|
 Sustainable National Income is a measure of national income that takes the impact of economic growth on the environment into account. It is intended to be used next to the standard indicator of GDP, so that the comparison of the two measures gives information about the real state of the economy. It was originally developed by Roefie Hueting at CBS Statistics Netherlands in the 1980s.
- Sustainability: At an OECD conference, Hueting & De Boer (2004) defined sustainability as: "The development (or behaviour) of the social-economic-environmental system can be said to be sustainable if the development does not threaten the existence of the system itself, nor the elements and characteristics of the system that people (as elements of the system) want to preserve for whatever reasons. A sustainable development therefore requires the preservation of vital elements and characteristics of the system. These essential variables include human health and vital environmental functions i.e. possibilities to use our physical surroundings (specifically to withdraw space, substances and organisms and to emit substances)."
- The need for information: The concept is relevant for managing issues as discussed in Collapse_(book).
National accounting
The SNI differs from the Human Development Index (HDI), Index of Sustainable Economic Welfare (ISEW) and Genuine Progress Indicator (GPI) in important respects. The HDI is not rooted in national income accounting and the ISEW and GPI include other issues than only the environment, such as crime, leisure and work at home. SNI also gives a systematic treatment within an Applied General Equilibrium model. In sum:
- It is based in the theory of welfare economics and national income
- It follows the neoclassical concept of scarcity
- It extends the standard framework of national statistical accounting with the concept of environmental functions
- It provides a revolution in statistics, since preferences for the future are included in a statistical measure for the past
- The measure assumes an absolute preference for sustainability. The resulted number is conditional to that assumption, just as the number for economic growth is conditional to the assumption that the market prices reflect the market preferences
- the effects of expected future technological progress and of expected future population growth on present sustainable national income are not incorporated.
About this, Hueting and De Boer (2004) explain: "One could ask how it is possible that we assume strong preferences for sustainability, while it is obvious that currently the world follows a non-sustainable development path. It is obvious, however, that individuals generally do not have the power to prevent largescale damage to the environment. It is also obvious that, when they have the power to change their conduct in a sustainable way, they have objections to being the first ones to take such steps, even if they have strong preferences for the result. This is because it would cause them disproportional costs, while they expect the effect to be close to zero because they doubt that others will follow suit (prisoner's dilemma). Because of the existence of these and other ‘blockages’ (or ‘barriers’), it suffices to assume one set of preferences to explain both the actual development where the blockages are effective and the assumedly preferred more environmentally benign path where the blockages are overcome (...). This construction has the additional advantage that the comparison of national income on both paths is less problematic than with two different welfare functions. The distance between the sustainable path and the actual development path in terms of national income is the distance to sustainability we have to bridge as a country in terms of the required opportunity costs."
About the result, they report: "SNI2 assumes that world market prices change proportionally as domestic prices when world-wide sustainability constraints are implemented. SNI1 assumes the world market prices do not change; this variant, which is in 1990 42,5 % lower than NNI (net national income) ... SNI2 is 56% below NNI in the base situation."
Reviews
Interestingly, neoclassical economics finds opposition from ecological economics, while that opposition would be less needed due to Hueting's more neoclassical analysis of the environment. The neoclassical SNI has different results than e.g. Robert Costanza et al. (1997), "The value of the world's ecosystem services and natural capital", Nature 387:253-260.
|
