2005 EnvironmentalSustainability

Index 

Benchmarking National Environmental Stewardship

2005 EnvironmentalSustainability

Index 

Benchmarking National Environmental StewardshipMillennium Challenge

CorporationJune 24, 2005

Millennium Challenge Corporation

June 24, 2005

Daniel C. EstyYale UniversityDaniel C. EstyYale University

Designing & Building an IndicatorDesigning & Building an Indicator

2005 Environmental Sustainability Index

Partners

Constructing the ESI

76 variables

21 indicators

5 components

ESI Score

equally weighted average

•Nitrogen dioxide concentration•Sulfur dioxide concentration

•Surface water availability

•Developed area

•Forest cover change

•Malnutrition

•Corporate sustainability (Dow Jones)•Corporate sustainability (Innovest)•ISO 14001 certified companies

•Intergovernmental environmental activities•Role in intl. environmental aid

Air Quality

Land

Water Quantity

Reducing Ecosystem Stress

Reducing Waste & Consumption Pressures

Basic Human Sustenance

Environmental Governance

Private Sector Responsiveness

Participation in International Collaborative Efforts

•Transboundary sulfur dioxide spillovers

Reducing Transboundary Environmental Pressures

•Particulate concentration•Indoor air quality

•Wilderness area

•Groundwater availability

•Acidification

•Safe drinking water supply

•Civil and political liberties•Sustainable development data gaps•International environmental engagement•Environmental knowledge creation•Democratic institutions•Local Agenda 21 initiatives

•Private sector environmental innovation•Participation in Responsible Care Program

•Participation in intl. environmental agreements

•Polluting-goods imports

•Ecoregions at risk•Threatened birds•Threatened mammals

Biodiversity •Threatened amphibians•National Biodiversity Index

•Suspended solids•Phosphorus concentration Water Quality

•Dissolved oxygen•Electrical conductivity

Environmental Systems

•Coal consumption•Nitrogen oxide emissions•Sulfur dioxide emissions

•Population growth

•Ecological Footprint•Waste recycling rates

Reducing Air Pollution

Reducing Population Pressure

Reducing Water Stress

•VOC emissions•Vehicles in use

•Total fertility rate

•Hazardous waste generation Reducing Stresses

•Deaths from intestinal infect. diseases•Child mortality rate

•Casualties due to environmental disasters

Environmental Health

Exposure to Natural Disasters

•Child mortality due to respiratory infections

•Environmental Hazard Exposure Index

Reducing Human Vulnerability

Energy Efficiency

Science and Technology

•Energy efficiency •Renewable energy production

Greenhouse Gas Emissions •Greenhouse gas emissions / GDP •Greenhouse gas emissions / capita Global Stewardship

Social and Institutional Capacity

76 Variables76 Variables 21 Indicators21 Indicators 5 Components 5 Components

•Pesticide consumption•Area under water stress

•Industrial organic effluents•Fertilizer consumption

Natural Resources Management•Overfishing•Sustainably managed forests•Market distortions

•Salinization due to irrigation•Agricultural subsidies

•Gasoline price•Corruption•Government effectiveness•Protected land area•Environmental governance•Strength of rule of law

•Innovation capacity•Digital Access Index•Female primary education

•University enrollment•Research scientists

• NO2 concentration

• SO2 concentration

• Particulate concentration

• Indoor air quality

Environmental Systems

VariablesVariables IndicatorIndicator ComponentComponent

Air Quality

Indicator Construction

1 Finland

2 Norway

3 Uruguay

4 Sweden

5 Iceland

6 Canada

7 Switzerland

8 Guyana

9 Argentina

10 Austria

137 Yemen

138 Kuwait

139 Trinidad & Tob.

140 Sudan

141 Haiti

142 Uzbekistan

143 Iraq

144 Turkmenistan

145 Taiwan

146 North Korea

Top TenTop Ten Bottom TenBottom TenOther CountriesOther Countries

11 Brazil

31 Germany

33 Russia

36 France

45 U.S.A.

65 U.K.

93 South Africa

95 Mexico

101 India

133 China

ESI Rankings

Key to Policy Leverage

• Peer groups

• Multiple perspectives– income-based– geographic– political / trade groupings– statistically derived

ESI Country Scores by Quintile

Bottom Quintile

4th Quintile

3rd Quintile

2nd Quintile

Top Quintile

Cluster Analysis: ESI Characteristic-Based Country Groupings

Why Measure?

• Better policy management

• Improved performance and results

• Benchmarking – shows what is possible

• Competitiveness pressure– leaders and laggards– best practices

Application in MCC Context

• Supports merit-based aid

• Helps clarify what is “meritorious”

• Makes decisionmaking more objective

But note:

• No purely “objective” criteria

• Data limitations are significant

• Measurement challenges should not be an excuse to withhold aid

Elements of effective and credible index

1. Theoretical foundation

2. Openness about strengths and weaknesses

3. Transparent methodology

4. Published data

5. Crosscheck – peer review

6. Sensitivity analysis (JRC)

MCC Issues to Consider

• Environment is a hard topic to capture– multidimensional issue– divergent priorities and values

• Companies invest in measurement– so should MCC

• A sound analytic framework cannot be developed on the cheap

What to Measure?• Choices

– Outcomes– Inputs (efforts)– Processes– Trends

• Targets– Absolute– Relative

• How to fill data gaps

MCC Evaluation of Options• Seek a credible capacity to deliver

• Emphasize an operational set of indicators

• Stress experience and a proven track record

• Look for a clear action blueprint– What issues to track– Where data will come from– How to check/verify data– Strategy for revising and updating

Sensitivity Analysis

• Checks the robustness of the rankings

• Evaluates sensitivity to the assumptions and aggregation methods utilized

The 2005 ESI is available at:

www.yale.edu/esi