems.

They answer questions like:

  • Does this policy rebuild forests but reduce education?
  • Does this energy transition raise produced capital but lower natural capital in mining regions?
  • Does growth today reduce resilience tomorrow?

To answer these, a model needs:

  • commensurable measures,
  • that track assets,
  • over time.

Dashboards are excellent for monitoring.
Wealth measures are necessary for decision-making.

A simple illustration

Imagine two policies:

  • Policy A raises income and health but degrades soils and water.
  • Policy B slows income growth but restores ecosystems and education.

A dashboard will show:

  • gains in some indicators,
  • losses in others.

But it cannot tell you:

  • whether A or B leaves society better positioned for the future.

A wealth-based measure asks:

  • Which policy increases the portfolio of assets that generate well-being?

That question is what Earth–economy models are built to answer.

The Doughnut connection

The Doughnut defines a region:

  • above social shortfalls,
  • below ecological overshoot.

Dashboards map where we are relative to the boundaries.

Wealth-based metrics ask:

Are we moving toward that region, or drifting away?

They shift attention from:

  • “How are we doing this year?”
    to:
  • “Are we building the capacity to stay in the safe-and-just space?”

Why “beyond GDP” is not enough by itself

It is tempting to believe:

  • If we just measure better, policy will follow.

But metrics do not change systems by themselves.

What matters is whether:

  • metrics are embedded in budgeting,
  • metrics guide investment,
  • metrics are used in evaluation.

Earth–economy modeling integrates metrics into the engine of decision-making:

  • policies are simulated,
  • asset paths are projected,
  • tradeoffs are explicit.

Measurement becomes operational.

Open resources you can remix for this chapter

All are compatible with a CC BY-NC-SA Quarto book.

  • Principles of Economics (UMN Libraries Publishing, CC BY-NC-SA)
    Use for: critiques of GDP and alternative measures.
    https://open.umn.edu/opentextbooks/textbooks/principles-of-economics

  • Natural Resources Sustainability: An Introductory Synthesis (CC BY-NC-SA)
    Use for: sustainability indicators and natural capital framing.
    https://uen.pressbooks.pub/naturalresourcessustainability/

  • InTeGrate teaching materials (many CC BY-NC-SA)
    Use for: data-driven exercises with SDGs and sustainability dashboards.
    https://serc.carleton.edu/integrate/teaching_materials/index.html

Exercises

  1. Dashboard critique.
    Pick an SDG-style dashboard.
    Identify:

    • one indicator that captures a social foundation,
    • one that reflects an ecological ceiling,
    • one important omission.

  2. Index design.
    Design a three-variable “well-being index.”
    Explain your weights and what your index would fail to capture.

  3. Wealth lens.
    Choose a policy (e.g., road expansion, forest protection, energy transition).
    Describe how it likely affects:

    • produced capital,
    • human capital,
    • natural capital.

Chapter roadmap

  • Next, we introduce inclusive wealth.
  • You will see how produced, human, and natural capital can be combined into a single sustainability metric.
  • This becomes the bridge between the Doughnut’s vision and Earth–economy modeling in practice.