A Conceptual and Theoretical Framework for
Sustainable Development Statistics
Thorvald Moe, Ph.D.
Finansdepartementet
INTRODUCTION
1. The main task of this working group is to arrive at a
theoretical and conceptual framework for SD statistics.
This is needed for a more coherent and holistic approach
to measuring SD, and it is a necessary condition for
making the concept an important one for long term
policies. Today SD remains far from the center of policy
making, partially because of lack of coherence and an
agreed framework.
2. In my paper which you have all received I elaborate on
this theme, and I would appreciate your written
comments. In my oral presentation I will:
2.1 Sketch a framework for the forces driving
development;
2.2 Show how this leads to a framework for measurement
or statistics for SD; and
2.3 Briefly illustrate how we applied this to measurement
and policies for SD in Norway.
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FORCES DRIVING DEVELOPMENT
3. J.M.Keynes:"General Theory of Employment, Interest and Money" (1935)
provided a conceptual or theoretical framework for constructing a system of
national accounts after World War II. SNA 1993 is now the internatinally
accepted statistical base for short term (macroeconomic) policies.
4. SD is a matter of long term development and its challenges. We therefore need
a theory or a conceptual base to understand the forces driving long term
development.
5. Adam Smith "Wealth of Nations" (1776) is the starting point of classical theory
which was developed further by Ricardo. Robert M. Solow (Nobel Prize winner in
1987) sums up neoclassical theory in:"Growth Theory:An Exposition" (1970).
6. Environmental and natural resource aspects of development have been
developed both by natural scientists and economists since the late 1960s. See
e.g. Smith et.al (2001) and SEEA 2003.
7. The importance of human capital for development was introduced in so called
endogenous growth theory by Romer in the 1980s. For an recent overview of
the iportance of human capital for development with detailed empirical
estimates, see:The OECD Growth Study (2003). These and social and
institutional (governnance) forces together with technological progress drive
development and should be the basis for measurement and policies.
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A CONCEPTUAL FRAMEWORK FOR SD,
MEASUREMENT AND POLICIES
8. The main threat to SD globally is to be found in the uneven distribution
between poor (developing) and rich (developed) countries. Key global
challenges are poverty and the global (environmental) commons. I refer to the
Millenium Development Goals (MGDs) and The World Bank:"Where is the
Wealth of Nations? Measuring capital for the 21st Century" (2005).
9. We, however, are to arrive at a conceptual/theoretical framework for developed
(OECD/CES) countries.
10. Our welfare is produced by nature and human beings using services from a
resource or capital base. A key SD question is thus what resources we have at
our disposal today, and what policies are needed to manage this resource base
over time so as to maintain and enhance it for our children and grandchildren.
11. Resources must be understood in a broad sence:
-Traditional economic resources (financial capital and produced capital goods);
-Natural resources (non-renewable and renewable);
-Environmental resources (cleaning services, our basic ecological/biological
system etc.);
-Human resources (Human capital provided by labour, competence and
knowledge etc.);
-Social and institutional conditions.
This total resource base is defined by statisticians, accountants and economists
as our National Wealth (NW). As showed above, NW and technological
developments are the main drivers of, and thus a consistant
conceptual/theoretical framework, for SD.
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THE NORWEGIAN APPLICATION:
Some Examples.
12. The Norwegian model of SD takes as a point of departure:
12.1 The total resouce or capital framework and the forces driving technologies;
12.2 Seven main Policy areas for long term developments and its sustainability.
See table 1. It is thus a policy driven capital approach to SD. To try to differentiate
between so called policy oriented approaches and capital approaches is rather
meaningless. The resource approach is by definition policy relevant because it, to
repeat, provides us with a consistent analytical famework for understanding and
measuring the forces drivig development, and thus for policies to make developments
sustaiable in the longer term.
Some of the so called policy oriented approaches represent largely measurement without
theory and lack in my view an analytical base to underpin both measurement and policy
analyses.
13. As you can see from Table 1, it is not sufficient to measure only NW because, inter alia:
13.1 The various components of NW cannot easily be substiuted or replaced by
oneanother. Thus we have to measure each component;
13.2 Practical challenges of measuring NW. I elaborate on these themes in my paper.
14. SD Policies in Norway: An Example. Petroleum (oil and gas) is some 25 per cent of our
total GDP. These are non-renewable resources which are registered as increases in GDP
when extracted. But if consumed, our NW and thus resource base for future generations
is reduced which is not sustainable in the longer term. Thus the revenues are put into a
Petroleum Fund (now called The Pension Fund-Global) and invested in foreign bonds and
stocks. Thus, as our natural resources are drawn down, our financial capital is increased
so as to maintain NW for future generations. Only the rate of return, estimated at some
four percent,of the capital stock is consumed for domestic purposes. This is the Hartwig
rule for managing natural resources sustainably (Hartwig 1977). The capital stock itself
belongs to future generations of Norwegians.
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CONCLUSIONS
15.Long term developments are driven by our total resource
base or capital stock broadly defined:National Wealth,
and technological developments.
16.This is a consistant and theoretically and empirically
based framework for SD developed by economists and
natural scientist for more than 200 years. Statistical
agencies produce NW estimates. Thus I see this
framework as key for fullfilling our mandate.