Sustainable growth

Green and growing
Jan 25 2001
From The Economist print edition

What is environmental sustainability, and how can you
measure it?

HOW are prosperity and
greenery related? It has
been a combative and so far
undecided issue among
environmentalists and
economists, made the more
so by the poor quality of
most environmental data.
Now a team led by Dan Esty
of Yale University, with
support from Columbia
University and the World
Economic Forum (WEF),
hopes to fill that information
gap, and perhaps to help
answer the broader
question, too. Their team
has developed the
Environmental Sustainability
Index (ESI), a detailed
assessment of dozens of
variables that influence the
environmental health of
economies (see chart). The
team released its rankings of
122 countries this week, to
coincide with the forum’s
schmoozathon of
businessmen and political
leaders at Davos, in
Switzerland. The devil is, of
course, in the detail. For a
start, defining
“environmental
sustainability” is a tricky
task, on which the rest of
the exercise hangs. The
researchers point out that
politicians have bandied the
term about for years, but
have not thought to
measure it—though it is less woolly than the (no less
bandied-about) idea of “sustainable development”.

Mr Esty and his researchers sorted through 67 separate variables
that it reckoned could influence environmental sustainability,
ranging from sulphur dioxide in the air to corruption. They devised
22 “core” indicators for the ESI, made up of those variables, which
they weighted equally for the purpose of the country rankings.
These range from eco-efficiency, to population stress, to the
responsiveness of the private sector. They found that the
indicators clump together naturally into five broad areas:

•Environmental systems. This assesses whether biodiversity
and other measures of environmental well-being are at healthy
levels, and whether they are improving rather than
deteriorating—for whatever causes.

•Reducing environmental stresses. This judges whether human
impact is low enough not demonstrably to harm environmental
systems.

•Reducing human vulnerability. This measures how susceptible
people’s basic needs (such as health and nutrition) are to
environmental disruptions.

•Social and institutional capacity. This weighs up whether the
country has in place institutions and underlying social patterns of
skills needed to cope with environmental challenges.

•Global stewardship. This considers whether countries work well
on cross-border issues such as global warming, ozone depletion
and acid rain.

Quantitative quagmire

What light does the new ESI report shed on all this? One finding is
that there is considerable variation in environmental sustainability
among countries at similar stages of economic development.
Wealth certainly matters: per-head income is highly correlated
with the ESI’S rankings. It is absurd to expect Haiti, which is
deforested, to pursue green goals as keenly as Finland. But there
is no reason it should not aspire to the relative greenery of
comparably poor Cameroon.

A striking result is that the variable with the greatest correlation
with greenery is corruption: the less corrupt a country is,
whatever its income level, the more likely it is to score high in the
rankings. Mr Esty reckons that corruption (measured by
Transparency International, an anti-corruption group) is a proxy
for lots of other things, such as the rule of law and the protection
of property rights, that have a big influence on how individuals
treat natural resources.

Interesting, yet nagging doubts remain about the methodology.
For a start, one inevitable doubt that any such
country-by-country analysis faces is that environmental problems
rarely fall neatly within a single country’s boundaries. Problems
may be global or cross-border—or even highly local—in nature.
Another doubt about country rankings is that headline-grabbing
hype may overshadow the substantive analysis that backs up such
rankings.

A tricky challenge for the
cross-country comparisons
is to decide how to weigh
each indicator. Global
warming may mean a lot to
Finns, but people in the poor
world’s filthy cities care
much more about local air or
water pollution (see table).
The ESI gives equal weight
to all its 22 indicators, an
approach that is sure to
please no one. The authors accept this criticism, but explain that
their database will soon be available on CD-ROM. Critics will then
be able to use whatever weightings they prefer.

Another challenge remains the paucity of good data. By forging
ahead anyway, the report risks lending a quantitative gravitas to
conclusions that are based on still-sketchy data. The researchers
sometimes used computer models; at other times, they made
educated guesses. Huge data gaps remain in areas such as toxic
waste, lead poisoning and natural-resource subsidies. The authors
justify this by arguing that they have created a framework that
exposes the data deficiencies, and so spurs others to remedy
them. Future versions of the report, they point out, can only get
better.

One of the more surprising findings of the rankings is the low score
received by Singapore, which prides itself on being the “garden
city of the east”—and on coming at or near the top of most
international rankings. Equally surprising may be the relatively high
score for Russia, infamous for its pollution inherited from the Soviet
era. In Singapore’s case, the authors reject suggestions that a
heavily populated city-state crammed on to a small island meets
unduly harsh judgment. On the contrary, they point out, their
framework is weighted towards only countries’ populated parts, so
that countries with large, empty tracts, such as Russia, are not
unfairly rewarded. That is why their analysis in general shows only
a weak link between ESI score and land area. Ditto, population
density.

Yet even after such adjustments, Singapore scores poorly,
because its environmental situation is precarious. The authors
argue that they wish to illuminate precisely how such places are
approaching the limits of environmental sustainability. In Russia’s
case, the authors acknowledge, the ranking is surely inflated.
They point to faulty and missing data as the culprits. They have
tried to fill in some gaps, but they have not replaced even dubious
official sources of data with unofficial ones, fearing the poor
precedent: it would be impossible to replicate for all countries.

As that unsatisfying compromise highlights, the ESI is deficient in
several important ways. Alas, it also does not provide a definitive
answer to the really big questions about the causal linkages
between greenery and growth. However, Mr Esty argues, “the
chief virtue of this index is that it begins the process of shifting
environmental debates on to firmer foundations, underpinned by
data and a greater degree of analytic rigour.” On that more
modest measure, the ESI is a thoughtful step in the right direction.