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MISMEASURING OUR LIVES. GDP – Gross Domestic Product HDI – Human Development Index. The Right Question. What do we really care about? HUMAN WELLBEING So what do we want to measure and track? HUMAN WELLBEING. Score Card -GDP. - PowerPoint PPT Presentation
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MISMEASURING OUR LIVES
GDP – Gross Domestic Product
HDI – Human Development Index
The Right Question
What do we really care about?
HUMAN WELLBEING
So what do we want to measure and track?
HUMAN WELLBEING
Score Card -GDP
• Measures only economic production and therefore only material wealth constituent of wellbeing
• No social and environmental dimensions
• Sustainability- Snap shot in time
Interlinkages and Human Well-Being-JSSA.
(Tanaka, 2005)
Level of local nature
Level of local nature
Level of
physi
cal unhealt
hin
ess
Level of
menta
l u
nh
ealt
hin
ess
Physical
Mental
Source: JSSA 2011
Score Card -HDI
• Measures health and education in addition to income as constituents of well-being
• No environmental dimension
• Sustainability- Snap shot in time
WE MANAGE WHAT WE MEASURE
KEY PRINCIPLESVALUESSUSTAINABILITYEQUALITYTRADE-OFFS AND SYNERGIES
THE PROPOSITION: INCLUSIVE WEALTH
Point 1: Wellbeing is defined as the discounted flow of present and future generation’s consumption flow.
Point 2: The discounted flow is dependent on the capital asset [Productive Base] base of the economy
Point 3: Wellbeing increases as long as the CHANGE in the VALUE of the capital asset base is positive
IWI: The Coupled System
The Capital Asset Base
• Social Capital
• Natural Capital
• Human Capital
• Produced Capital
INCLUSIVE WEALTH
Value of Assets = Inclusive Wealth
Inclusive Wealth is the SHADOW PRICE of the asset multiplied by the QUANTITY STOCK of asset
Trade-Offs and Synergies
• Substitution between capital assets
• Critical Capital Stocks
• Inter-dependency among Capitals
• Shadow Prices– Rate of Substitution – Externalities
Natural Capital
• Non-Renewable Resources – Oil, Minerals
• Renewable Resources– Ecosystem Services
Ecosystem Services
• Provisioning
• Regulating
• Cultural
Shadow Prices
Strength and Achilles Heel
How do we compute shadow prices?
Coupled Systems Modeling
IWI
IWI per capita
17
Average annual growth in IWI per capita
18
Average annual growth in IWI per capita
19
Average annual growth in IWI per capita
20
Average annual growth in IWI per capita
21
AVERAGE ANNUAL GROWTH RATES DISAGGREGATED BY NATURAL CAPITAL
TYPES
ANNUAL GROWTH RATES DISAGGREGATED BY NATURAL CAPITAL
TYPES Agricultural Land
Forest Resources
Minerals
Fisheries
Fossil Fuels Natural Capital Index
Agricultural Land
Forest Resources
Minerals
Fisheries
Fossil Fuels Natural Capital Index
KEY DATA SOURCES
RESOURCE DATA SOURCE
Agricultural Land Food and Agricultural Organization (FAO)
Fisheries Sea Around Us Project database (SAUP)
Forest Resources Food and Agricultural Organization (FAO)
Fossil FuelsUnited States Energy Information Administration (EIA)
Minerals United States Geological Survey (USGS)
Key Findings
• Focus on both the aggregate sum of all capitals and each capital
• Population growth rate is key for measuring productive base of country
• Shadow prices are key to measuring wellbeing and progress.
• National accounts need to be revised to reflect all four capitals
Key Messages
• New Yardstick for measuring progress is needed
• Wellbeing is multi-dimensional and dependent on the productive base of the economy
• Need shadow prices of key ecosystem services
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