donella meadows institute

Indicators and InformationSystems for SustainableDevelopment

Published by The Sustainability Institute • 3 Linden Road • Hartland VT 05048

by Donella Meadows

A Report to the Balaton Group

The Sustainability Institute • 3 Linded Road • Hartland VT 05049Phone 802-436-1277 • FAX 802-436-1281 • Email: [email protected] additional copies of this report, send US$10 to The Sustainability Institute.

Published by

© The Sustainability Institute, 1998.

Indicators andInformationSystems forSustainable

Developmentby Donella Meadows

ultimate ends

A Report to the Balaton Group • September 1998

intermediate ends

intermediate means

ultimate means

i

Contents

The origin of this workAcknowledgments

Notes on the format

Summary

1. The nature of indicators, the importance of indicators

2. Indicators, models, cultures, worldviews

3. Why indicators of sustainable development?

4. The challenge of coming up with good indicators

5. Suggestions for indicator process and linkageHierarchy: coherence up and down the information system

The selection process: experts and citizens together

Systems: making indicators dynamic

6. A suggested framework for sustainable development indicatorsThe hierarchy from ultimate means to ultimate ends

Natural capital (ultimate means)

Built capital (intermediate means)

Human capital (intermediate means/ends)

Social capital (intermediate ends)

Well-being (ultimate ends)

Integration (translating ultimate means into ultimate ends)

7. Sample indicators

8. Implementing, monitoring, testing, evaluating, and improving indicators

iiiv

vii

viii

1

6

11

17

2222

25

27

4040

47

53

57

61

66

68

72

76

Indicators and Information Systems for Sustainable Development

ii

iii

This paper grew out of a five-dayworkshop on sustainable develop-ment indicators attended by a smallsubset of the two hundred membersof the Balaton Group. The BalatonGroup, founded in 1981, is an inter-national network of scholars and ac-tivists who work on sustainable de-velopment in their own countries andregions. We come to our work froma cross-disciplinary, whole-systemsperspective. Individually and jointlywe have been thinking about and test-ing indicators of sustainable develop-ment in local, national, or interna-tional contexts for many years.

The workshop was held at theNational Institute for Public Healthand Environmental Protection(RIVM) in Bilthoven, the Nether-lands, April 13–17, 1996. The par-ticipants (identified here by theirplace of employment, though we par-ticipated as individuals) were:

• Alan AtKisson, RedefiningProgress, San Francisco, CA, USA;

• Alp Baysal, Programme for Sys-tems Management, University ofCape Town, South Africa;

The origin of this work

• Wouter Biesiot, Center for En-ergy and Environmental Studies,University of Groningen, theNetherlands;

• Valdis Bisters, Ecological Center,University of Latvia, Riga, Latvia;

• Hartmut Bossel, EnvironmentalSystems Research Center, Univer-sity of Kassel, Germany;

• Joan Davis, Federal Institute forEnvironmental Sciences and Tech-nology, Dubendorf, Switzerland;

• Bert de Vries, RIVM, Bilthoven,the Netherlands;

• Thomas Fiddaman, System Dy-namics Group, MIT, Cambridge,MA, USA;

• Genady Golubev, Faculty of Ge-ography, Moscow State University,Russia;

• Jane King, Centre for HumanEcology, University of Edin-burgh, Scotland;

• Donella Meadows, Environmen-tal Studies Program, Dartmouth



iv

College, Hanover, NH, USA;

• Lars Mortensen, Division for Sus-tainable Development, Depart-ment of Policy Coordination andSustainable Development, Uni-ted Nations, New York, NY, USA;

• Jørgen Nørgard, Department ofBuildings and Energy, TechnicalUniversity of Denmark, Lyngby,Denmark;

• Michael Ochieng Odhiambo,Centre for Environmental Policyand Law, Nakuru, Kenya;

• John Peet, Department ofChemical and Process Engineer-ing, University of Canterbury,Christchurch, New Zealand;

• Laszlo Pinter, International Insti-tute for Sustainable Develop-ment, Winnipeg, Canada;

• Rosendo Pujol, Department ofCivil Engineering, University ofCosta Rica, San Jose, Costa Rica;

• Aromar Revi, The Action Re-search Unit, New Delhi, India;

• Detlef von Vuuren, RIVM,Bilthoven, the Netherlands.

Whenever Balaton Group membersget together, new ideas fly and oldideas come together in sudden andstriking connections. This workshopwas no exception. We emerged with

a new vision of the kinds of infor-mation and indicators we wouldneed to guide ourselves toward a sus-tainable world — whether on thelevel of a community, a nation, orthe whole planet. We were all ex-cited.

I was given the task of trying towrite up the kaleidoscope of insightswe had produced. I did my best,though I didn’t and still don’t feeladequate to the task. I prepared adraft that circulated among BalatonGroup members for a year, collect-ing comments and amendments andstarting a few heated arguments.Outside reviewers sent us primarilypraise and requests for more copies.Whatever we had produced, it wasclearly unfinished, still a work inprogress, but equally clearly usefulenough to justify compiling all theresponses and putting out a finalprinted version. A subcommittee as-sembled to do that. That commit-tee consisted of Alan AtKisson,Hartmut Bossel, Joan Davis, Bert deVries, Donella Meadows, JørgenNørgard, John Peet, Laszlo Pinter,and Aromar Revi.

This is the result. It bears onlymy name as author, because theBalaton Group is made up of far toomany diverse and independentthinkers to suggest that they are allof one mind about anything, exceptthe basic desirability and urgency ofsustainable development and morepowerful indicators thereof. Some of

v

the group strongly object to somethings written here, though I thinkall are in agreement with the basicthrust (and I try to signal the areas ofsignificant discord). The draftingcommittee decided it would be bet-ter to give me free rein to write in myown voice, choose my own empha-ses, and be responsible for my ownquirks, rather than to try to hammerout a document that might pleaseeveryone and therefore become col-orless.

So, while recognizing an enor-mous debt to those who were respon-sible for the ideas, funding, and prac-tical efforts that made this work pos-sible, I take personal responsibility foreverything written here.

Acknowledgments

The entire group is thankful toMariette Commadeur and Bert deVries of RIVM and Betty Miller andDiana Wright of the Balaton Groupfor their efficient and cheerful logis-tical support.

Financial support was providedby RIVM, the Jenifer Altman Foun-dation, the Wallace Global Fund, andthe Gellert Foundation. Specialthanks to the John D. and CatherineT. MacArthur Foundation for the fel-lowship that allows me to work forthe Balaton Group.

The workshop participants could

have made no headway if we had notbeen able to think about and buildupon years of intense discussionabout indicators of sustainable devel-opment on the part of thousands ofpeople throughout the world. In par-ticular we would like to acknowledge:

• The program on indicators of theUnited Nations Commission onSustainable Development (CSD);

• The formulation of indicators ofnatural, human, and social capi-tal by the World Bank;

• Compilations of environmentalindicators assembled by theUnited Nations Statistical Divi-sion, the OECD, the EuropeanEnvironment Agency, andEurostat;

• The Project on Indicators of theScientific Committee on Prob-lems of the Environment(SCOPE);

• The Human Development Re-port of the United Nations De-velopment Programme (UNDP);

• The initiatives of the World Re-sources Institute (WRI), in par-ticular in the areas of biodiversity,georeference indicators, and ma-terials flows;

• Studies by the Dutch NationalInstitute of Public Health andEnvironmental Protection



vi

(RIVM) in cooperation with theUnited Nations EnvironmentProgramme (UNEP), especiallyin the area of indicators sup-ported by dynamic modeling;

• Local indicators projects in manyparts of the world, most particu-larly Sustainable Seattle;

• The overview of sustainable de-velopment indicator initiativespublished by the InternationalInstitute on Sustainable Develop-ment (IISD);

• Initiatives at the national level bycountries such as Canada, CostaRica, Japan, the Netherlands, theUnited States, and others, and re-gional initiatives in LatinAmerica, Europe, Africa, andAsia;

• The Worldwatch Institute’s an-nual report Vital Signs.

The Balaton Group owes an ongoingintellectual debt to many thinkers inthe fields of systems, sustainability,and development, whose ideas influ-ence our every meeting as well as thisdocument. They include Jay Forrester(system dynamics), Herman Daly(the Daly triangle, the Daly laws),Amory Lovins (least-cost end-useanalysis), Vassily Leontief (input-out-put analysis), Michael Thompson(cultural theory), Manfred Max-Neef(fundamental human needs), Will-iam Rees (ecological footprints),

Hartmut Bossel (orientor theory andScenarios A and B), E. F. Schumacher(definitions of human capital), andecologists and ecological economiststoo numerous to mention.

Finally I would personally like tothank Balaton Group members athome and on-line who sent ideas,comments, and reactions, and whohave helped build up over many yearsthe intellectual capital we all broughtto this exercise.

The format was designed by MegHouston of Fonta.

vii

Notes on the format

The summary is assembled from themain headings of the various parts ofthe text.

Examples of indicators are high-lighted throughout, using a differentfont. For example:

Suggested dynamic indicators:

Turnover time, which is stock sizerelative to stock change rate.Especially relevant for understandingthe time it takes for aquifers orsurface water bodies (or theatmosphere) to flush out pollution, orthe time it takes for industrial capitalstocks (such as the automobile fleet)to be replaced.

In some cases, the indicator examplesare long enough to warrant pullingthem from the columnar text, inwhich case you will find them in aseparate box with any accompanyinggraphic illustrations.

These examples are meant to beprovocative, to be suggestive, tostimulate your own creative juices, totrigger ideas for other indicators thatmight be more directly useful to youfor your own situation and purposes.They are not necessarily indicatorsrecommended by the author or theBalaton Group as the ultimate or bestindicators of sustainable develop-ment. We don’t even claim that theycan necessarily be measured easily,maybe not at all. The author’s rec-ommended indicators, which are


backed by the partial but not unani-mous enthusiasm of members of theworking group, are summarized inthe last section.


viii

Summary

Chapter 1: The nature ofindicators, the importance ofindicators

Indicators are natural, everywhere,part of everyone’s life.

Indicators arise from values (wemeasure what we care about), andthey create values (we care about whatwe measure).

When indicators are poorly cho-sen, they can cause serious malfunc-tions.

Indicators are often poorly cho-sen. The choice and use of indicatorsare processes full of pitfalls.

The choice of indicators is a criti-cal determinant of the behavior of asystem.

Chapter 2: Indicators, models,cultures, worldviews

Indicators are partial reflections ofreality, based on uncertain and im-perfect models.

We need many indicators becausewe have many different purposes —but there may be over-arching pur-poses that transcend nations and cul-tures, and therefore there may beoverarching indicators.

We need many indicators becausewe have many worldviews — but in-dicators may help narrow the differ-ences between worldviews.

Indicators need not be purelyobjective, and in fact few of them are.

Despite their difficulties and un-certainties, we can’t manage withoutindicators.

The search for indicators is evo-lutionary. The necessary process isone of learning.

Chapter 3: Why indicators ofsustainable development?

Development and sustainability areold problems; now they come to-gether on a global scale and in an ur-gent time frame.

Sustainability indicators must bemore than environmental indicators;they must be about time and/orthresholds.

Development indicators shouldbe more than growth indicators; theyshould be about efficiency, suffi-ciency, equity, and quality of life.

Chapter 4: The challenge ofcoming up with good indicators

It’s easy enough to list the character-istics of ideal indicators.

It’s not so easy to find indicatorsthat actually meet these ideal charac-teristics.

Most of us already have indica-tors in the backs of our minds, “be-loved indicators” that reflect issues ofgreat concern to us. It’s important to

ix

get them out on the table.Indicators can take many forms.

They don’t have to be numbers. Theycan be signs, symbols, pictures, col-ors.

What is needed to inform sustain-able development is not just indica-tors, but a coherent information sys-tem from which indicators can bederived.

Chapter 5: Suggestions forindicator process and linkage

Hierarchy: coherence up and downthe information system

The information system shouldbe organized into hierarchies of in-creasing scale and decreasing speci-ficity.

Information from the hierarchyat all levels should be available topeople at all levels.

Information should also comefrom all levels. The public can beimportant contributors to, as well asusers of information and indicators.

The selection process: experts andcitizens together

The process of indicator develop-ment is as important as the indica-tors selected.

The indicator selection processworks best with a combination ofexpert and grassroots participation.

But integrating expert and non-expert opinion has its costs and must

be done with care.

Systems: making indicators dynamicSystems insights can help in the

design of indicators that identify criti-cal linkages, dynamic tendencies, andleverage points for action.

Distinguish between stocks andflows. Stocks are indicators of thestate of a system and its response time.Flows may be leading indicators ofchange.

Exponential growth rates (thestrengths of vicious or virtuous cycles)are sensitive points to monitor in sys-tems.

The ratio of change rate to re-sponse rate is a critical — and usu-ally critically missing — indicator ofthe degree to which a system can becontrolled.

Watch for unbalanced or missingcontrol loops.

An important indicator of theresilience of a system is the redun-dancy of its controlling negative feed-back loops.

Nonlinearities in systems (turn-ing points, thresholds) are key pointsfor the placement of indicators.

A primary indicator of the long-term viability of a system is its evolu-tionary potential.

Wherever possible, indicatorsshould be reported as time graphsrather than static numbers.

Indicators should be combinedwith formal dynamic modeling.



x

Chapter 6: A suggestedframework for sustainabledevelopment indicators

The hierarchy from ultimate means toultimate ends

The “Daly Triangle,” which re-lates natural wealth to ultimate hu-man purpose through technology,economy, politics, and ethics, pro-vides a simple integrating framework.

Sustainable development is a callto expand the economic calculus toinclude the top (development) andthe bottom (sustainability) of the tri-angle.

The three most basic aggregatemeasures of sustainable developmentare the sufficiency with which ultimateends are realized for all people, theefficiency with which ultimate meansare translated into ultimate ends, andthe sustainability of use of ultimatemeans.

Extending the definition of capi-tal to natural, human, and social capi-tal could provide an easily understoodbase for calculating and integratingthe Daly triangle.

Natural capital (ultimate means)Natural capital consists of the

stocks and flows in nature from whichthe human economy takes its mate-rials and energy (sources) and to whichwe throw those materials and energywhen we are done with them (sinks).

The human economy uses manykinds of throughput streams, each as-

sociated with natural capital on boththe source and sink end of the flow.

Natural capital is being usedunsustainably if sources are decliningor sinks are increasing.

Indicators should highlight lim-iting natural capital stocks.

Natural capital should be moni-tored at whatever geographic levelmakes sense.

We need to allow estimates in ourindicators for life support systemsthat we do not yet understand.

Built capital (intermediate means)Built capital is human-built,

long-lasting physical capacity — fac-tories, tools, machines — that pro-duces economic output.

The nature and amount of builtcapital determines the standing de-mand for human capital (labor andskills) and for throughput from natu-ral capital (materials and energy).That fraction of built capital that pro-duces more built capital (investment)determines the rate of economicgrowth.

Sustainability on the level of builtcapital means investing at least as fastas capital depreciates. Across levels itmeans keeping the throughput needsof built capital appropriate to the sus-tainable yields and absorptive capaci-ties of natural capital and keeping la-bor and management needs appro-priate to the sustainable use of hu-man capital.

There are many categories of built

xi

capital. A useful indicator would re-flect the proper balance among cat-egories to permit the most produc-tive use of all forms of capital.

Human capital(intermediate means/ends)

The base of human capital is thepopulation, including its age and gen-der structure.

Along with numbers, ages, andgenders, human capital can be mea-sured by attributes such as health andeducation.

Human capital is in one sense anintermediate means, in another sensean intermediate end.

Population with its attributes, likebuilt capital, is an indicator of thenecessary throughputs and potentialoutputs of a society.

The universal resource availableto all human beings, and the currencyof most value to them, is time. Timeaccounting may be key to humancapital accounting.

Social capital (intermediate ends)Social capital is a stock of at-

tributes (knowledge, trust, efficiency,honesty) that inheres not to a singleindividual, but to the human collec-tivity.

Just as time is a key currency forhuman capital, information may bea key currency for social capital.

Another possible measure of socialcapital would be density or frequencyor intensity of human relationships.

The “forbidden numeraire,”whose stocks, flows, and distributioncould lend itself to indicators, ispower.

Social capital can be a high-lever-age transformative factor in the pro-cess of channeling ultimate meansinto ultimate ends.

Rough indicators of social capi-tal are better than nothing.

Well-being (ultimate ends)The most important indicator,

without which the others make nosense, is an indicator of ultimate ends.

Indicators of ultimate ends maynot be numerical or precise, but theyare findable and usable.

Integration (translating ultimatemeans into ultimate ends)

The central indicators of sustain-able development will integrate thewhole Daly triangle.

The information system fromwhich these central indicators can bederived will measure capital stocks atevery level and the flows that increase,decrease, and connect those stocks.

There are systematic schemes forassessing the total viability of a sys-tem. These schemes can serve aschecklists for sustainable develop-ment indicators.

Chapter 7: Sample indicators



xii

Chapter 8: Implementing,monitoring, testing, evaluating,and improving indicators

Indicators don’t guarantee results.But results are impossible withoutproper indicators. And proper indi-cators, in themselves, can produceresults.

Indicator measurement can be acostly, bureaucratic process. But itcan also be relatively simple. Theremay be clever ways to measure indi-cators that don’t even require num-bers or disturbing the system in anyway.

The process of finding, imple-menting, and improving sustainabledevelopment indicators will not bedone right at first. Nevertheless it isurgent to begin.

xiii


1

1. The nature of indicators,the importance of indicators

Indicators are natural,everywhere, part of everyone’s life.

Intuitively we all use indicators tomonitor complex systems we careabout or need to control.

Mothers are alert to the activity levelof their children, the brightness of theireyes, the way they breathe in sleep.

The learning of every school child isexpressed as test scores and grades.

Farmers scan the sky for weatherfronts, squeeze the soil to measureits moisture, watch how many earth-worms are turned over in a shovelfulof earth.

Doctors take your temperature, lookat your tongue, do blood tests andCAT scans.

Mechanics use calipers and pressuregauges and listen to the sound of themotor.

Pilots and power plant operatorshave whole panels of instruments infront of them.

Economists use leading indicators,lagging indicators, cost-of-living indi-cators, employment indicators, theNikkei or Dow-Jones index, and themost famous and criticized of all in-dicators, the GDP.

Some indicators are legends — thecanary in the coal mine, the sea birdthat hints of the yet-invisible land, thepuff of smoke from the Vatican chim-ney.

We have many words for indicator— sign, symptom, omen, signal, tip,clue, grade, rank, data, pointer, dial,warning light, instrument, measure-ment. Indicators are a necessary partof the stream of information we useto understand the world, make deci-sions, and plan our actions.

If we could first know where we are, andwhither we are tending, we could betterjudge what to do, and how to do it...

The nature of indicators, the importance of indicators

— Abraham Lincoln, speech to the Illinois Republican state convention, June 16, 1858


2

Indicators arise from values(we measure what we care about),and they create values(we care about what we measure).

What do you keep an eye on, to besure your home or workplace or com-munity is in good shape? What wouldyou ask about a place you might moveto, to find out if you would like to livethere? What would you want to knowabout your society fifty years fromnow, to be sure your grandchildren areliving good lives? The answers peoplegive to questions like these reflect theirvalues.

Various U.S. communities, asked todefine indicators of their own long-term welfare, have responded with:

• whether we have to lock ourhouses and cars;

• whether the children will go on liv-ing here or move away;

• whether wild salmon still run in therivers (Seattle);

• whether, when we open the win-dows, we can smell the sage (Den-ver).

A group of Portuguese young peopleonce listed as the top three ques-tions they would ask about a strangecountry:

• how many days in a year does thesun shine?

• how many kilometers are there ofclean beach?

• when you walk down the streets,are the people warm and friendly?

Clearly some values (and hence indi-cators) are place- or culture-specific,others are common to all humanity.Some are quantitatively measurable,while others, which may be equallyimportant, can only be felt qualita-tively.

Not only do we measure what wevalue, we also come to value whatwe measure. The Dow-Jones indexarose from the information needs ofstockholders, but now the generalpublic sees it as an indicator of na-tional economic health. No onecared about a blood cholesterol levelover 200 until doctors started in-cluding it in our annual checkups.Opponents of the Vietnam Warmade converts by creating an indi-cator: the nightly body count.

Indicators can be tools ofchange, learning, and propaganda.Their presence, absence, or promi-nence affect behavior. The worldwould be a very different place if na-tions prided themselves not on theirhigh GDPs but on their low infantmortality rates. Or if the WorldBank ranked countries not by aver-age GDP per capita but by the ratioof the incomes of the richest 10 per-cent to the poorest 10 percent.

We try to measure what we value.We come to value what we measure.This feedback process is common, in-evitable, useful, and full of pitfalls.

3

When indicators are poorlychosen, they can cause seriousmalfunctions.

If you manage a national economyto maximize GDP, you get GDP. Youdo not necessarily get justice or free-dom or environmental quality oreven, sometimes, real wealth.

If you run a company to increaseits stock market value, you may verywell produce a rise in the stock mar-ket value — perhaps at the cost of un-derpaid workers or poor quality prod-ucts, and therefore, over the long term,a downturn in the stock market value.

When the success of the familyplanning program in India was mea-sured by the number of intra-uterinedevices (IUDs) inserted per month,some family planning workers, it issaid, inserted IUDs in unknowingwomen, in infertile women, and evenin women who already had IUDs.The indicator looked fine, but thebirth rate, the actual target, washardly affected.

Indicators are both importantand dangerous because they sit at thecenter of the decision-making pro-cess. Nearly every human decisionis intended to bring some importantsystem condition or state (literacy ofthe population; pollution in the lake;national debt) to some desired state.Action is taken depending on thediscrepancy between the desiredstate or goal and the perceived stateof the system.

The perceived state is an indi-cator. It may not be measured ac-curately. It may measure not the ac-tual system state, but some proxyor associated state. (It’s impossible,for instance, to measure the exactpopulation of fish in the ocean, sowe measure the catch and assumethe population.) The indicator maybe delayed. It may be “noisy,” so itscentral tendency is hard to deduce.It may be deliberately or acciden-tally biased.

If an indicator of the state of thesystem is poorly chosen, inaccuratelymeasured, delayed, noisy, or biased,decisions based on it cannot be effec-tive. Misleading indicators will causeover- or under-reactions, changes thatare too weak or too strong to bringthe system exactly to the desired state.We can’t steer accurately, if we don’tknow where we are.


state ofthe system

discrepancy

inflows

perceivedstate

goal

outflows


4

Indicators are often poorly chosen.The choice and use of indicatorsare processes full of pitfalls.

Pitfalls in the process of choosing andusing indicators include:

Overaggregation. If too manythings are lumped together, theircombined message may be indeci-pherable. The GDP is the classic ex-ample, adding together money flowscaused by “good” economic changes(more education, say, or better food)and “bad” changes (more hospitaliza-tions from automobile accidents).Another example: measuring thestrength of a fishery by total tons offish caught may disguise the fact thatmore valuable species are diminish-ing, but smaller, less desirable fish arebeing substituted.

Measuring what is measurable,rather than what is important. Thearea covered by forest rather thanthe size, diversity, or health of thetrees; tons of hazardous chemicalsrather than toxicities; the amountof money people have rather thanthe quality of their l ives; theamount spent per school childrather than actual learning.

Dependence on a false model.We may think that the birth rate re-flects the availability of family plan-ning programs, when it may actuallyreflect the freedom of women to usethose programs. We may think theprice of oil tells us about the under-

ground abundance of oil, when itprimarily tells us about the built ca-pacity of oil wells relative to the builtcapacity of oil-consuming devices.

Deliberate falsification. If anindex carries bad news, someone maybe tempted to alter it, delay it, changeterms or definitions, unfund it, loseit, or otherwise suppress it. For ex-ample, the U.S. counts as unem-ployed only those people who are ac-tively looking for jobs, not those whohave given up looking. Some govern-ments have been known to report ag-ricultural yields based on five-yearplans, rather than actual harvests.

Diverting attention from directexperience. Indicators may mesmer-ize people with numbers and blindthem to their own perceptions. Thestock market is going up, so theeconomy must be in great shape, de-spite the fact that many of us are de-cidedly poorer.

Overconfidence. Indicators maylead people to think they know whatthey’re doing, or to think what they’redoing is working, when in fact theindicators may be faulty.

Incompleteness. Indicators arenot the real system. They may missmany of the subtleties, beauties, won-ders, warnings, diversities, possibili-ties, or perversities of the real system.

5

The choice of indicators is acritical determinant of thebehavior of a system.

Indicators are leverage points. Theirpresence or absence, accuracy or inac-curacy, use or non-use, can change thebehavior of a system, for better orworse. In fact, changing indicators canbe one of the most powerful and atthe same time one of the easiest waysof making system changes — it doesnot require firing people, ripping upphysical structures, inventing newtechnologies, or enforcing new regu-lations. It only requires delivering newinformation to new places.

For example, when a new U.S. lawrequired every plant emitting toxic airpollutants to list those pollutants pub-licly, an indicator was created. Localnewspapers began reporting the“top ten polluters.” Companiesacted quickly to get off that list, andtoxic emissions decreased by over40 percent in three years, thoughthere was no law against them. Thepresence of the indicator was suffi-cient in itself to change behavior.1

Similarly, when new Dutch houseswere built with the electric meter inthe front hall where it was easily vis-ible (instead of out of sight in thecellar), electricity use in those houseswent down by one-third though therewas no change in the price of elec-tricity. There was simply a clear indi-cator of electricity use situatedwhere no one could avoid seeing it.2

1 Environment Today, 6, no.1(Jan/Feb 1995): 16. The 40percent reduction was achievednot so much by reducing thegeneration of toxics as bydiverting them from disposal intothe air to disposal by injectioninto the ground (and hence intogroundwater). This exampleillustrates another hazard ofindicators — bizarre behaviordesigned not to solve a problembut to evade revelation by anindicator.

2 This story was told in 1973 ata system dynamics workshop inKollekolle, Denmark, and itssource is lost — but systemspeople tell it over and over until ithas become legend.

People can’t respond to informationthey don’t have. They can’t react ef-fectively to information that is inad-equate. They can’t achieve goals ortargets of which they are not aware.They cannot work toward sustainabledevelopment if they have no clear,timely, accurate, visible indicators ofsustainable development.

Conversely, if there are good in-dicators of sustainable development,it will be almost impossible not tomake decisions and take actions thatmake the indicators improve.



6

Indicators are partial reflectionsof reality, based on uncertain andimperfect models.

The grade is not the knowledge inthe head of the student. The stockmarket price is not the value of thecompany. No indicator is the real sys-tem. Indicators are abstractions fromsystems. Furthermore, they are ab-stractions from abstractions, frommodels, or sets of assumptions abouthow the world works, what is impor-tant, what should be measured.

We experience the worldthrough models, most of them fil-tered through our senses and hiddenin our minds. We don’t carry realityin our heads, we carry mental mod-els, assumptions about the world,based on our personality, culture,language, training, and experience.

2. Indicators, models, cultures,worldviews

Our mental models are enormouslyvaried, which is one reason why wehave trouble agreeing upon commonindicators with which to inform ourdecisions.

Some of our models are formal,written down or otherwise expressedoutwardly so others can see them. Forinstance spreadsheets, maps, writtenpapers, or mathematical equations areformal models.

All our models, mental and for-mal, are only models. They are nec-essarily incomplete. None of us hasperfect information. We don’t under-stand everything that is happening.We’re unclear about what causeswhat. Even with the help of comput-ers, there is a limit to the degree ofcomplexity we can comprehend orprocess. If we somehow could as-semble all relevant information, we

The real act of discoveryconsists not in finding new landsbut in seeing with new eyes.

— Marcel Proust

7

wouldn’t be able to absorb its fullbuzzing complexity. We would haveto abstract and simplify. The aston-ishing success of our species testifiesto our ability to do so accuratelyenough to serve many purposes. Therecord of our failures, accidents, sur-prises, and disasters testifies to thelimits of our modeling ability.

It helps to maintain humilityabout our models as we search forindicators of sustainable develop-ment. Sustainable development is asocial construct, referring to the long-term evolution of a hugely complexsystem — the human population andeconomy embedded within the eco-systems and biogeochemical flows ofthe planet. Our models of this sys-tem are and will always be incom-plete. Our indicators will be imper-fect. We will be making decisionsunder uncertainty. Our task is to re-duce that uncertainty. We will not beable to eliminate it completely, at leastnot any time soon.

We need many indicators,because we have many purposes— but there may be over-archingpurposes that transcend nationsand cultures, and therefore theremay be overarching indicators.

Football scores are meaningful indi-cators to football fans and gibberishto everyone else. A farmer can readsignals from a field of growing grain

that the rest of us don’t even perceive.Every jiggle in stock prices carries vi-tal information only to those whowatch the market every day. An indi-cator is useful only if it carries its in-formation to a mind prepared to re-ceive it, educated to its terms andunits of measurement, and activelyengaged with the system illuminatedby that indicator.

Therefore we will probably neversettle on a single global index of sus-tainable development — too manydifferent people work on differentproblems and need different kindsof information. Some people aremore interested in “development,”others in “sustainability.” Some arelooking for “warning lights” tellingwhen a key resource will becomescarce or an ecosystem is likely to bedriven into irreversible collapse.Others are interested in the welfareof a particular city or nation, or inbringing to public attention a par-ticular pocket of poverty or pollu-tion or under-capitalization.

So, rather than a single index, weneed an information system — oneat least as sophisticated as the systemthat presently tracks flows of moneyaround the world — to inform vari-ous decision makers at various levelswith various purposes related to sus-tainability and development.

Having said that, I must also saysomething that sounds contradictory.The comprehensive task — bringingabout a socioeconomic system that

Indicators, models, cultures, worldviews


8

enhances quality of human life whilepreserving natural support systems —is particular to cultures and ecosys-tems, but is also, in essence, the sameeverywhere. Planet Earth operates byjust one set of physical and biologi-cal laws, though they manifest as di-verse climates and ecosystems. Hu-man beings have the same fundamen-tal needs for sustenance and belong-ing and meaning, though their waysof meeting those needs are culturallyvaried. Global resources such as theoceans and atmosphere are importantto everyone. Therefore it may be pos-sible to derive from a multiplicity ofspecific local indicators an overarchingset of global indicators that informcommon problems and purposes.These indicators can report to all ofus about the increasingly integratedglobal socioeconomic system con-tained within the undeniably inte-grated global biogeochemical system.

I suggest a few overarching indi-cators later in this document.

We need many indicatorsbecause we have manyworldviews — but indicators mayhelp narrow the differencesbetween worldviews.

The deepest reason why people needdifferent indicators is that they havedifferent fundamental worldviews orparadigms. Worldviews are mentalmodels about the very nature of real-

ity. They tell us what the environmentis (limited and fragile or infinite androbust, outside ourselves or continu-ous with ourselves, a luxury or themost basic of necessities), what humanbeings are (honest, devious, generous,greedy, fallen angels, unrecognizedbuddhas, competitive rationalists,myopic egotists), and how people andnature should interact (through do-minion, stewardship, harmony, part-nership, competition, exploitation,love). Our worldviews define what isimportant, what questions can beasked, what goals are possible, whatcan and should be measured.

Worldviews not only give mean-ing to information, they activelyscreen information, only admittingwhat fits our preconceived models.Someone who is convinced that tech-nology can solve any problem, for ex-ample, can read the newspaper andfind articles about wonderful newtechnologies. Someone with a skep-tical view can read the same paper andsee nothing but articles about tech-nical foul-ups. Each is screening forthe information that fits his or herparadigm. If contrary evidence doespenetrate our paradigmatic screens,we have ways of dismissing it or dis-counting the people who present itto us. We see information thatdisconfirms our worldview as the ex-ception and information that con-firms our worldview as the rule.

Therefore people of differentworldviews live literally in different

9

worlds. They see different things andtake their information from differentindicators. Scientists who see theworld as flows of energy will wantdifferent indicators than will econo-mists who see the world as flows ofmoney — who will want differentindicators than will people who seethe world as flows of time or socialrelationships or moral obligation orpolitical power. Our worldviews don’teven use the same currency! No won-der we argue about indicators!

Given the multiplicity of perspec-tives, one option is to disagree end-lessly. We can promote our own in-dicators and ridicule others’. Anotheroption is to acknowledge the inher-ent ambiguity in the choice of mod-els and the design of indicators. If thatis done, if worldviews and models areexposed to view, if their plurality isnot only recognized but appreciated,indicators can play an emancipatoryrole. Different indicators giving con-flicting reports about the state of theglobal system can provide an oppor-tunity to inquire into the underlyingmodels that produced the discrep-ancy. Indicators can be a tool for ex-panding, correcting, and integratingworldviews.

(Note: everything written hereabout worldviews is a worldview.)

Indicators need not be purelyobjective, and in fact few ofthem are.

It is conventional within a scientificworldview to distinguish between “ob-jective” and “subjective” indicators.Objective indicators are sensed by in-struments outside the individual —thermometers, voltmeters, counters,dials, rulers. They can be verified byothers. They can be expressed in num-bers. Subjective indicators are sensedonly within the individual by meansthat may not be easily explained andin units that are probably not numeri-cal. Objective indicators primarilymeasure quantity. Subjective indica-tors primarily measure quality.

Objective indicators are usuallyconsidered more reliable and valu-able. They are certainly more easilycommunicated and validated by oth-ers. But there are vital purposes thatdepend on subjective, qualitative in-formation. The scientific worldviewis just one way to see the world, a veryuseful one, but not comprehensiveenough to be used exclusively. Achoice to pay attention only to whatis measurable is itself a subjectivechoice, and not a wise one. Every hu-man being knows that some of themost important things in life — free-dom, love, hope, harmony, even thebeauty of scientific precision — arequalities, not quantities.

All indicators are at least partiallysubjective. The very choice of an in-

Indicators, models, cultures, worldviews


10

dicator is based upon some value,some inner human purpose that tellsus what is important to measure. Thechoice of what is important is inher-ently subjective.

Indicators of quality, “subjectiveindicators,” are worthy of respect,however hard they may be to define.The fact that people consider some-thing ugly or beautiful, harmoniousor dissonant, noble or ignoble, is notto be swept away as “mere opinion.”If we guide our decisions only byquantitative indicators and not quali-tative ones, we will produce a worldof quantity without quality. Many ofour social and personal problems arisefrom the fact that we are well on ourway to doing exactly that.

Despite their difficulties anduncertainties, we can’t managewithout indicators.

Indicators are hard to define. They arebased on uncertain models. Their se-lection and use are full of pitfalls. Theycarry different messages to differentminds. These difficulties don’t mean,however, that we shouldn’t use indica-tors. We have no choice. Without themwe fly blind. The world is too complexto deal with all available information.We have to choose a set of indicatorssmall and meaningful enough to com-prehend. Rather than discourage us, thepitfalls and difficulties should give usideas about how to design better indi-cators, and motivation to do so.

The search for indicators isevolutionary. The necessaryprocess is one of learning.

A lot of planes crashed before peoplelearned what instruments to put inthe cockpit. Many patients died be-fore doctors figured out how to taketemperatures and blood tests. Whena system is extremely complex, it takestrial, error, and learning to produce aserviceable set of indicators.

The human economy and theplanet Earth together make up a sys-tem we can’t afford to crash. We haveto learn from the experience of localeconomies and ecosystems (some ofwhich have crashed or are crashing)and improve our indicators as best wecan, using many types of human ex-perience and knowledge and models.

That is an enormous job. Whilewe’re learning, we should view our in-dicators and models with utmost hu-mility. We should open ourselves todisproof, which is a faster way of learn-ing than looking only for proof. (Sci-entists are trained not to prove atheory but to try to disprove it.) Weshould subject every model, especiallyour favorite ones, to as much scru-tiny and as tough testing as possible.There’s no shame in having a wrongmodel or a misleading indicator, onlyin clinging to it in the face of contra-dictory evidence. The more flexiblewe can be, the faster we will find goodsustainable development indicators.

11

Development and sustainabilityare old problems; now they cometogether on a global scale and inan urgent time frame.

The world economy is doublingroughly every twenty years. Theworld population is doubling everyfourty to fifty years. The planet thatsupplies the materials and energy nec-essary for the functioning of thepopulation and economy is not grow-ing at all. That means whatever plan-etary resource was one-fourth-used ageneration ago is half-used today.Whatever waste sink was half-full ageneration ago is full today. What-ever was full a generation ago isoverfull today.

Each successive doubling of thehuman system causes new stresses andraises new questions, or rather bringstwo old questions together with new

3. Why indicators ofsustainable development?

urgency. Question one is how can weprovide sufficiency, security, good livesto all people? (The development ques-tion.) The second is how can we livewithin the rules and boundaries of thebiophysical environment? (The sus-tainability question.) With theeconomy globally linked, the oceanfisheries depleting, the atmospherechanging in composition, openspaces filling in, and much of the hu-man population still living in poverty,these two questions now come to-gether with urgency. How can we andour children live good lives withouteroding the health and productivity ofthe physical planet — and therefore thepossibility for future generations to leadgood lives?

The indicators we need to answerthat question are not immediately ob-vious, because the question is so new.It is new because most human his-

Indicators of sustainable development need to be developedto provide solid bases for decision making at all levels and tocontribute to the self-regulating sustainability of integratedenvironment and development systems.

— Chapter 40.4 of Agenda 21, from the United Nations Earth Summit in Rio, 1992

Why indicators of sustainable development?


12

tory thus far has occurred in a worldwith few apparent limits. Withtwenty-year doublings, however, thehuman endeavor is rapidly approach-ing and in some cases exceedingphysical limits. The unsustainabilityof many of our activities is becomingapparent. Suddenly we need indica-tors that we never needed before.

“Sustainability” and “develop-ment” are value words. Like all valuewords — freedom, fairness, beauty,justice, security, sufficiency, democ-racy — they are subjective, nearly im-possible to define, nevertheless pos-sible to sense (or to sense their ab-sence), and vitally important. Takentogether — “sustainable develop-ment” — the two words may seemcontradictory but nevertheless mustbe achieved together.

Good lives for all people in harmonywith nature. The urgency and scaleof achieving that goal challenge oldmodels and worldviews. Hence thedemand for new ways of thinking andthe need for new indicators.

Sustainability indicators must bemore than environmentalindicators; they must be abouttime and/or thresholds.

Governments already maintain manyenvironmental and resource indica-tors, such as the emission rate of sul-fur dioxide, concentration of carbondioxide in the atmosphere, concen-tration of lead in drinking water, es-timated reserves of fossil fuels.

An environmental indicator be-comes a sustainability indicator (orunsustainability indicator) with theaddition of time, limit, or target.The central questions of sustainabil-ity are: How long can this activitylast? How long do we have to respondbefore we run into trouble? Where arewe with respect to our limits? There-fore sustainability indicators are ide-ally expressed in time units. If we keepon mining or fishing or logging at thisrate, how many years will the resourcelast? If we keep emitting this pollut-ant at this rate, how long before weaccumulate a dangerous concentra-tion in nature or in ourselves?

Ecological sustainability is the domain of the biologist and thephysical scientist. The units of measurement are different, theconstructs are different, and the context and time scale is different.

— Ismail Serageldin, Vice President, Environmentally Sustainable Development, World Bank

13

3 Worldwide Petroleum IndustryOutlook, 14th ed. Tulsa, Okla.:PennWell Pub. Co., 1997;Energy Statistics Sourcebook,12th ed. Tulsa, Okla.: PennWellPub. Co., 1997.

4 Ibid.

For example, a common resource indicator is the amount of fossil fuel reservesknown and estimated — roughly 1000 billion barrels of known oil reserves globally,plus perhaps 500 billion barrels estimated but undiscovered.3 This amount by itselfis not a helpful number. It is too huge to be imaginable, and it is not related to ourown activities or limits.

If we compare the estimated supply of 1500 billion barrels to recent rates of oilconsumption, about 25 billion barrels per year,4 we can put that reserve in terms ofa more understandable index: years of consumption remaining:

(1000+500)/25 = 60 more years of oil at present consumption rate.

If we assume not present consumption, but a rate of growth slightly higher thanpopulation growth — let’s say 2%/year on average — we get a strikingly differentnumber:

ln (.02*60 + 1)/.02 = 39.4 years with 2% consumption growth.

We may (and will) argue about how much more oil might be discovered and aboutwhat the future growth rate might be. Different estimates will produce differentindicated lifetimes for the oil resource. For example:

Suppose four times as much new oil is discovered as is currentlyestimated, but consumption growth proceeds at 5% per year:

(1000+2000)/25 = 120 years at present consumption rate, but

ln(.05*120 +1)/.05 = 38.9 years at 5% consumption growth.

Suppose twice as much new oil is discovered as is currently esti-mated but consumption growth stays as low as 1% per year:

(1000+1000)/25 = 80 years at present consumption rate.

ln(.01*80 +1)/.01 = 58.8 years at 1% consumption growth.

Even given great uncertainties about future oil discoveries and future consumptiongrowth, a few calculations of such an indicator of time remaining gets across thecentral message: the time is bounded and limited to decades, not centuries, if oilconsumption keeps increasing.

A useful indicator in such an inherently uncertain arena ought to cover the range ofpossibilities. Perhaps something like this: Known and estimated and speculative oilreserves will last roughly approximately 60 to 120 years if there is no increase inconsumption, and 30 to 60 years if there is steady exponential growth in consump-tion.



14

5 Intergovernmental Panel onClimate Change, ClimateChange: The IPCC ScientificAssessment, edited by J. T.Houghton, G. J. Jenkins, and J.J. Ephraums. Cambridge/NewYork: Cambridge UniversityPress, 1990.

6 That is roughly what the Foodand Agriculture Organization(FAO) has estimated for excessfishing capacity on averageworldwide, though such anindicator makes most sense onlywhen it is calculated fishery byfishery. See, for example: J. A.Gulland, ed., The Fish Resourcesof the Ocean. Surrey, U.K.:Fishing News Ltd., 1971; M. A.Robinson, Trends and Prospects inWorld Fisheries, Fisheries CircularNo. 772. Rome: FAO, 1984;FAO, Marine Fisheries and theLaw of the Sea: A Decade ofChange, Fisheries Circular No.853. Rome: FAO, 1993; FAO,The State of World Fisheries andAquaculture 1996. Rome: FAO,1997.

7 Dr. A. Adriaanse,Environmental Policy PerformanceIndicators. Sdu UitgeverijKoninginnegracht, May 1993,pp. 33.

If they are not expressed in units oftime, sustainability indicators shouldbe related to carrying capacity or tothreshold of danger or to targets.Tons of nutrient per year released intowaterways means nothing to people.Amount released relative to theamount the waterways can absorbwithout becoming toxic or cloggedbegins to carry a message.

Deposition of acidic pollution on Dutch soil

acid

ifica

tion

equi

vale

nts

deposition

target

sustainability level

6,000

0

3,000

1980 1995 2010

target

target

The Intergovernmental Panel on Climate Change (IPCC) estimates that the worldeconomy would need to cut its carbon dioxide emissions by 60% in order tostabilize the chemical composition of the atmosphere.5 If we define the sus-tainable emission rate as 1.0, that means our current emission rate is 1.6 —clearly beyond sustainability.

Similarly, suppose that a fishery’s biology experts estimate that the currentrate of fish harvesting is about 20 percent above the rate that would allow fishpopulations to regenerate.6 Sustainability index = 1.2 — over the limit.

Distance from a sustainability target can be expressed even more graphicallyby showing a time trend related to a target, as in the following example fromthe Netherlands.7

Development indicators shouldbe more than growth indicators;they should be about efficiency,sufficiency, equity, and qualityof life.

In an empty world, development caneasily be confused with growth.Growth simply means getting larger— not necessarily getting better.Most of our economic indicators, es-

15

Ecological Available Surplus orFootprint Capacity Deficit

Nation (ha/cap) (ha/cap) (ha/cap)

Australia 8.1 9.7 +1.6

Bangladesh 0.7 0.6 -0.1

Brazil 2.6 2.4 -0.2

China 1.2 1.3 +0.1

Germany 4.6 2.1 -2.5

Indonesia 1.6 0.9 -0.7

Japan 6.3 1.7 -4.6

New Zealand 9.8 14.3 +4.5

Russia 6.0 3.9 -2.0

United States 8.4 6.2 -2.1

8 M. Wackernagel and W. Rees,Our Ecological Footprint.Philadelphia: New SocietyPublishing, 1996.

9 M. Wackernagel et al.,“Ecological Footprints ofNations,” Center for Sustainabil-ity Studies, Xalapa, Mexico,March 10, 1997.

10 R. Goodland, H. Daly, and S.El Serafy, introduction toEnvironmentally SustainableEconomic Development: Buildingon Brundtland, The World BankEnvironment Working Paper no.46, July 1991, pp. 2-3.

tablished several doublings ago, aredefined around growth, with theGDP per capita as the most obviousexample.

In a full world, development andphysical growth must be decoupled.As economist Herman Daly haspointed out, growth is about gettingbigger, development is about gettingbetter.10 Development indicators mustbegin to reflect quality, equity, effi-

ciency, and sufficiency. They must shiftemphasis from money to physicalunits and from quantity of materialthroughput to quality of life. Thesedistinctions begin to point to the realpurpose of economic development,which is not to have money but tohave better lives. This sort of rethink-ing can also create openings for con-cepts not only of under-developmentbut of over-development, and there-fore for concepts of “enough.”


To take a more ambitious example,Wackernagel and Rees have definedthe “ecological footprint” — a roughestimate of the average amount ofland required by a given nation tosupply all that nation’s physical con-sumption (food, energy, water, ma-terials, waste purification).8 If theecological footprint is larger than theactual area of the nation, then thatnation must be either importing re-sources from outside its borders(which is fine, as long as the export-ing countries’ footprints are smallerthan their actual area) or drawingdown its own or other countries’ re-sources (which is clearly unsustain-able).

Here are some Wackernagel andRees estimates of ecological foot-prints related to land capacity for se-lected nations of the world:9


16

One of the first attempts to indi-cate actual human developmentrather than money flows is theHuman Development Index, pio-neered by the UN DevelopmentProgramme. The HDI is a (fairlycomplex) mathematical averageof three indicators: average lifeexpectancy, average educa-tional attainment, and GDP percapita. Here are some sampleHDI values for selected coun-tries (1993 data).11

11 United Nations DevelopmentProgramme, Human DevelopmentReport 1996. New York: OxfordUniversity Press, 1996, pp. 136-137.

12 The “Prevention Index” isavailable from Preventionmagazine, 33 East Minor Street,Emmaus, Pennsylvania.

HumanDevelopment

IndexNation (HDI)

Canada 0.951

USA 0.940

Japan 0.938

Russia 0.804

Brazil 0.796

Indonesia 0.641

China 0.609

Kenya 0.473

Nigeria 0.400

Afghanistan 0.229

Somalia 0.221

In a similar vein, the health-based magazine Prevention hasinvented an index to measurethe healthfulness of a nation’slifestyle. It is an aggregation oftwenty-one indicators, deter-mined largely by polling data.They include:12

What percent of the adult popu-lation:

• do not smoke?

• engage in frequent strenuousexercise?

• maintain proper weight?

• get 7-8 hours of sleep a night?

• fasten seat belts while ridingin a car?

• refrain from excess alcoholconsumption?

17

Indicators must be simultaneouslymeaningful in two different domains:that of science and that of policy.

— Wouter Biesiot

4. The challenge of comingup with good indicators

It’s easy enough to list thecharacteristics of idealindicators.

Most study groups on indicators startby making a list of the qualities of agood indicator. Just about every in-dicator report contains a list similarto the following.13

Indicators should be:Clear in value: no uncertainty

about which direction is good andwhich is bad.

Clear in content: easily under-standable, with units that make sense,expressed in imaginable, not eye-glazing, numbers.

Compelling: interesting, excit-ing, suggestive of effective action.

Policy relevant: for all stakehold-ers in the system, including the leastpowerful.

Feasible: measurable at reason-able cost.

Sufficient: not too much infor-mation to comprehend, not too littleto give an adequate picture of the situ-ation.

Timely: compilable without longdelays.

Appropriate in scale: not over-or under-aggregated.

Democratic: people should haveinput to indicator choice and have ac-cess to results.

Supplementary: should includewhat people can’t measure for them-selves (such as radioactive emissions,or satellite imagery).

Participatory: should make use ofwhat people can measure for them-selves (such as river water quality orlocal biodiversity) and compile it toprovide geographic or time overviews.

13 For a definitive list agreedupon by a large internationalbody of experts, see “TheBellagio Principles,” in B.Moldan, S. Billharz, and R.Matravers, SustainabilityIndicators: A Report on the Projecton Indicators of SustainableDevelopment (SCOPE).Chichester and New York: JohnWiley, 1997.

The challenge of coming up with good indicators


18

14 H. Bossel, “Finding Indicatorsof Sustainable Development,”Center for EnvironmentalSystems Research, University ofKassel, draft, September 1997.

Oh please! Not again new indicators! I onlywant to see simple indicators that can be usedby politicians and let the scientists stop withever more complicated stuff!

— A very high UNEP official

Hierarchical: so a user can delvedown to details if desired but can alsoget the general message quickly.

Physical: money and prices arenoisy, inflatable, slippery, and unsta-bly exchangeable. Since sustainabledevelopment is to a large extent con-cerned with physical things — food,water, pollutants, forests, houses,health — it’s best wherever possibleto measure it in physical units. (Tonsof oil, not dollars’ worth of oil; yearsof healthy life, not expenditures onhealth care.)

Leading: so they can provide in-formation in time to act on it.

Tentative: up for discussion,learning, and change. (We shouldhave replaced the GNP index decadesago, for example, but it became tooinstitutionalized to do so.)

It’s not so easy to find indicatorsthat actually meet these idealcharacteristics.

Having made a list like the one above,the typical indicator study group dis-bands, encouraging someone else tocome up with actual indicators thatmeet all these wonderful criteria. Oralternatively, the study group pro-ceeds to recommend a long list of in-dicators that don’t meet the criteria.As one of our Balaton colleagues haswritten: “International organizations,dependent on consensus of theirmembers, assemble indicator sets thatmeasure the noncontroversial issuesin overwhelming detail, while leav-ing out information on controversialissues. It’s like cramming an airliner’scockpit with ship chronometers,cuckoo clocks, swatches, hour glasses,and thermometers, without makingsure that vital instruments like air-speed indicators and compass are onboard.”14

Having tried the exercise our-selves, however, the Balaton work-shop members found ourselves insympathy with others who have failedto come up with perfect indicators.It was easier to complain about otherindicators, to spew out theoreticallists of hundreds of (mostly unmea-surable) indicators, or to philosophizeabout the Ideal Indicator, than it wasto produce a limited, comprehensiblenumber of compelling, effective in-dicators. Our understanding is im-

19

perfect, our worldviews get stuck, sys-tems are complex, people disagree, wefall back on our narrow specialties,we fail to summon the enormous cre-ativity we need. One wants to throwup one’s hands and go do somethingeasy.

To keep ourselves from duckingthe difficulties, some of us created,at irregular intervals throughout theworkshop, an imaginary challenge tocome up with ten, just ten, crucialindicators we would recommend tothe nations of the world, “or else beshot at dawn.” Under that pretendedpressure, most of us did produce in-dicators.15 We were unhappy withour forced lists and pleaded for moretime. We repeated the exercise andour lists changed as the workshopproceeded and we thought moredeeply. We didn’t like to be forced toproduce (who does?) but in fact evenour imperfect suggestions were prob-ably improvements on existing indi-cators. And the forcing exercisebrought out questions, consider-ations, doubts, and ideas that led usto more creative indicators.

If you aren’t too dignified, Iwould recommend the “ten indica-tors or be shot at dawn” exercise whenyou find yourself bogging down.Otherwise it’s too easy to indulge intheorizing or politicizing or someother evasive activity.

Most of us already haveindicators in the backs of ourminds, “beloved indicators” thatreflect issues of great concern tous. It’s important to get them outon the table.

We noticed each time we did the forc-ing exercise that we each had “belovedindicators,” which we kept puttingback on our lists because we just plainwanted them there. (See the list onthe next page.) These indicators weredifferent for different people; theymay not be the best ones to put intothe cockpit of the sustainability jet-liner, but they are worth paying at-tention to. When we try to explainwhy we want them, we find ourselvesbringing out our deepest worldviewsand values. They may suggest practi-cal indicators of great importance —or at least once they’ve been acknowl-edged and talked through, our mindscan be at rest and ready to think aboutother indicators.

15 Some of us considered thewhole exercise undignified andrefused to participate. Othersdeclared that the process ofchoosing indicators was moreimportant to them than theproduct — and that the properbroad base of constituents wasnot present at the workshop.



20

Here are some of the beloved indicators that participants in the Balaton work-shop kept insisting upon (which may tell you more about us than about sustain-ability indicators):

• Percent of the food supply that is grown organically. We are worried aboutthe effects of chemical agriculture on ecosystems and human health.

• Percent of streams you can drink from safely. Seems to us it should be 100percent.

• Average age of the trees in the forest. Old ones signify to us undisturbedecosystems, too many young ones signify unsustainable forestry.

• Population trends of migrating songbirds. To us life would be unbearably sadwithout songbirds, and migrating birds are sensitive measures of environ-mental health over large areas.

• Food miles (average distance an item of food travels before being eaten).Local food is likely to be more fresh, nutritious, good-tasting, and resilient tosupply interruptions. It has also used less packaging and transport energy.

• Average distance between creators and consumers of art and media. Prefer-ably there is no distance at all — a measure of community, participation,identity, self-expression.

• Percent of elections in which you get to vote for a politician you really trust.This one could be an embarrassing indicator of real democracy.

• Average distance between living places of members of extended family. Foraffection, social resilience, and energy efficiency, the closer the better.

• Average number of minutes spent daily in prayer, meditation, or quiet time.

• Percent of people who say they have “enough.” We wonder if a society ishappy if significant numbers of people, however rich, constantly want “more.”

21

Indicators can take many forms.They don’t have to be numbers.They can be signs, symbols,pictures, colors.

We thought of many different typesof indicators — digital and analog,monetary and physical, aggregatedand disaggregated, static and dy-namic, additive and multiplicative,normalized and absolute.

We particularly distinguished be-tween three types of indicators thatwould be necessary in any airplanecockpit, for which there are obviousanalogies in sustainable development:

• gauges and warning lights to sig-nal obstacles or dangers ahead;

• indicators of the comfort andsafety of the passengers;

• measures of the heading and dis-tance to go toward the destination.

We got into long, hot discussionsabout the meaning of symbols (moreabout this later). We began to imag-ine different ways of presenting indi-cators — illuminated control panels,hypertexted Web pages, pictures, dy-namic models, maps, compasses. Wetalked about the power of the famousBulletin of Atomic Scientists “Minutesto Midnight” clock that powerfully,if qualitatively, measures the politi-cal tension of the nuclear arms race.We thought of the creative ways thatTV weather reporters deliver complexinformation.

Surely as much effort and inge-nuity ought to go into reporting to


the people of the world about theirwelfare and the sustainability of theirplanet as goes into reporting to themabout tomorrow’s weather!

What is needed to informsustainable development is notjust indicators, but a coherentinformation system from whichindicators can be derived.

As we went back and forth, suggestingspecific indicators, then backing off totalk about the philosophy of what wewere doing, we realized that we weresearching not just for indicators butalso for an information system aboutsustainable development, of which in-dicators are just one part. That is to say,we were talking about the design notonly of the instrument panel (indica-tors) that governments and citizensneed to see to steer the ship and avoidobstacles, but also the design of thebackground wiring (information sys-tem) that collects and sorts informa-tion and delivers it to the panel.

We saw that we were working onthree levels. First, we were evolving ideasfor process, linkage, and worldviewexplication that could aid the searchfor indicators. Second, we were devel-oping a framework (a model) to orga-nize and link together an entire sustain-able development information system.Third, we were coming up with indi-cators. Our discussions on these threelevels constitute the next three sectionsof this report.


22

Hierarchy: coherence upand down the informationsystem

The information system should beorganized into hierarchies ofincreasing scale and decreasingspecificity.

Whether or not the world is actuallyarranged in hierarchies, our mentalmodels perceive the world that way.We see a hierarchy from the indi-vidual to the family, the neighbor-hood, the community, the region, thenation, the world. Or from the or-ganism to the population to the eco-system to the biome to the planet. Orfrom the employee to the division tothe firm to the sector to the nationaleconomy to the global economy. Ateach of these levels, actions are taken

and information is needed. So we pic-ture a nested set of indicators, eachinforming the “system in focus” at itsown level (say, actual water qualityin this lake) and aggregating to in-form the system at the next higherlevel (average water quality in theregion’s lakes).

Aggregation is necessary to keepfrom overwhelming the system at thehigher levels of the hierarchy. Thebrain cannot and need not process ev-erything happening to every cell inthe body. The leaders of nations can’tkeep track of every family, species,business, or lake. But actors down theline, in the family, near the lake, needdetailed information to keep theirpart of the system functioning well.

Aggregation must be done withcare, because information is lost ateach stage. Ideally only important in-

5. Suggestions for indicatorprocess and linkage

Everything should be as simple aspossible, but not simpler.

— Albert Einstein

23

formation should be passed up tohigher levels, but what informationis important will change over timeand with different purposes. There-fore it should always be possible togo down as many levels as necessaryto see the numbers that have been puttogether to make the aggregate indi-cator and to create new indicators.(For example, it should be possiblefor anyone to find out not only thatthe GDP went up, but what went up— home construction or weaponsconstruction, cleaning up after natu-ral disasters or cleaning up the envi-ronment.)

“Clicking a hypertext page” is thephrase we used to indicate our visionof the way a user could navigate a hi-erarchical information system.

The main “cockpit” would show themost critical and aggregated indica-tors (say, for example, the qualityand adequacy of human capital). A“click” on that indicator would opena more detailed set of information(say, size of population and primaryattributes — age, sex, health status,education, income, employment).Another “click” on health statuscould open boxes of informationabout age-specific mortality andmorbidity rates and causes. Further“clicks” could give the same infor-mation about specific geographicsub-areas. And so forth.

Information from the hierarchy atall levels should be available topeople at all levels.

Like a library, an information systemrich at every hierarchical level yetclearly organized so that one can findone’s way among the levels, would bemaximally useful for matching di-verse kinds of information to the di-verse purposes for which people needinformation.

One of the pitfalls of such a flex-ible information system, however, isthat it can be manipulated. It allowsthe user to choose only those indica-tors that serve a pre-conceived out-come. Selecting information to jus-tify only one point of view is a trapthat even well-meaning users can fallinto. The only way to get around it isto be sure the information system isaccessible to users with many pointsof view. Then multiple interpreta-tions can emerge and can be discussednot at the futile level of throwing con-tradictory statistics at each other, butat the level of examining the modelsand purposes that cause those statis-tics to be selected from the full setavailable.

Making sure that “cockpit indi-cators,” the aggregated ones at the topof the hierarchy, are comprehensivecan also help overcome the all-too-human tendency to pay attentiononly to the news you want to hear.If, for example, economic productiv-ity indicators are improving nicely,

Suggestions for indicator process and linkage


24

It comes back to localknowledge. People havesaid that the beaches aremore polluted than whatthey’ve been. I couldhave told you that.Because I’ve seen fromupstairs for thirty yearsand looked out thewindow every day andseen the color of the sandchange color. Whereas itused to be like everyoneimagines sand, it’s now abrowny color.

— focus group participant, LancashireCounty, UK16

For example, a nongovernmentalorganization called River Watch inthe United States organizes highschool science teachers to involvestudents in regular chemical andbiological monitoring of a streamnear each school. The schools linktheir findings through computernetworks, thereby creating moni-toring networks for entire streamsand rivers. They have been able todetect changes in water qualityquickly, and even, by comparingdata on successive reaches, to pin-point the source of a problememission. If enough sections ofriver could be covered this way,the information could be aggre-gated upward into, for example, anindex of what percent of thenation’s surface water is of swim-mable and drinkable quality, andhow that index is changing overtime.17

Costa Rica has organized throughits Instituto Nacional de Bio-diversidad (INBio) thousands of itscitizens as local naturalists, trainedto collect and preserve insects,plants, birds, and to send them totaxonomists for classification.Working in their spare time, the la-borers, students, housewives, andretired people in this program arecataloguing the vast biological di-versity of their nation. They havediscovered hundreds of new spe-cies. The species catalog is com-puterized and made available atlibraries and schools throughoutthe country. When the catalog isdone, the citizen naturalists can be-come monitors of population size,breeding success, and other at-tributes of biological diversity.18

Similarly the Christmas Bird

Counts conducted by Audubon So-ciety volunteers, originally in NorthAmerica, now throughout theWestern Hemisphere, are provingone of the most reliable long-termbird population data bases in ex-istence.19

but indicators of the security ofhouseholds, say, or the integrity ofcommunities are falling apart, and ifthe cockpit indicator blends thosetwo sources of information, then atleast the question will rise, “why isn’tthis indicator rising, when theeconomy is doing so well?” Presum-ably a scan of the indicators at thenext level down in the hierarchy willanswer that question.

Information should also comefrom all levels. The public can beimportant contributors to, as wellas users of information andindicators.

Governments have the scientific andfinancial resources to gather informa-tion that is inaccessible to citizens,such as satellite imagery or radiationleaks. Citizens can provide detailedground-truth that is inaccessible togovernments.

25

Citizens could survey many things atthe local level: soil erosion, child nu-trition, adequacy of housing, use oflocal energy sources, quality of roads,water, jobs, schools, or forests. Citi-zen monitoring not only can provideexcellent information at low cost, itcan also contribute to the educationof the people and to widespread ap-preciation for natural and societalwealth.

The Selection Process:experts and citizenstogether

The process of indicatordevelopment for social systems isas important as the indicatorsselected.

As indicators are selected and defined,values are expressed, purposes areagreed upon, worldviews are at play,and models are developed and shared(implicitly or explicitly). Thereforethe selection process is the placewhere legitimacy and comprehensionare built, as people see their valuesand worldviews incorporated into theindicators. The process of indicatorselection is also one of the key placeswhere social learning about indica-tors and models takes place.

For all these reasons — to be in-clusive, to gather a full compilationof viewpoints, to legitimize the prod-uct, and to enhance learning — the

16 Quoted in P. Hardi and T.Zdan, eds., Assessing SustainableDevelopment: Principles inPractice. Winnipeg, Manitoba:International Institute forSustainable Development, 1997,p. 107.

17 River Watch Network, 153State Street, Montpelier, VT05602. Another such organiza-tion is the Global RiversEnvironmental Network(GREEN, 206 South Fifth Ave.,Suite 150, Ann Arbor, Michigan48104, U.S.A.)

18 INBio, Sto. Domingo 3100,Heredia Costa Rica, Tel.: (506)36-7690, Fax: (506) 36-2816.

19 The data are complied andmaintained by the PatuxentWildlife Research Center, Laurel,Maryland. The CBC started onChristmas Day, 1900. Today,over 45,000 people from all 50states, every Canadian province,the Caribbean, Central andSouth America, and the PacificIslands (all areas where thebreeding birds of North Americaspend their winter) participate inabout 1700 counts held during atwo and one-half week period.The Christmas Bird Count hasevolved into the largest andlongest-running wildlife surveyever undertaken.

more people involved in indicator se-lection the better. Indicators for anentire social system should not be de-termined by a small group of expertsor politicians or civil servants sittingtogether in rooms out of contact withthe people who are expected to un-derstand and use the indicators.

The indicator selection processworks best with a combination ofexpert and grassrootsparticipation.

Many indicator-defining groups havefound that they made greatest head-way in finding useful indicators ifthey put together experts on the sub-ject in question with interested non-experts.

Experts are necessary to supplycomprehensive understanding, per-spective on the development of thesystem over time, knowledge of whatdata are available, realism about whatcan be measured, and credibility tothe process. But experts, left to theirown devices, can get lost in details,can want to measure everything thatis intellectually interesting rather thanwhat is policy-relevant, can inventtechnical indicators that carry nomeaning outside the expert commu-nity, and can be blindered by the nar-row specificity of one area of study.

Non-experts tend to push tomake the indicator relevant and un-derstandable. The non-expert may bemore open than the expert to creative



26

linkages and syntheses, more likely tocapture the “big picture,” more likelyto be sure a diversity of interests arerepresented. Just as the expert bringsscientific credibility to the indicatorselection process, the non-expertbrings political credibility.

But integrating expert and non-expert opinion has its costs andmust be done with care.

Involving “everyone” can produce dis-proportionate representation of somestakeholders, too little technicalknowledge, too much focus on imme-diate interests, risk of incomplete map-ping of the area of interest, and no ho-listic understanding. Furthermore, itcan be inordinately time-consuming,may be difficult to enroll sufficientparticipation, requires skilled facilita-tion, tends to get stuck in process dis-cussions, and tends to produce low-level “concrete” indicators.

Some practitioners who haveweathered these challenges suggestthe following ten-step process for de-veloping an indicator set.20 They rec-ommend that the process be managedby impartial facilitators whose role isto coordinate meetings, guide the dis-cussion, prepare background docu-ments, and synthesize results.

1. Select a small working group,responsible for the success of theentire venture. The working groupneeds to be multi-disciplinary, with

strong ties to the community or au-dience for whom the indicators areintended. The working group is mosteffective when it combines expertsand non-experts from the outset, butthe critical element is long-term com-mitment to the process.

2. Clarify the purpose of the in-dicator set — whether it is meant toeducate the public, provide back-ground for key policy decisions, orevaluate the success of an initiativeor plan. Different purposes give riseto different indicators and publica-tion strategies.

3. Identify the community’sshared values and vision. The indi-cator set must be able to speak to thehopes and aspirations of the peopleit is meant to serve.

4. Review existing models, in-dicators, and data. The workinggroup takes a look at other indicatorprojects as examples to learn from. Italso reviews what indicators are al-ready published locally and what dataare generally available.

5. Draft a set of proposed in-dicators. The working group drawson its own knowledge, the examplesit has collected, and the advice ofoutside experts if needed to preparea first draft. The draft may gothrough several revisions before it isready for the next step. In particu-lar, initial indicator sets tend to bevery long. In later drafts, they needto be pruned down and made morefocused and practicable.

20 “The Community IndicatorsHandbook,” available for US$20from Redefining Progress, 1Kearny Street, 4th Floor, SanFrancisco CA 94108. Tel.: (415)781-1191, Fax: (415) 781-1198,Email [email protected]

27

6. Convene a participatory se-lection process. The draft indicatorsneed to be presented to a broad cross-section of the community for theirinput. This process serves several im-portant goals. It educates the partici-pants, gathers their collective creativ-ity and expertise, and makes themstakeholders in the success of theproject. Often it also gives rise to newrelationships and alliances among theparticipants and can even generatenew action initiatives to address prob-lems identified by the indicators.

7. Perform a technical review.An interdisciplinary team of knowl-edgeable people sorts through theproposed final draft indicators and se-lects for measurability, statistical andsystemic relevance, etc., trying to staytrue to the intentions and preferencesexpressed by the citizen review pro-cess. The technical review helps to fillin gaps, weed out technical problems,and produce a final indicator set thatis ready to be fleshed out with data.

8. Research the data. At thisstage, the indicators are usually sub-ject to additional revision, driven bydata concerns and new learning.

9. Publish and promote the in-dicators. This requires translatingthem into striking graphics, clear lan-guage, and an effective outreach cam-paign. It helps to link the indicatorsto the policies and driving forces thataffect them, to illustrate their link-ages, and to point to the actions thatcan be taken to improve them.

10. Update the report regularly.Indicators make little difference, orindeed little sense, if they are not pub-lished periodically to show changeover time. This requires an institu-tional base that can be relied upon toreproduce steps 8. and 9. on a regu-lar basis, and to go back and revisitthe other steps as needed. Each newversion of an indicator report be-comes an opportunity to revise theindicators, develop new researchmethods, and add linkages. If perfor-mance targets have been set, they canbe assessed and, if necessary, adjusted.And when targets are met, celebra-tions can occur!

These steps may sound daunt-ing, but they are being put into prac-tice by hundreds of community- andregional-level indicator movementsaround the world.21

Systems: makingindicators dynamic

Systems insights can help in thedesign of indicators that identifycritical linkages, dynamictendencies, and leverage pointsfor action.

Systems change over time, and it is of-ten exactly their dynamic behavior thatwe want indicators of sustainable de-velopment to tell us about. Is the popu-lation or the economy growing moreor less rapidly than it used to be? Are

21 Ibid.; and also P. Hardi and T.Zdan eds., op. cit.


We should not tacklevast problems withhalf-vast concepts.

— Preston Cloud


28

weather patterns becoming more or lessvariable? For how long can the fishpopulation support this rate of harvest,and what happens if it can’t?

System dynamics is a field of ex-pertise that specializes in understand-ing the unfolding behavior over timeof whole systems. Therefore it can beuseful in finding linkage indicators,leading indicators, and leverage pointswhere systems are especially likely tosignal change or respond to action.

This section contains a brief sum-mary of some insights from systemdynamics about how to design dy-namic indicators.

Distinguish between stocks andflows. Stocks are indicators of thestate of a system and its responsetime. Flows may be leadingindicators of change.

Stocks describe the state of the sys-tem at any particular time — theamount of biomass in a forest, peoplein a nation, factories in an economy,money in the bank, water in an aqui-fer, greenhouse gases in the atmo-sphere. Stocks are accumulations ofthe past history of the system. Thesources in nature from which rawmaterials are drawn are primarilystocks. So are the sinks in the envi-ronment into which pollutants arepoured, or the factories and tools thatmake up the productive capital of anation. Stocks are generally the mostcountable elements of systems, andhence they make obvious indicators.

Stocks are usually slow to change.Even if CFC emissions cease today,the accumulation of chlorine in thestratosphere will take decades to de-cline. If a new energy source is in-vented tomorrow, there would be along delay before existing stocks ofcars and furnaces and industrial boil-ers that burn the old types of energycan be replaced. Therefore the sizeand lifetimes of stocks can give ususeful indicators of response rates —how long it will take a system to cor-rect a problem, adjust to a change, ortake advantage of a new opportunity.

stockinflows outflows

populationbirths deaths

fishing harvest

fishpopulationregeneration natural deaths

harvestrate

29


Turnover time, which is stock sizerelative to stock change rate. Espe-cially relevant for understanding thetime it takes for aquifers or surfacewater bodies (or the atmosphere) toflush out pollution, or for the time ittakes for industrial capital stocks(such as the automobile fleet) to bereplaced.

Coverage time, which is stock sizerelative to the drain on the stock. Es-pecially relevant to calculate ad-equacy of supply. Fossil fuel reserve/consumption is an example alreadygiven here. Food reserves relative tofood consumption (number of dayscurrent supplies can cover consump-tion), or inventory relative to salesrate are other examples. Note alwaysthe difference between coverage atsteady consumption and coverage atexponentially increasing consump-tion.

For leading indicators, we need tomonitor flows. Flows are the inputs oroutputs (measured per time unit) thatincrease or decrease stocks. Harvest andgrowth of trees, births and deaths inthe population, construction and de-preciation of capital are all flows thatchange stocks. Flows in turn are drivenby other stocks. (Tree harvesting de-pends on the number of chainsaws andloggers and trucks, as well as on thestock of trees in the forest.)

Advance warning comes from thebalance of flows affecting a stock. Abuildup of greenhouse gases in the at-mosphere, for example, is predictablewhen the rates of emission of thosegases begin to exceed their natural rates

of recycling or absorption. Deforesta-tion is indicated not when the forestis gone, but when the rate of harvestfirst exceeds the rate of regrowth.


Harvest/regeneration, the essentialmeasure of sustainable use of a re-newable resource, whether fish, wa-ter, forest, soil. If the index is above1.0, the harvest is not sustainable.

Emission/absorption, where ab-sorption means any process, naturalor human-mediated, that renders apollutant harmless. This is an essen-tial measure of the sustainability ofany waste stream, with values above1.0 indicating unsustainability.

Since some of these flows may behard to measure directly (regenera-tion in a forest, absorption in the soil),they can be measured indirectly bychanges over time in the relevantstock. Any resource stock that is fall-ing is being used unsustainably. Anypollution sink that is filling is beingused unsustainably.


tree harvest

biomassin foresttree growth natural deaths

loggingequipmentinvestment depreciation


30

The stock-flow orientation is relatedto the pressure-state orientation com-mon to United Nations and other in-dicator systems. Stocks are measuresof system states. Flows are measuresof pressures that change those states.

Exponential growth rates (thestrengths of vicious or virtuouscycles) are sensitive points insystems.

A revealing indicator in dynamic sys-tems is the rapidity of exponentialgrowth processes (which systems ana-lysts call positive feedback loops).Exponential growth is growth thatfeeds on itself — the more you have,the more you get. The two most ob-vious places where that type of growthoccurs are population and economicoutput. In fact, the most basic devel-opment indicator is the ratio betweenthe two — the rate of growth of out-put per capita.

Positive feedback loops drivemore than population and economy,however. Teachers teaching moreteachers builds up the educational ca-pacity of a nation. Knowledge leadsto more knowledge. Natural popula-tions, such as fish or trees, grow ex-ponentially, when they grow at all.

Epidemics proceed through posi-tive feedback loops — more sickpeople infect more people, who theninfect more people. Pest populationscan explode exponentially. Desertifi-

cation and other erosion processescan degrade soil in a vicious down-ward spiral — fewer trees have fewerroots, which are less able to hold soilagainst erosion; less soil allows lessplant growth, still fewer roots, stillmore erosion, and so forth. Intereston debt is also a downward exponen-tial spiral, increasing the debt moreeach year than the year before, unlessrepayments exceed interest charges.

Whether the cycle is vicious orvirtuous, small changes in growth ratecan signal large potential changes inthe system. For example, a growthrate of 1 percent per year means thatover a century the population (oreconomy) will grow to 2.7 times itspresent value. A growth rate of 2 per-cent means that in a century thepopulation or economy will grow bya factor of 7.4. A growth rate of 3percent over a century will produce apopulation or economy twenty timesits original size!

31

Suggested dynamic indicators:Similarly, halving times of entitiesthat are decreasing exponentiallyare 70 divided by the decreaserate. A forest being cut by 3.5%per year will be half gone in 20years. Soil eroding at 1% per yearwill be half gone in 70 years. A fos-sil fuel resource being consumedat 7% per year will be half gone in10 years.

(Calculating doubling or halvingtimes does not imply that an ex-ponential growth rate will continueunchanged over any future period.The point of a doubling or halvingtime calculation is usually to pointout that it can’t or shouldn’t!)


Doubling time or halving time.

Percent changes are hard to imag-ine; doubling times are more eas-ily understood. The doubling timeof an exponential growth processis 70 divided by the growth rate.So a city growing at 7% per yearwill double in 10 years (and doubleagain in another 10 years, if thatgrowth rate continues). A popula-tion growing at 3.5% per year willdouble in 20 years. An agriculturalyield going up by 2% per year willdouble in 35 years.

Exponential growth against a

limiting resource. A powerfulway to communicate the implica-tions of an exponential growth pro-cess is to relate it to a fixed orlimiting resource — to show theexponentially shrinking resourceper capita. For example, Hawaiiansunderstood the implications ofexponential population growth,when they started plotting overtime the miles of beach per per-son. China took population growthseriously when it extrapolated fig-ures for cultivable land and avail-able water per person. Many citieswould be shocked to plot overtime their miles of road per car.

The ratio of change rate toresponse rate is a critical — andusually critically missing —indicator of the degree to which asystem can be controlled.

Rates of change around positive feed-back loops are even more useful in-dicators when they are combinedwith information about possible re-sponse times. In fact, the combinationof the two — change rate comparedwith response rate — makes an indica-tor of the controllability of the system.

During the 1970s, the produc-tion of CFCs in the world was grow-

ing by about 7 percent per year. Thatmakes a doubling time of 10 years. Ittakes a CFC molecule ten to fifteenyears to rise from the earth’s surfaceup to the stratosphere, where it breaksapart and starts destroying the ozonelayer. Given that growth rate and thatlag, the problem doubled before it couldeven be measured.

Clearly a system that is changingfaster than anyone can know or reactis a system that cannot be managed,controlled, or protected against dam-age. The concept of change/responseas a measure of system safety has beenhighly developed in the field of


32

nuclear engineering. The time it takesfor a nuclear reactor to “go critical”and reach an irreversible rate of neu-tron generation (in other words anexplosion) is called the respite time.The response time is the time it takesfor operators to notice a problem,track down its source, and mobilizecontrol rods to absorb and slow downneutrons. A reactor with a responsetime longer than its respite time isinherently unsafe.22

So is any system in which prob-lems are generated faster than theycan be responded to. Even if tech-nologies are powerful, even if finan-cial resources and political will canbe summoned, if a problem comeson faster than technologies, money,or will can take effect, that problemwill be unsolvable. The situation willbe equivalent to driving a car too fast— though the brakes may functionperfectly, obstacles can’t be seen intime to stop.

Therefore a powerful warning in-dicator can be created from the rate ofincrease of a problem divided by responserate. This ratio could be measured asrate of change in percent per year di-vided by rate of response in percentper year, an index that gets critical asit approaches 1.0. Or, if, as in theozone case, the problem is a discretelag in detection or response, the ratiocould be measured as response time/respite time.

Such an indicator could be applied,for example, to:

• the depletion time of any resourcerelative to the time to develop a sub-stitute;

• the rising educational needs of agrowing population relative to therate of training teachers and buildingschools;

• the spread of pesticide resistancerelative to the time to develop a newpesticide;

• the doubling time of greenhousegas emissions relative to the re-sponse lags in the climate systemthat allows climate change to be de-tected;

• population growth in a city relativeto the rate at which the city can addinfrastructure to handle sewage, gar-bage, or traffic.

Any system in which the rate ofgrowth of a problem is significantlyfaster than the rate of response is,quite simply, out of control. Thereare only two ways to bring it backinto the realm of manageability:either quicken the response rate (ifpossible) or slow the growth rate ofthe problem (or both).

The concept of respite time ver-sus response time is new to manymanagers and missing from most in-dicator sets — and obviously criticalto any hope of achieving a sustain-able society.22 The respite time/response

time indicator was suggested tous by Wouter Biesiot and thestaff of the Center for Energyand Environmental Studies,University of Groningen, theNetherlands, November 1995,draft prepared for our workshop.

33

Watch for unbalanced or missingcontrol loops.

Complex systems, whether natural orhuman-designed, are managedthrough control loops (negative feed-back loops in systems terms) thatmonitor the state of a system and actto keep it in balance. A common ex-ample is the thermostat. When thetemperature in a room falls, the ther-mostat switches on the furnace, caus-ing the temperature to rise again.When the temperature rises, the fur-nace is switched off. Other commoncontrol loops maintain blood sugarlevel in the body, keep a plane flyingin its intended direction, and adjustprices to equilibrate supply and de-mand in an economy.

When systems behave pathologi-cally, it is often because balancingnegative feedback loops are weak or

missing. Overfishing is almost inevi-table, if there is no system for regu-lating the catch depending on howmany fish there are. Forests may becut down uneconomically if thosedoing the cutting are not assessed thevalue of the services provided bystanding trees (such as flood protec-tion or carbon sequestration). Riversare easily polluted if there is no waydownstream populations can regulateor claim damages from upstream pol-luters. Those are all examples of miss-ing indicators, which, once they arerestored, will supply the necessarycontrol loops to allow a system toadjust itself automatically.

The famous dilemma of “thetragedy of the commons” is an ex-ample of missing feedback controlwhen there is a common resource andno price or penalty for use of the re-source short of its exhaustion.23

23 G. Hardin, “The Tragedy ofthe Commons,” Science 362, no.3858 (December 1968): 1243-48.


Examples of indicators and enforcement systems to supply missing feedback control:

A warning light on pumps takinggroundwater from an aquifer, to in-dicate whether the aquifer is fill-ing (green), stable (yellow), orfalling (red). Ideally the cost of thewater would rise steeply as thelight turns red.

A meter on the dashboards of cars,showing the instantaneous rate offuel consumption (measured inmoney expended) — which wouldgive drivers feedback on more andless wasteful driving habits.

A permit system for boats in a fish-ery, cutting the allowed number ofboats or fishing days if the fishpopulation falls.

Required stickers (purchased fromthe municipality) on municipallycollected garbage, so that peoplewho generate more trash have topay more for its disposal.

Emission quotas for large-scalepollutants such as sulfur dioxide orcarbon dioxide, the total amountto be determined upon biophysi-cal sustainability grounds, to beauctioned off regularly to the high-est bidders. (Such a system wouldput a price on the commons ofclean air and would allow the mar-ket to distribute efficiently the rightto pollute. It would also provide acontrol mechanism to keep totalpollution within health and safetyguidelines.)


34

Notice that in the above systems, theindicator gains real force when it iscoupled with a fee or regulatory sys-tem.

An important indicator of theresilience of a system is theredundancy of its controllingnegative feedback loops.

When an ecosystem loses species, itmay lose control mechanisms bywhich predators and prey keep theirrelative populations in balance. Whena village loses access to lands fromwhich it supplemented its food sup-ply in times of famine, it has lost anelement of emergency self-mainte-nance. Resilience is lost when familymembers are geographically scattered,or when a watershed loses wetlandsthat absorb floodwaters, or when anation becomes dependent upon asingle, imported source of energy, orwhen a government fixes a price so itcan’t respond to supply and demand,or when a body’s immune system iscompromised.

Removing or weakening feedbackloops that provide resilience is equiva-lent to removing the fire detectorsand sprinkler systems in a building,

or the emergency cooling systems ofa nuclear power plant, or the healthcare capacity of a society, or the in-surance policies from a business. Re-silience can be stripped away from asystem without immediate cost (ac-tually saving cost) and without affect-ing the functioning of the system,until a crisis comes that demands thatresilience. At that point the cost canbe tremendous.

You can see why it is importantto sustainable development to haveindicators that measure resilience. Ifimmediate operating cost is the onlyindicator, there can be great tempta-tions to remove resilience or let it de-teriorate in order to realize short-termcost-saving.

Resilience is not commonly oreasily measured; it will take some cre-ativity to invent good indicators here.

The only specific suggestion I canthink of here is to use a concept fa-miliar to most economic-minded per-sons: insurance. There must besimple indicators that calculate for anenterprise how much is being ex-pended on insurance and how ad-equate that insurance is. (Companieswilling to cut corners in all othersareas rarely seem to stint on buyinginsurance.) Could that concept be ex-tended to families? Communities?Ecosystems? Planetary geophysicalflows?

35

Nonlinearities in systems (turningpoints, thresholds) are key pointsfor the placement of indicators.

You can erode the soil right down tothe depth of crop roots without muchimpact, but erode it a little past thatpoint, and crop yields plummet:

You can emit nutrients into astream and natural bacteria will cleanthem up, but if you emit too muchtoo fast, the natural biota may bekilled off, and the stream turned intoa sewer where wastes pile up withoutamelioration:

You can catch fish and open upecological space for immigration orreproduction of more fish — up to apoint, after which the diminishedpopulation may be unable to breedor may be open to competitors, atwhich point it plummets:

Turning points like these markthresholds beyond which the behav-ior of a system changes radically,sometimes irreversibly. Clearly weneed indicators that signal them wellin advance. These “distance from theedge” indicators are like radar warn-ing a ship or plane of an obstacleahead. The faster the ship or plane(or economy) is moving, the fartherahead they have to look, to allow suf-ficient braking or turning time. (Backto the change rate/response rate dis-cussion!)


yiel

d

percent of soil eroded0% 100%

emissions rate

ambient waste conce

ntra

tion

bacteria popula

tion

fish

popu

latio

n

annual catch


36


Time to turning or irreversibility

point. If the threshold or nonlinearityis well understood, the time to reachit, given current rate of approach,should be calculable.

Degree of risk. If the threshold is notwell understood, which is often thecase (how many species can youtake out of an ecosystem before itcollapses? how far down can youbring the fish population before it nolonger can restore itself? how muchmoney can you allow private personsto give to elected officials before alltrust in democratic government isgone? how many greenhouse gasescan you put into the atmosphere be-fore you derail massive ocean cur-rents?), the challenge is to designindicators that convey the degree ofrisk. One possibility is to deliver in-formation about the full range of es-timates (as the IPCC scientists havedone painstakingly in communicatingabout climate change). Even whenthe uncertainties are great, consid-ered guesses are better than no in-formation at all.

A primary indicator of the long-term viability of a system is itsevolutionary potential.

The resilience of a system is its abil-ity to recover and repair itself fromshocks. Short-term resilience dependson adequate controlling negativefeedback loops, as discussed above.Long-term resilience depends on theevolutionary potential of a system— its ability to adapt to new condi-tions, to create new species, struc-tures, technologies, or ideas — toevolve.

The most important reason whybiological diversity should be pre-served is because the gene pool isnature’s raw material for evolution.For human societies, evolutionarypotential lies in technology, knowl-edge, the variety of organizations inthe civil society, foresight, tolerance,and the mental and social flexibilityto be open to new ideas, to test themquickly, to select the ones that applybest under present and impending fu-ture conditions, and to evolve newideas and institutions.

To measure sustainability, weneed indicators of the potential forevolutionary change. These have todo with diversity, tolerance, ingenu-ity, open-mindedness, education, andtruth-telling about the success or fail-ure of experiments.

37

Possible indicators:


Technological evolutionary poten-tial might be approximated by sci-entists per capita, basic researchexpenditures per capita, inventionsor scientific prizes per capita(though the latter is a lagging indi-cator, reflecting the training of thepast generation, not coming ones.)A better measure than any of theabove would get more directly atcreativity, originality, quickness ofproblem-solving, elegance and in-genuity of solutions. (Percent ofhigh-school students working onsolar cars? Truly original inventionspatented per capita? Number ofstartup companies based on com-pletely new concepts? Averagelength of time major technicalproblems persist before they aresolved?)

Cultural evolutionary potentialmight be captured in the numberof different races, cultures, reli-gions that live together in peacewithin a given geographic area. Aleading indicator of the breakdownof this potential might be the fre-quency of ethnic or cultural hate-talk in the public media, especiallywhen it comes from public lead-ers. (Monitoring this indicatorwould have provided early warn-ing of the development of the fas-cist regimes in Europe in the 1930sand the breakdown of Yugoslaviain the 1990s.)

Ecological evolutionary potentialmight be measured by the rate ofdisappearance of species relativeto the number of species originallythere (equivalent to the rate of dis-appearance of books or journals ina library).


38

Worldwatch Institute in its an-nual report Vital Signs devotes a two-page spread to each of its indicators(see below). One page is explanatorytext, the other shows the develop-ment of that indicator over time, bothas a table of raw data and as a timegraph. Other graphs on the page maydisaggregate the indicator to show itsconstituent parts or provide someother illuminating information.24

This is an economical way tocommunicate a great deal of infor-mation to a wide audience, and es-pecially to give that audience a graspof the history and potential future ofeach indicator.

Wherever possible, indicatorsshould be reported as time graphsrather than static numbers.

Time graphs show not only thepresent state of an indicator, but itstrend over time — improving, declin-ing, fluctuating, becoming more orless unstable. It’s not really possibleto understand an indicator unless oneknows its dynamics. It is often espe-cially illuminating to compare onetime trend with another on the samegraph and same scale.

24 L. R. Brown et al., Vital Signs1998. New York: W. W. Norton& Company, 1998, pp. 44-45.

39

25 The literature is vast. For astart, see any issue of the SystemDynamics Journal or the followingwebsites: http://web.mit.edu/jsterman/www/DID.html; http://home.earthlink.net/~tomfid/sdbookmarks.html; http://sysdyn.mit.edu/road-maps/rm-toc.html


Indicators should be combinedwith formal dynamic modeling.

Most of the indicators mentioned inthis section are potentially powerful,but not easy to define or understandunless they are accompanied by a dy-namic model that can help, for ex-ample, spin out the future conse-quences of present exponentialgrowth rates, or calculate the abilityof control loops to stabilize a system.

Models of this type are already be-ing used to help understand climatechange, fish population dynamics,changes in the stratospheric ozonelayer, demographic developments inpopulations, and macro-economicgrowth.25 The co-development of in-dicators and dynamic models canhelp not only to identify trouble spotsin the system, but can help test,gauge, and time corrective actions.

Action will be taken on the basisof models in any case, mental mod-els or formal models. The search forindicators is a search for better mod-els, ideally dynamic models that canhelp us understand the timing ofproblems and solutions.


40

The Hierarchyfrom ultimate meansto ultimate ends

The “Daly Triangle,” whichrelates natural wealth to ultimatehuman purpose throughtechnology, economy, politics,and ethics, provides a simpleintegrating framework.

So what information needs to be dis-played on the cockpit, to allow soci-ety to steer successfully toward sus-tainable development? What orga-nizing framework makes intuitivesense, captures the relative impor-tance of various indicators, and illus-trates their relationship to one an-other? What could deliver at a glancethe essence of the present situationand its rate and direction of changeand the policy levers that might alter

the rate and direction of change?Several tentative frameworks have

been suggested and discussed —among them the “pressure-state-impact-response” model used to or-ganize the first indicator efforts of theU.N. Commission on SustainableDevelopment and other internationalbodies,26 the “ecological footprint,”27

the “four capitals” (economic, natu-ral, human, and social capital) aris-ing from the World Bank,28 and theidea of “genuine savings.”29 TheBalaton Group workshop found theseforerunners useful; each seemed tocapture an important piece of thepuzzle — but not the whole puzzle.We struggled to bring them together,to distill the message that eachseemed to carry, and to find a morewhole-system context within whichto place them. We looked for a frame-work that would make sense on its

6. A suggested frameworkfor sustainable developmentindicators

That which is good and helpful ought to begrowing and that which is bad and hinderingought to be diminishing.... We therefore need,above all else, ... concepts that enable us tochoose the right direction of our movement andnot merely to measure its speed.

— E. F. Schumacher

26 See, for example, “WorkProgramme on Indicators ofSustainable Development of theCommission on SustainableDevelopment,” United NationsDepartment for PolicyCoordination and SustainableDevelopment, February 1996,and “OECD Core Set ofIndicators for EnvironmentalPerformance Review,” OECDEnvironment Directorate,October 1993.

27 Wackernagle and Rees, op. cit.

28 I. Serageldin, Sustainabilityand the Wealth of Nations: FirstSteps in an Ongoing Journey,World Bank Discussion Draft,Second Edition, March 3, 1996.

29 World Bank, MonitoringEnvironmental Progress: A Reporton Work in Progress, ESD Series,1995.

41

A suggested framework for sustainable development indicators

own terms and that would lend itselfboth to a comprehensive underlyinginformation system and to underly-ing dynamic models. We wanted a“data-base organizer” that could becomprehended at all levels, in whichone would not be likely to lose one’sway, in which one would never losesight of what is most important forsustainable development.

I believe we found it, but beforeI describe it, I must state that severalof my Balaton colleagues have reser-vations about this scheme, more onthe symbolic and philosophical lev-els than on the level of logical con-cepts. No scheme we came up withwas embraced by all without reserva-tion. Our discussions of our doubtsabout each scheme were revealing,showing the power of symbols andthe different interpretations differentcultures can bring to the same sym-bol. I see no way around that diffi-culty, except to choose a frameworkthat seems to capture the central logicone is trying to communicate, andthen, through use and example, toimbue that framework with the in-tended meaning. That is how everylarge-scale indicator, from the GDPto the Dow-Jones Index, has evolved.

The framework I suggest is basedon a diagram Herman Daly drewmore than twenty years ago.30 It pic-tures the relationship between the hu-man economy and the earth in a waythat is, to me, logical, systematic, andclarifying. Daly originally drew it as

a triangle or pyramid, and for histori-cal purposes I will use that symbol-ism, though the shape is not neces-sary to the logic (see page 42). Dalyhimself abandoned it in later textsand simply drew a vertical line. Theimportant idea is to situate the hu-man economy within a hierarchy,resting on a foundation of natural re-sources and reaching to the height ofultimate purpose.

At the base of the triangle, sup-porting everything, are what Dalycalls the ultimate means out ofwhich all life and all economic trans-actions are built and sustained. Thisis natural capital, the matter of theplanet, the sun’s energy, the bio-geochemical cycles, the ecosystemsand the genetic information theybear, and the human being as an or-ganism. These ultimate means are notcreated by us; they are the heritagewe were born into, and out of themwe fashion everything we have orknow. They are studied by the sci-ences and converted through technol-ogy to intermediate means.

The intermediate means aretools, machines, factories, skilled la-bor, processed material and energy —built capital and human capital andraw material. These intermediatemeans define the productive capac-ity of the economy. Economists callthem inputs to the economy (system-atically ignoring nature’s unpriced in-puts from the level below). Interme-diate means are necessary but not suf-

30 H. E. Daly, Toward a Steady-State Economy. San Francisco: W.H. Freeman and Company,1973, p. 8.


42

science & technology

solar energy,the biosphere,earth materials,the biogeochemicalcycles

built capital & human capital:

human capital & social capital:

happiness,harmony, identity,fulfillment,self-respect,self-realization,community,transcendence,enlightenment

ultimate ends

intermediate ends

intermediate means

ultimate means

well-being:

health, wealth,leisure, mobility,knowledge,communication,consumer goods

labor, tools,factories,processed rawmaterials

natural capital:

political economy

theology & ethics

43

ficient to accomplish all higher pur-poses. Managing, valuing, distribut-ing, maintaining, and using these in-termediate means is the concern ofeconomics and politics, or the politi-cal economy.

The intermediate ends are thegoals that governments promise andeconomies are expected to deliver —consumer goods, health, wealth,knowledge, leisure, communication,transportation — what economistscall output. They are what everyonewants, but they by no means guaran-tee satisfaction, as is revealed by soci-eties where intermediate ends areabundant but people still feel theirlives are empty. That is because in-termediate ends are not ends in them-selves, but instruments to achievesomething yet higher. The conversionof intermediate ends to ultimate endsdepends on an effective ethic or reli-gion or philosophy that can answerthe question: what are health, wealth,and education for?

At the top of the triangle is theultimate end, desired for itself, notthe means to the achievement of anyother end. The definition or measure-ment of the ultimate end is fraughtwith difficulties, especially for peopleof Western cultures. Daly was vagueabout it: “Our perception of the ul-timate is always cloudy, but necessarynonetheless, for without a perceptionof the ultimate it would be impos-sible to order intermediate ends andto speak of priorities.”31 He calledthe ultimate end the “summum

bonum,” and insists, from his ownmonotheistic point of view, that it issingular, not plural.

I have added to the diagram someother words that people use to definethe ultimate end of human economicactivity and human life — happiness,harmony, fulfillment, self-respect,self-realization, community, identity,transcendence, enlightenment. Theimpossibility of defining these words,or agreeing on ultimate end or ends,demonstrates that we are discussingquality, not quantity, something im-material, not material, though it re-quires the whole material triangle un-derneath to support it.

Now for the reservations. Severalmembers of the Balaton Group haveproblems, not with the basic ideabehind this triangle, but with its sym-bolism. It is too hierarchical and“Western minded” for some; too an-thropocentric for others; or too static;or there’s too much vagueness aboutthe top of the triangle, where objec-tive physical stuff somehow getstransformed into subjective humansatisfaction or arguable spirituality.

We all like the idea of theeconomy being borne up by anddrawing from nature and the idea ofthe economy serving higher goals andnot being an end in itself. We regardthose two ideas as essential to the un-derstanding of sustainable develop-ment. We tried redrawing the Dalydiagram, turning it into concentriccircles of “nested dependencies,” intoa flower (see the title page of this re-


31 Daly, op. cit., pp. 7-8.


44

port), even into a Möbius strip. Wemade it into a compass (a likely indi-cator to find on a cockpit instrumentpanel), with N=Nature, E=Economy,S=Society, and W=human Welfare.We got into snarls with the compasssymbol too; some people interpretedit as saying that N is the best direc-tion to go, or that if you go E, youcan’t simultaneously go W, etc., etc.,etc. The compass, while preservingmost of the content of the Daly tri-angle (except the ultimate end, whichsome people are glad to get out of thepicture), loses the sequential, depen-dent relationships among the variouslevels.

The whole discussion, which be-came very emotional, taught us a lotabout the humorlessness with whichhuman beings take their symbols —a vital lesson for the design of indica-tors!

I don’t insist on the triangle,though out of deference to Daly’soriginal vision, I use it here. I cer-tainly don’t intend to convey by it theidea that the only purpose of natureis to fulfill human ends, an interpre-tation to which most Balaton mem-bers strongly object. (Rather, I see thetriangle as saying there’s no way hu-man ends can be realized withouthealthy, functioning natural and eco-nomic and social systems. Others seeno problem, because they assume thathigh human purposes must naturallyinclude valuing nature in its ownright, independent of its ability to

supply human ends.) The logical re-lationship among the levels of thehierarchy is what’s important to me,along with the challenge of orientingindicators toward the two things thatultimately count for me — the healthof nature and real human well-being.I find the Daly pyramid the most in-tuitive of the many frameworks I haveseen for organizing indicators, onethat organizes the links among manyaspects of sustainable development,and one which, as I will demonstratehere, lends itself naturally to dynamicmodeling, pressure-state-responseschemes, ecological footprints, andvarious kinds of capital.

Sustainable development is a callto expand the economic calculusto include the top (development)and the bottom (sustainability) ofthe triangle.

Industrial society has thousands of in-dicators from the middle of the pyra-mid, but few from the bottom andalmost none from the top.

That is probably why “sustainabledevelopment” has become a globalrallying cry. Obviously, the purposeof life is more than economic, andlife is supported by more than thatto which we can assign an economicprice. Sustainable development asksus to pay attention to the bottom andthe topof the pyramid, the health ofnature and the well-being of people,

45

one measured in physical terms, onemeasured in subjective terms; one thedomain of science, the other the do-main of philosophy and psychology.Seemingly incommensurable, essen-tially undefinable, sometimes appar-ently at odds with each other, the twoconcepts of sustainability and devel-opment clearly derive from the topand bottom of the pyramid and arelinked through the intermediatesteps.

Indicators can be derived fromeach level of the triangle separately(as I will illustrate), but the mostimportant indicators will reflect theconnections between one level andanother.

The three most basic aggregatemeasures of sustainabledevelopment are the sufficiencywith which ultimate ends arerealized for all people, theefficiency with which ultimatemeans are translated into ultimateends, and the sustainability of useof ultimate means.

It is conceivable that health, educa-tion, happiness, and harmony couldincrease, even if the mobilization ofenergy, materials, capital, and labordecreased. That would obviously bea step in the direction of sustainabledevelopment. In fact, it would be aprimary goal of a sustainable society toproduce the greatest possible ends withthe least possible means.

Sustainable development indica-tors could rise if, say, total electricityuse goes down through more efficienttechnology that provides light or turnsmotors with less current. The indica-tors could rise if more comfortable andconvenient mobility were providedwith fewer cars (or if unnecessarymobility were eliminated by betterspatial planning.) They could rise ifpeople learned to satisfy their non-material needs (such as self-esteem)through nonmaterial means, insteadof through heavily marketed materialsubstitutes (such as clothes or cars).

To provide more ends with fewermeans, the entire triangle, from tech-nology through philosophy, must bebalanced and integrated. If there iswisdom about ultimate ends but notechnology for tapping ultimatemeans, the wisdom will rest on afoundation of physical scarcity. Ifthere is technical proficiency supply-ing an abundance of intermediatemeans, but unjust politics and dis-torted economics, there will be plen-tiful capital, labor, and energy butpoorly distributed health, education,and wealth. Powerful technologiesand an efficient, equitable economymay make a society rich in interme-diate ends, but if that society is spiri-tually barren, its abundance will notbring fulfillment. If technologies aredestructive of the ultimate means, theentire structure will crumble at itsfoundation, regardless of the excel-lence of its upper levels.



46

Integration of the triangle frombottom to top requires good scienceand just and efficient political andeconomic systems and a culture thatilluminates the higher purposes oflife. The focus of such a society wouldbe wholeness, not maximizing onepart of the system at the expense ofother parts. The goal of perpetual eco-nomic growth would be seen as non-sensical, partly because the finitematerial base cannot sustain it, partlybecause human fulfillment does notdemand it. The focus would be onquality, not quantity, and yet quan-tity sufficient for the physical needsof all would not be lacking.

Therefore the most basic indicatorsof sustainable development wouldbe the sufficiency, efficiency, andsustainability of the entire triangle,determined by some kind of aggre-gate measures of:

• real human welfare;

• environmental integrity; and

• the ratio between the two, whichis a measure of the efficiency withwhich environmental resources aretranslated into human welfare.

It’s easy enough to say “some kind ofaggregate measures of human welfareand environmental integrity,” but notat all easy to produce these measures.The rest of this document is an at-tempt to begin to think through howto do it. I invite others to join in thethinking.

In order to develop these aggre-gate indicators, we need an informa-tion system for each step in the tri-angle. Those information systemsdepend upon the notion of severalkinds of capital.

Extending the definition of capitalto natural, human, and socialcapital could provide an easilyunderstood base for calculatingand integrating the Daly triangle.

To a bank or a university or a busi-ness or an endowed charitable foun-dation, “development” means in-creasing your stock of wealth, and“sustainability” means living on theincome from that wealth, not eatinginto principle. No accountant wouldcredit as “income” a temporary burstof money that comes from the draw-ing down of capital faster than it isreplenished.

That idea extends easily to “natu-ral capital.” We should draw waterfrom the outflow of a lake, not draindown the lake; catch fish at the rate atwhich they regenerate, not consumethe breeding population; harvest for-

interest addedprinciple

interestrate

expendituresearnings

47

ests no faster than they can grow back;farm so the soil doesn’t erode.

Herman Daly captured the con-cept of natural capital in the threebasic “Daly Rules” for sustainability:32

Renewable resources (fish, for-ests, soils, groundwaters) must beused no faster than the rate at whichthey regenerate;

Nonrenewable resources (min-eral ores, fossil fuels, fossilgroundwaters) must be used no fasterthan renewable substitutes for themcan be put into place;

Pollution and wastes must beemitted no faster than natural systemscan absorb them, recycle them, orrender them harmless.

These three rules suggest sustain-ability indicators for each resourcethat flows through the humaneconomy. More on that in the nextsection.

The World Bank is now tryingnot only to establish natural capitalaccounts, but also to extend the con-cept to human and social capital.33

Surely there is a stock or endowmentof health, skills, and knowledge thatcan be invested in, enhanced, andused to produce a steady stream ofproductivity, or that can be overused,eroded, allowed to depreciate. Surelythere must be social capital in theform of functioning civic organiza-tions, cultures of personal and com-munity responsibility, efficient mar-kets and governments, tolerance andpublic trust.

32 Herman Daly, “Toward SomeOperational Principles ofSustainable Development,Ecological Economics 2 (1990): 1-6.

33 Serageldin, op. cit.

The Balaton working groupagreed unanimously that the idea ofcapital — all forms of capital — iscentral to information systems forsustainable development. Combinedwith the Daly triangle, various capi-tal structures can capture develop-ment and sustainability and their re-lation to each other. They allow thestock-flow analysis that can make in-dicators dynamic. And they begin tosuggest a conceptual framework tokeep track of the linkages amongmany forms of capital and to deriveindicators that could help people andnations build up the several kinds ofwealth that are necessary for a people-enriching, nature-preserving system.

Natural Capital(ultimate means)

Natural capital consists of thestocks and flows in nature fromwhich the human economy takesits materials and energy (sources)and to which we throw thosematerials and energy when weare done with them (sinks).

The materials and energy used in thehuman economy do not appear fromnowhere. Nor, when we are done withthem, do they disappear. They aretaken from and return to the Earth’sbiogeochemical systems.

To borrow some useful butunbeautiful terms from engineering,



48

It would be a realachievement if ...capital assets, naturalassets, andenvironmental assetswere equally “real” andsubject to the samescale of values, indeedthe same bookkeepingconventions. Deeperways of thinking mightbe affected.

— Robert Solow

sphere by the natural capital of greenplants photosynthesizing.

Notice that forests are sourcecapital for the input of wood prod-ucts and sink capital for the outputof carbon dioxide. Many forms ofnatural capital play both source andsink roles. Aquifers provide drinkingwater but also may be sinks forleached pesticides or leaked petro-leum. Soil provides nutrients forgrowing crops and receives depositsof heavy metals from the atmosphere.The connections among the elementsof natural capital — the oneness of theglobal system — is a major cause ofsustainability problems and a majorreason why indicators (and formalmodels of our complex natural sup-port systems) are so badly needed.

we can call the flows of material andenergy from nature into the economyinputs, the flows of wastes back tonature outputs, and the combinedflows throughputs. Then the capi-tal/income idea can be stated clearly.Throughput is the income derivedfrom a natural capital stock. Athroughput stream of lumber andpaper and wood fuel comes from thenatural capital of a forest. Ground-water is pumped up from the naturalcapital in the aquifer. A stream offood can be obtained from the natu-ral capital of the nutrients in the soil.On the sink side, an output flow ofsewage can be released to the naturalcapital of organisms that break thesewage back down to nutrients. Thecarbon dioxide from burning fossilfuels can be removed from the atmo-

GLOBAL ECOSYSTEMsolarenergy

materials& fossil

fuels

high-gradeenergy

wastes&

pollution

low-gradeenergy

heat loss

PlanetarySources

EconomicSubsystempopulation& capital

PlanetarySinks

Illustration after: R. Goodland, etal., op. cit.

49

The human economy uses manykinds of throughput streams, eachassociated with natural capital onboth the source and sink end ofthe flow.

Think of the throughput flows sum-moned continuously and in great vol-ume by any city or nation. Water andmany kinds of food. Oil, coal, natu-ral gas and other fuels. Constructionlumber, plywood, cardboard, paper.Steel, copper, aluminum, and a hostof other metals. Rubber, plastics,glass, cement. Tens of thousands ofkinds of chemicals.34

All these substances flow in fromnature and flow out after use, usuallyin haphazard mixes, into air, water, soils.

To keep track of these manythroughput flows is a large but notimpossible task, no worse in principlethan keeping track of the moneyflows through all industrial sectorsthat make up the GDP. Input-out-put tables are easily adapted to thetask. Material and energy flow tables,combined with money flow tables,should and could be an essential partof national accounting.35

Material and energy flows throughthe economy are at least theoreticallymeasurable, even though they are notyet always measured. It is more diffi-cult to keep track of the natural capi-tal stocks that are the sources and sinksof the flows — difficult because forsome we haven’t done it before, forothers the people who do the measur-

ing (foresters, soil scientists, atmo-spheric chemists) are not in regularcontact with national accountants, andfor some (ocean fish, soil bacteria, oilunder the ground) accurate measure-ment is very difficult to do.

Nevertheless, we could compileand organize many kinds of naturalcapital measures and relate them totheir associated throughput flows.That would form the basis for a natu-ral capital accounting system.

Natural capital is being usedunsustainably if sources aredeclining or sinks are increasing.

The indicators of the sustainabilityof use of most forms of natural capi-tal are obvious; they are the direc-tions and rates of change of sourcesand sinks. As previously discussed,they could be expressed dynamicallyas the ratio between use rate and res-toration rate (with 1.0 standing forsustainability) or as the amount oftime until the resource can no longerbe a source or sink.

34 For illustrative throughputnumbers for the city of London,see H. Girardet, The Gaia Atlas ofCities: New Directions forSustainable Urban Living. NewYork: Doubleday, June 1993; forHongkong, see S. Boyden, AnIntegrative Ecological Approach tothe Study of Human Settlements.Paris: Unesco, International Co-ordinating Council of theProgramme on Man and theBiosphere, 1979.

35 For a pioneering example, seeA. Adriaanse et al., ResourceFlows: The Material Basis ofIndustrial Economies. WashingtonDC: World Resources Institute,1997.



50

If a forest is cut faster than it grows,the throughput stream of productsfrom the forest will not be sustained.Natural capital is being spent, reduc-ing future productivity. Whatever theindicator, the value of the excessharvest should be counted not as in-come but as depletion of capital.36

If groundwater is pumped down toirrigate farmland and there is no in-vestment in an alternative watersource to keep that land in produc-tion after the groundwater is gone,that is drawdown of capital.

On the sink side, if an output streambuilds up wastes that are not re-cycled or rendered harmless, thenthat practice cannot be sustainedwithout serious repercussions some-where. An indicator can signal howfar above a sustainable absorptionrate the output is, or how long it willbe until an unacceptable level ofwaste accumulates. The value of thethroughput stream creating thewaste ought to be discounted eitherby the eventual cost of dealing withthe pollution or by the actual dam-age that pollution is causing to builtcapital, human capital (such ashealth), or some other form of natu-ral capital.

Indicators can signal unsustainabilitylong before a resource “runs out” ora sink overflows, even if natural capi-tal cannot be measured directly. It’shard to measure ocean fish popula-tions, for example, but a leading in-dicator of their decline is decreasingcatch per fishing effort (per boat, perhour of trawling, per dollar of operat-ing or investment cost, per gallon offuel burned). We do not know theexact size of undiscovered petroleumreserves, but a drop in yield per dis-covery effort is a leading indicator ofa depleting resource.

“Daly rule” indicators such asthese are simple, leading sustainabil-ity measures easily understood andreadily measured for many through-put streams. They should be imple-mented wherever possible.

However, it is important to notethat the “Daly rules” are static, andthey are stated with regard to quanti-tative flows of separate throughputstreams. They may not capture eitherqualitative degradation nor interac-tions between one form of naturalcapital and another, nor do they nec-essarily reveal the seriousness of un-sustainability through “time to ex-haustion” or “time to unacceptablethreshold.” Indicators that revealthese important factors will requireintegrated dynamic models.

36 See R. Repetto et al., TheForest for the Trees? (GovernmentPolicies and the Misuse of ForestResources); Wasting Assets(National Resources in theNational Income Accounts); andAccounts Overdue (NaturalResource Depreciation in CostRica). Washington, DC: WorldResources Institute, 1988-1991.

51

Indicators should highlightlimiting natural capital stocks.

If nitrogen is lacking in the soil, itdoesn’t help that there is plenty ofphosphate. If chromium is lacking tomake stainless steel, it doesn’t matterthat there’s an excess of iron. If theoutput from burning coal stresses anatmospheric sink, it is of little com-fort to know that on the source sidecoal is abundant. Like all complexsystems, the physical economy de-pends not on its most abundantthroughputs, but on its most limit-ing. The limits can come from eitherthe source or the sink side of the flow.

Ideally a complete information sys-tem would keep track of all forms ofnatural capital and their throughputs,but cockpit indicators would empha-size the most limiting factors. (Likelights on an instrument panel, youonly need to pay attention to the onesblinking red.)

The warning lights must blink farenough in advance to allow preven-tive action and must illustrate inter-connections, so the preventive actionwill not simply throw the load ontoanother natural capital stock, whichwould then become limiting. Again,this is a research agenda and a taskfor dynamic modeling.

Natural capital should bemonitored at whatevergeographic level makes sense.

The stock of nutrients in soil is mea-sured most meaningfully at the fieldor farm level. It can be aggregated tothe national level as the percentageof agricultural land that is losing nu-trients faster than they are replaced.

The stock of greenhouse gases inthe atmosphere makes sense only atthe global level. At the national levelone can keep track of the nationalcontribution to the global imbalancein that stock.

The appropriate geographic levelfor measurement is obvious for mostresources. More tricky is the questionof imported resources. It should be aconcern at the national level to knowthe sustainability of whatever natu-ral capital outside the country sup-plies a critical stream of resources tothe country. This could be done bycalculating a national EcologicalFootprint.



52

We need to allow estimates in ourindicators for life support systemsthat we do not yet understand.

Most of us didn’t understand the life-sheltering function of the strato-spheric ozone layer, until scientistsnoticed that that layer was eroding.

Whole communities of poorlyunderstood soil microbes serve asfertilizer-generating factories inhealthy organic soils.

The unpriced value of nature’s di-rect services to the human economy(through pollination, flood control,drought protection, pest control,waste recycling, species protection,nutrient regeneration, soil formation,and a dozen other critical functions)has been conservatively estimated at$33 trillion per year (as comparedwith the economic system’s output of$18 trillion per year).38

We only dimly understand the in-tricately woven web of geophysicalprocesses and life forms that make upPlanet Earth and support our endeav-ors.

Therefore we should create at leastone indicator to measure the amountof nature we have left untouched, an“insurance factor” for the knowledgewe don’t yet have about the formsof natural capital we don’t knowenough to value.

The Ecological Footprint, invented byWilliam Rees of the University ofBritish Columbia, measures aperson’s, city’s, industry’s, or nation’senvironmental impact by the amountof land (anywhere on earth) that en-tity requires for its maintenance.37 Forexample, Rees calculates that thecity of Vancouver, through its food,water, energy, and waste-disposaldemands, actually occupies an areaof land (an Ecological Footprint) four-teen times the area of the city.

The use of land as a numeraire, ratherthan money or energy, makes thefootprint easy to understand and alsopermits provocative calculations. Forexample, Rees calculates that if allpeople on earth had the same foot-print as the average American (5hectares), we would need threeEarths to supply everyone! He cal-culates a “fair earthshare” (total pro-ductive land area divided by worldpopulation) of 1.5 hectares, a num-ber that goes down as the popula-tion grows. He points out that theaverage footprint of a citizen of Indiais just 0.5 hectares, but becausethere are 910 million Indians, the to-tal footprint of India is 35% greaterthan the actual area of India.

The Ecological Footprint capturesmany useful ideas within one num-ber, and it has a strong intuitive andmetaphorical appeal. It is an excel-lent summary indicator of sustainabledevelopment, with the following ca-veats. There needs to be a consid-ered scientific review to codify itscalculation. (Rees’s method is roughand ready, fairly easy to implement,but oversimplified.) As Rees himselfpoints out, it should have a marineresources equivalent. And it needsto be made dynamic, so it reflectsnot only present footprints, but im-plications for future ones.

37 Wackernagel and Rees, op. cit.

38 R. Costanza, R. d’Arge, R. deGroot, “The Value of the World’sEcosystem Eervices and NaturalCapital,” Nature 387 (May 151997): 253-60; G. Daily, ed.,Nature’s Services: SocietalDependence on NaturalEcosystems. Washington, DC:Island Press, 1997.

53

Built Capital(intermediate means)

Built capital is human-built, long-lasting physical capacity —factories, tools, machines — thatproduces economic output.

We have come to think of moneycapital as interest-bearing — able toproduce a steady stream of incomewithout itself being depleted — be-cause there is a form of real capitalthat can behave that way. It is “builtcapital” — the human-made tools,machines, factories, smelters, electricgenerators, pumps, trucks that cre-ate output without themselves beingconsumed (or at least that create out-put while themselves depreciatingonly slowly).

Built capital is the physical stockof productive capacity of aneconomy. It is steel mills, cementplants, car factories, constructionequipment, lathes, tractors, build-ings, oil wells, chainsaws, powerplants, the most solid measures ofeconomic development. Built capi-tal is increased by investment (usu-ally after a construction delay). It isdecreased by depreciation or obso-lescence (which can be postponed bymaintenance and retrofitting). Builtcapital usually lasts for decades, pro-viding both stability and inflexibil-ity to the economy. Built capital hasan age structure just as populationdoes. New steel mills age into old

steel mills that may be technicallyobsolete long before they actuallywear out.

One simple development indica-tor is built capital per person. An ef-ficiency indicator would measure theamount of built capital (and through-put) necessary to meet final demandfor intermediate ends — the lowerthe number, the more efficient thecapital. Capital lifetime is anothergood indicator — the longer the life-time, the more value over time eachpiece of capital supplies (assuming notechnical obsolescence).

builtcapitalinvestment depreciation

... to nature

... to consumption, investment

energy,resources

labor,management

pollution

output

from nature ...



54

The nature and amount of builtcapital determines the standingdemand for human capital (laborand skills) and for throughputfrom natural capital (materialsand energy). That fraction of builtcapital that produces more builtcapital (investment) determinesthe rate of economic growth.

Built capital sits on the second levelof the Daly pyramid; it is intermedi-ate means. It is a key element in inte-grating the pyramid, because a pieceof built capital — a furnace, say, or apaper mill, or an irrigation system —requires a specific stream of through-put from natural capital (materials, en-ergy, water) in order to function. It re-leases a specific stream of waste andpollution. It requires particular typesof labor and management (humancapital). As long as it is running to ca-pacity, it produces a known stream ofoutput, which is either consumption(on the next level of the Daly pyra-mid, intermediate ends) or investment(some other form of capital).

Built capital is usually measuredin money terms — the accumulatedamount invested in it, or the amountit would take to replace it at currentprices. There are problems with thisway of measuring, primarily becausemoney is an insufficient proxy forsomething that is actually concrete,that comes in many different formsand capacities, that does not inflate but

does wear out physically, that does notphysically change even if priceschange. For the moment we probablymust construct indicators of built capi-tal in money terms, but in a moreelaborate information system for sus-tainable development, we may wantto specify them in terms of outputcapacity (megawatts, tons of steel peryear, cars per year) and input require-ments (fuel, labor, material per year).

Sustainability on the level of builtcapital means investing at leastas fast as capital depreciates.Across levels it means keepingthe throughput needs of builtcapital appropriate to thesustainable yields and absorptivecapacities of natural capital andkeeping labor and managementneeds appropriate to thesustainable use of human capital.

To sustain built capital, investmentmust replace depreciation (in actualproductive capacity, not in moneyterms). Capital grows if investment isfaster than depreciation. The self-gen-erating growth of built capital (it takescapital to produce more capital; themore capital you have, the more newcapital you can build) is one of the sen-sitive positive feedback loops that pro-vides a central indicator of both sus-tainability and development.

55

Development indicator: real invest-ment (measured in concrete produc-tive capacity) divided by realdepreciation (measured in physicalterms). If greater than 1., productivecapacity is growing. If equal to 1., pro-ductive capacity is just being main-tained. If less than 1., the built capitalstock of the economy is not beingsustained.

Note: such an indicator is commonin money terms, but doing it in physi-cal terms would reveal new informa-tion — for example it would signalthe erosion of capital through de-ferred maintenance much faster thanmoney accounts can do.

Sustainability indicator: throughputneed of built capital divided by sus-tainable yield from natural capital. Ifgreater than 1., the economy hasbuilt itself beyond the capacity of theresource base to supply it.

Sustainability and development

indicator: labor and managementneed of built capital divided by laborand management capacities of hu-man capital (which will be discussedin the next section). Greater than 1.indicates insufficient human capac-ity to run and maintain the capitalplant. Less than 1. indicates humanresources going unused. (An infor-mation system that tracks built capi-tal could also track jobs andemployment relatively easily.)

There are many categories of builtcapital. A useful indicator wouldreflect the proper balance amongcategories to permit the mostproductive use of all forms ofcapital.

Built capital accounts could be keptfor every industrial sector, every city,every company. In some countries,they are already measured on all thoselevels, because on each level there aredecision-makers who need to moni-tor capital accounts. (The job is notonly similar to keeping accounts forGDP, or national input-output tables,it naturally complements those ac-counts.)

For indicators of sustainable de-velopment at the national level, a fewcategories of built capital can be ag-gregated according to their large-scalesystem function:

Industrial capital is capital thatcan build more capital — the steelmills that make steel for more steelmills, the machine tools that makemachine tools. This is the fraction ofbuilt capital that provides real physi-cal investment, the engine of eco-nomic growth.

Household capital consists ofhomes, cars, refrigerators, home com-puters, durable goods owned by fami-lies. It is a supporter or enhanc& r ofhuman capital and a better measureof material well-being than income.



56

Service capital is hospitals,schools, government buildings, banks— capital that provides services, someof which enhance the functioning ofother kinds of capital, some of whichenhance human and social capital.

Consumer goods capital pro-duces nondurable consumer products(food, paper, clothing), another mea-sure of material well-being.

Public infrastructure is roads,bridges, ports, water lines, and otherpublic investments that serve thewhole economy.

Resource-obtaining capital con-sists of mines, oil wells, and otherbuilt equipment that extractsthroughput from natural capital.

Pollution-abating capital, suchas sewage treatment plants, trash in-cinerators, or stack scrubbers, ame-liorate damage when throughput isreleased back to nature.

Military capital maintains the se-curity of natural capital, economy,and society.

The last three types of capital arenot directly productive; they are costsof supplying or keeping safe otherkinds of capital. An efficient societywill be structured to need as little ofthem as possible.

So a useful indicator would be theratio of the last three protective kindsof capital to the first five productivekinds of capital. (But if, for example,necessary pollution-abating capital isnot built, some other form of capital,probably natural or human capital, willbe degraded. A proper capital ac-counting system should assessthose costs.)

For some kinds of capital, nationalaccounts would need to distinguishthat which is used for 1) domesticproduction, 2) export production,

industrialcapital

consumer goods

household capital

service capital

pollution–abating capital

resource–obtaining capital

military capital

investment depreciation

industrial output

public infrastructure

57

and 3) import production (“virtualcapital” in other countries). The firsttwo of these generate in-country jobs,pressure on natural capital, and pol-lution. The first and third generatein-country consumption.

Another important indicator would bethe balance among various kinds ofcapital. There are countries, forexample, with roads so bad thatvehicles get shaken apart bypotholes. This is unnecessarydepreciation of household capitalbecause of an under-investment inpublic infrastructure capital. In othercountries, under-investment inenergy production (resource-obtaining capital) occasionally shutsdown industrial or household capital.There are places where insufficientservice capital hampers thefunctioning of all other forms ofcapital because of an unskilled orunhealthy labor force.

Therefore, an indicator should mea-sure the balance among the kinds ofcapital (what fraction of total capitalis represented by each), to reflect theextent to which they enhance ratherthan undermine each other’s produc-tivity. Ideally, lights should start toblink on the social instrument panel,when over- or under-investment inone kind of capital degrades the ef-fectiveness of another kind of capi-tal. (It is widely believed that the freemarket automatically takes care ofsuch capital imbalances, but thewidespread existence of capital im-balances illustrates that delays andimperfections keep the actual mar-ket a long way from fulfilling theo-retical expections.)

Human Capital(intermediate means/ends)

Human and social capital are diffi-cult to define; indeed, it is a signifi-cant question whether “capital” is theright conceptual framework for them.Neither human nor social capital canbe adequately denominated in termsof materials, energy, or money. Fur-thermore, drawing a line between the“human” and the “social” is depen-dent on worldview. What is seen insome cultures as human capital (be-cause it is carried within the mindsand bodies of individuals) is seen byothers as social capital, because theindividual is only given identity andpurpose by the group.

However, given those caveats, it ispossible and useful to talk about andcreate indicators for human and so-cial capital, both of which can accu-mulate over time, can be invested in,can depreciate, and must be essentialfactors in sustainable development.

The base of human capital is thepopulation, including its age andgender structure.

Demographic models, derived fromfairly accurate censuses in most coun-tries, are already available. Popula-tions are countable stocks, increasedby births and inmigrations, decreasedby deaths and outmigrations. Eachperson in the population carries with

Development does notstart with goods; it startswith people and theireducation, organisation,and discipline. Withoutthese three, all resourcesremain latent, untapped,potential.... We have hadplenty of opportunity toobserve the primacy ofthe[se] invisible factorsafter the war. Everycountry, no matter howdevastated, which had ahigh level of education,organization, anddiscipline, produced an“economic miracle.”

— E. F. Schumacher39

39 E. F. Schumacher, Small isBeautiful. New York: Harper &Row, 1973.



58

him or her a set of attributes, the mostobvious of which — age and sex —are already reported in the census.

Because of the long lifetimes ofmost people, populations changeonly slowly, with great momentum.Much about their future is predict-able from their age structures — thisyear’s five-year olds will be (minus mi-gration and mortality) the twenty-year olds of fifteen years from nowand the sixty-five-years olds of sixtyyears from now. Demographic mod-eling can spin out the future impli-cations of today’s population events.

Modeling can also calculate thefuture consequences of a crucial ex-ponential growth indicator: netpopulation growth rate. (See the dis-cussion of positive feedback loopsearlier in this report.)

Along with numbers, ages, andgenders, human capital can bemeasured by attributes such ashealth and education.

Demographic databases can also in-clude information about attributesimbued within the minds and bod-ies of people — most obviously theirlevels of education and health. Invest-ment (especially in service and hu-man capital) can build up those at-tributes. Neglect can allow them todepreciate. Investment in humancapital can also be seen as a positivefeedback loop — the more educationin a population, the more educated

parents and teachers build that edu-cation level still further.

I will define attributes that inherenot to individuals but to groups associal capital and discuss them in amoment.

Human capital is in one sense anintermediate means, in anothersense an intermediate end.

Seen as a labor force, human capitalis an intermediate means, a factor ofproduction, which interacts withbuilt capital and throughput fromnatural capital to produce economicoutput. As the health and educationof a population increase, other formsof capital can be more productive.Human capital, if we had a way ofaccounting for it in money terms,might prove to be at various stages ofdevelopment the most lucrative pos-sible investment on pure grounds ofeconomic return. (That becomesagain a matter of balancing the vari-ous types of capital so they do nothold each other back.)

Human capital is also, however,an intermediate end. Education andhealth (and other individual at-tributes) have purposes beyond mak-ing a person more productive in theeconomy. They also serve the top ofthe triangle — the ability to lead ajoyful, fulfilling life. If we could mea-sure the degree to which human capi-tal serves ultimate goals, investmentin it might look like an even better

59

deal. Relative to built capital, humancapital probably delivers more well-being from less money, less built capi-tal, and less material and energythroughput than any other invest-ment (with the possible exception ofsocial capital).

Population with its attributes, likebuilt capital, is an indicator of thenecessary throughputs andpotential outputs of a society.

Human capital relates to the top ofthe triangle through well-being. Itrelates to the bottom of the trianglethrough the flows of material andenergy necessary to maintain a per-son. It relates to the middle of thetriangle through the flows of eco-nomic output that a person (with theaid of built capital) is capable of pro-ducing and consuming.

Thus human capital, like builtcapital, can be seen as a standing de-mand for material and energythroughput. Different people withdifferent attributes and in differentcultures require very differentthroughputs. (They have very differ-ent Ecological Footprints.) They arecapable of producing very differentoutputs. (They have different laborproductivities.)

In order to avoid double count-ing, we need to distinguish thethroughput needs and output poten-tial attributable to human capital andto built capital. Economists have been

trying to untangle this knot for years.It might be clearer not to try to makea clean separation of what is actuallya systematic partnership. Through-puts and outputs might best be speci-fied for the human-and-built-capitalsystem as a whole.

The universal resource availableto all human beings, and thecurrency of most value to them, istime. Time accounting may be keyto human capital accounting.

We each have an equal endowmentof twenty-four hours a day. Much ofreal economics has to do with com-mandeering the time endowments ofsome people to serve other peoples’intermediate or ultimate ends. Wehad the feeling in the workshop thattime budgets could be even more re-vealing than money budgets, espe-cially as we begin to relate to the topof the triangle. We’re not sure yet howto integrate them, but clearly anotherattribute that could be correlated witheach person in a human capital stockwould be the allocation of thatperson’s time.

Human time can be sorted intomany possible categories, such as:

Survival tasks: eating, sleeping,preparing food, gathering fuel, etc.;

Learning: acquiring the skillsnecessary to survive and to exchangein the time economy;

Wage work: time exchanged inthe market for compensation;



60

In the table is an example from India of the kinds of information revealed by data systems built upon time.40 Notice the strongdifferences between women and men and between landless and landed women.

TIME USE (% of total hours)forest hill landless landed urban middle

Women tribe tribe rural rural slum classsleep 40 33 34 50 34 39

survival 12 27 17 13 17 11

reprod. work 12 17 13 8 14 10

wage work 13 10 26 — 19 17

learning 2 3 2 8 4 7

recreation 17 5 5 8 8 11

religion 4 4 3 13 4 5

Mensleep 43 49 47 48 47 48

survival 9 6 6 2 3 2

reprod. work 6 2 2 1 2 1

wage work 19 22 30 26 28 26

learning 5 4 3 6 6 8

recreation 15 14 10 13 11 13

religion 4 4 2 4 4 3

Life Expectancy (years)45 60 60 60 60 75

Child rearing: time invested inthe next generation of human capital;

Leisure: time spent on psycho-logical maintenance, spiritual devel-opment, building and maintainingrelationships, entertainment, sports,etc. Viewed in some cultures as timeof little value; viewed in others as timeinvested in health, productivity, andrealization of the top of the triangle;

Community time: time devotedto the needs of others, to communityfunctions, volunteer groups, neigh-borhood duties, discussion and co-ordination of work in groups.

A key indicator is how much healthytime is available to people (subtract-ing time spent sick, immobile, oraged to the point of feebleness).41

A second would be how that healthytime is distributed among differentgenders, ages, and social classes orincome groups. Time spent on sur-vival tasks, indexed for equity, isessentially a proxy for depreciationrates of human capital.

A set of indicators based on“time” could be a fruitful topic forresearch, for indicators of sustainableuse of human capital and indicatorsof sustainable development. Some ofus think the prime characteristic of a

40 Aromar Revi, TARU, NewDelhi, personal communication.

41 C. J. L. Murray, “Quantifyingthe Burden of Disease: TheTechnical Basis for DALYs,”Bulletin of the World HealthOrganization 72, no. 3 (1994):429-445.

61

sustainable society would be that lifewould slo-o-o-w down so there wouldnot be a perpetual sense of scarcityabout time. But we didn’t have timein our hectic five-day workshop to de-velop this idea!

Social Capital(intermediate ends)

Social capital is a stock ofattributes (knowledge, trust,efficiency, honesty) that inheresnot to a single individual, but tothe human collectivity.

When you start thinking about so-cial capital, you begin seeing itaround you. Knowledge is clearly anaccumulated stock, which growsthrough inflows of research, experi-ment, new understanding and isdrained by outflows of forgetting.Parliamentary rules and other socialbehaviors that allow large groups tohave fair and purposeful discussionsare learned painstakingly over timeand must be maintained against de-preciation. The ability of a house-hold to clean itself, of a communityto police itself, of businesses to makeand enforce contracts, of citizens topropose, debate, pass, and obey laws— all these could be considered so-cial capital. They can be invested in.They depreciate. They don’t changequickly. They bear the history of allpast investments and depreciations.

We could think of public trust as astock of capital, decreased by tell-ing lies and increased by telling thetruth. (Perhaps each lie or truthshould be weighed by the numberof people who hear it. That way eachof us every day builds or depreciatesthe public trust, but public figureswho speak to millions can build orerode the public trust far morequickly than can ordinary citizens.)

Tolerance of ethnic, religious, or otherdiversity might be a social capitalstock, built up by actions and wordsthat demonstrate good will, torndown by actions and words that ex-press hatred.

Efficient, well-regulated markets.

Technology and the ability to evolvenew technology.

Orderliness, reliability, creativity, cul-ture.

The ability to treasure what is valu-able in the old and to seize what isuseful in the new.

Museums, folksongs, jokes, cityparks, sports teams, scouts.

All these things must have some-thing to do with social capital. Adapt-ability, resilience, the capacity to learnand reorganize, repair damage orchange direction, maintain a steadycourse, muster resources for majorefforts, all of these are dependent onhaving an adequate “stock” of social“capital.”

Indicator selection for social capital isdifficult indeed. Suggested social capi-tal indicators often measure depletionor malfunction: crime, for example.Crime is surely an indicator of declinein social capital, driven by inadequateinvestment in other kinds of capital.

Equally important is thesocial side, and here wemean equity, socialmobility, social cohesion,participation,empowerment, culturalidentity, and institutionaldevelopment.... It is, tomy mind, an essentialpart of the definition ofsustainability, because,let me remind you, theneglect of that side leadsto institutions that areincapable of respondingto the needs of society.We see the consequencesof that in tragedies fromSomalia to Rwanda andfrom Liberia to Bosnia.

— Ismail Serageldin



62

Social capital is terrifically varied,incredibly hard to measure, but mostof us not only acknowledge its exist-ence but can sense its presence orabsence. “You can feel it when youwalk down the street,” one memberof our workshop said. It is based inthe integrity and efficiency of insti-tutions, information systems, and hu-man relationships.

Just as time is a key currency forhuman capital, information maybe a key currency for socialcapital.

Social capital is generally understoodin terms of “cohesion,” but its pri-mary component is information.More accurately, social capital is em-bodied in dense, meaningful, andtruthful information flows.

Indicators of social capital wouldbe especially useful if they could dis-criminate not only quantity of infor-mation (which can be measured bystocks and flows of megabytes), butquality of information — the differ-ence between data, information,knowledge, and wisdom. Data arebits of information, which can rap-idly become distracting, overwhelm-ing, stupefying, or a managementnuisance (as is currently the casewith most of the Worldwide Web).Information is data sorted and se-lected to “make a difference” to somesystem or some decision. Knowledgeis understanding of the way informa-

tion streams are organized and ac-cessed. Wisdom is the capacity to uti-lize knowledge in decision-making, tointegrate knowledge and informa-tion with new experience, to see thesystem whole, to grasp the necessityand yet the uncertainty of models,to move between and within levelsin a model, to be able to distinguishbetween the system itself and mod-els of the system, and to make ad-justments to models as necessary.

Trust, relational capacity, and theefficacy of a society’s institutions alldepend on the quality of informationflows within a society. It is a centraltenet of systems theory that a systemcannot be managed without adequateflows of information.

Another possible measure ofsocial capital would be density orfrequency or intensity of humanrelationships.

How often do you see your relatives,and for what length of time? Doesthat measure the stability, resilience,functionality of your family?

How many neighbors do youknow by name, talk to often, under-stand something about their lives?Does that give an idea of the socialintegrity of your neighborhood?

Do you have a face-to-face humanrelationship with your employer oremployees? With the makers and sup-pliers of the things you buy? Withthe people who teach your children,

63

who heal your body, to whom yougrant the power of governance? Is so-cial capital enhanced or decreased asinstitutions become bigger and morepowerful but human relationships be-come more distant and abstract?

Decentralized, relatively immo-bile societies such as traditional vil-lages have a high density and fre-quency of face-to-face interactions,which builds up a palpable, func-tional social capital. A society basedon long-term personal relationshipsneeds few if any contracts, papers,lawyers, rules, courts, judges. It’sprobably the absence of such relation-ship-based interactions in our livesthat makes us romanticize such a de-centralized system — and it does havereal advantages.

On the other hand, a decentral-ized society can suffer from insular-ity, inbreeding, narrowness of ideasand viewpoints, suspiciousness of in-novation, suppression of deviance.Perhaps a “cosmopolitan-ness” indexcould counterbalance the human re-lationship index, to measure thebreadth of a society’s informationcontacts and idea-base.

Then comes the question, is itpossible to devise a society that couldscore high on both indices?

The “forbidden numeraire,”whose stocks, flows, anddistribution could lend itself toindicators, is power.

I have no idea how to measure power.I don’t think many of us do. I sus-pect that is not so much because it isunmeasurable as because it is notpolitically acceptable to raise the topic(especially among those who have ac-cumulated large quantities of power).

All the more reason to try tomeasure it. Clearly power has to dowith the ability to force people to dothings they would not independentlychoose to do. (It may be inversely re-lated to freedom, creativity, social re-silience, and evolutionary potential.)

Here are some ideas for measuresof power:

• number and strength of weaponsand distribution among the popu-lation;

• ratio of number of employers tonumber of employees;

• income distribution, particularly theratio of extremely rich to extremelypoor;

• concentration of ownership of themedia (public and private);

• political prisoners as percent of thepopulation;

• percent of GDP earned by the tenor fifty largest corporations.



64

Social capital can be a high-leverage transformative factor inthe process of channeling ultimatemeans into ultimate ends.

If a society has a low crime rate, ahistory of common endeavor, andhabits of timeliness and cleanliness,then it probably can organize a pleas-ant, efficient mass transportation sys-tem that gives its citizens high mo-bility with minimal cost in householdcapital (cars) and natural capital(steel, glass, rubber, fossil fuels, con-crete, air pollution). High mobilitycan be obtained at low cost becauseof the high level of social capital.

If a culture allows men to feelmanly without having to be sur-rounded by tons of polished steel pro-pelled at high speeds, that culturecould allow the realization of an im-portant ultimate end with great sav-ings of all kinds of ultimate and in-termediate means.

It is well established for most ofthe industrialized nations that effi-ciency in the design of built capitalcan produce the same amounts ofeconomic output with half as much,or even one-tenth as much, energy.42

It could be true that efficiency in thedesign of social capital could produceequivalent well being with one-hun-dredth or one-thousandth as muchenergy, materials, and built capital.This possibility gives hope that trulysustainable means of meeting thehighest and most important ends

If the world’spopulation had theproductivity of theSwiss, the consumptionhabits of the Chinese,the egalitarian instinctsof the Swedes, and thesocial discipline of theJapanese, then theplanet could supportmany times its currentpopulation withoutprivation for anyone.On the other hand, ifthe world’s populationhad the productivity ofChad, the consumptionhabits of the UnitedStates, the inegalitarianinstincts of India, andthe social discipline ofArgentina, then theplanet could notsupport anywhere nearits current numbers.

— Lester Thurow, TechnologyReview, Aug/Sept 1986

could be attained for all people onEarth. Somewhere within the con-cept of social capital, combined withclever technical design of built capi-tal and loving development of humancapital, is the capacity to meet mate-rial needs materially and non-mate-rial needs non-materially with greatefficiency in the use of ultimatemeans.

Rough indicators of social capitalare better than nothing.

It is tempting to refuse to deal withanything so messy (and politicallytouchy) as social capital. It’s all tooeasy for experts in science or econom-ics, who like to deal in clean conceptsand precise numbers, to shift thetopic quickly to prices or kilojoulesor numbers of species.

While we didn’t make enormousheadway on social capital in our ownworkshop, we recommend that thistopic become a major area of discus-sion, involving many kinds of people.

We believe it is possible and vi-tally important to find ways to mea-sure social capital, even if those waysare subjective (remember, all indica-tors are subjective). It is importantpartly because social capital can besuch a powerful mediator in the trans-lation of ultimate means to ultimateends, and partly because without anymeasure of social capital, many pur-ported “development” plans may eat

42 See E. von Weiszacker, A.Lovins, and H. Lovins, FactorFour: Doubling Wealth - HalvingResource Use. Washington, DC:Island Press, 1997.

65

into this kind of capital withoutcounting the cost. (Dams that floodout long-standing communities, em-ployment patterns that break upfamilies, mass information systemsthat swamp local cultures.)

Participatory indicator selectionprocesses can be especially creative incoming up with indicators of socialcapital. Even if they can only produceagreement about the general directionof change (pedestrian streets in citiesincrease social capital, freeways de-crease it; many small, local-based re-tail stores increase social capital, oneor two large “chain” distributors de-crease it), the exercise is worth doing.


Sustainable Seattle’s participantswere determined to measure“neighborliness” somehow. Theyinvented a telephone survey toask: How do you define “neigh-bor?” How many neighbors wouldyou say you have? How many ofthem do you know by name?What kinds of interactions do youhave with them? The answers re-vealed strong differences byneighborhood and by incomeclass, and suggested that the citywas not actually very neighborly.43

Among draft indicators in the “so-cial” dimension for the U.S. Inter-agency Working Group onSustainable Development Indica-tors are:44

• percent of children living in one-parent families;

• percent contributing time ormoney to charities;

• crime rate;

• participation in the arts and rec-reation;

• number in census tracts withover 40% poverty.

The World Bank provides a long listof possible indicators of social capi-tal, among them:45

• index of democracy;

• index of corruption;

• independence of court system;

• contract enforceability;

• strikes, riots, protests;

• prisoners per 100,000 people;

• extent of trust in government,trade unions;

• small credit availability;

• index of political and/or eco-nomic discrimination;

• index of civil liberties;

• voter turnout.

Examples of social capital indicators from community indicator projects:

Social capital is, essentially, a “shared wisdom index.“ Defining it requires a significant amount of wisdom!

43 Sustainable Seattle, Indicatorsof Sustainable Community 1995,available from Sustainable Seattle,909 Fourth Avenue, Seattle, WA98104.

44 U.S. Interagency WorkingGroup on Sustainable Develop-ment Indicators, SustainableDevelopment in the United States,Interim Report, draft, April1998.

45 The World Bank, Expandingthe Measure of Wealth: Indicatorsof Environmentally SustainableDevelopment, 1997.


66

Well-Being(ultimate end)

If social capital was hard, how are weever going to define ultimate humanfulfillment?

Not by going around doing shal-low polls that ask, simply, “are youhappy?” (Think what answers mightcome forth if we asked, “Does yourlife allow you to contribute all youhave to give to society? If you hadcomplete control of your own time,would you spend it the way you donow? Do you see a purpose to yourlife and are you able to achieve thatpurpose? Are you lonely? Are youloved? Is there beauty in your life?Joy? Transcendence? If you knewyou would die tomorrow, would yoube satisfied?”)

The question of ultimate ends,happiness, well-being has been a topicof discussion for thousands of years.That discussion has not producednothing. Through many differentcultures and historical periods it hasproduced some strikingly constantinsights, one of which is that “mandoes not live by bread alone.” Well-being requires a basic amount ofmaterial throughput to sustain life,but after that point, more wealth isonly loosely associated, if at all, withmore happiness.

So how to measure the mostqualitative, personal, culture-bound,subjective, and important part of thepyramid? We’re not sure. We suspect

that it should be a participatory, notan expert-dominated activity. We doknow that, however uncomfortableor difficult the topic, discussing thetop of the pyramid is the most im-portant task on the road to sustain-able development.

The most important indicator,without which the others make nosense, is an indicator of ultimateends.

If we can’t define what our ultimateends are, how can we know whetherwe are approaching them, or withwhat efficiency, or even whether we’regoing the right direction? Thequalitativeness, subjectiveness, elusive-ness, and culture-specificity of the ul-timate ends does not for a momentdiminish their importance. If the sys-tem orients itself around indicatorsthat do not reflect real well-being, thenit will produce whatever those indica-tors do measure (money flow, size ofthe economy, personal material pos-sessions) rather than real well-being.

We need to press courageously todiscuss well-being and define indica-tors that reflect it, even if we suspectthat this process will shake up ourworldviews and challenge our powerstructures and our lives. If thosepower structures and lives are in factcreating well-being, then they won’tbe challenged. If they are not, thenthey should be shaken.

It [the GNP] does notinclude the beauty ofour poetry or thestrength of ourmarriages, theintelligence of ourpublic debate or theintegrity of our publicofficials. It allowsneither for the justice inour courts, nor thejustness in our dealingswith one another. TheGross National Productmeasures neither ourwit nor our courage,neither our wisdom norour learning, neitherour compassion nor ourdevotion to country. Itmeasures everything, inshort, except that whichmakes life worthwhile.

— Robert Kennedy

67

Indicators of ultimate ends maynot be numerical or precise, butthey are findable and usable.

The literature on human happiness/fulfillment/purpose/satisfaction/quality-of-life is far too extensive toreview in this short paper. I will quotehere only one scheme by which indi-cators could be derived, more to il-lustrate that such schemes are possiblethan to defend this particular one asbest — though I personally find itthought-provoking and as good abasis for building “quality of life” in-dicators as any other I know.

Manfred Max-Neef, after manycross-cultural studies, has come upwith a list of nine universal “basichuman needs.”46 Only the first ofthem — subsistence — is clearlymaterial. The others may have ma-terial underpinnings, but they are es-sentially qualitative:

• subsistence;

• protection (security);

• affection;

• understanding;

• participation;

• idleness (leisure, rest);

• creation;

• identity;

• freedom.

Max-Neef insists that these needs arenot hierarchical or substitutable. Allare necessary; none is more impor-tant than the others. One can’t com-

pensate for a deficiency in one by anexcess in another — for lack of affec-tion, say, by an increase in protection,or for a loss of freedom by an im-provement in material subsistence.

Cultures differ, says Max-Neef,not in these needs, which are essen-tially human, but in their satisfiers,their specific ways of satisfying theneeds. Participation may be realizedin some societies by democratic vot-ing, in others by long discussion, inothers by a formal process of consen-sus. Identity could be established byparticular kinds of decoration orclothes, by possessions such as carsor houses, by celebrity in the massmedia, by local nicknames or affec-tionate jokes or a small communityknowing and respecting one’s uniqueset of strengths and weaknesses. Somesatisfiers can meet multiple needs.(Max-Neef cites breast-feeding,which serves subsistence and affec-tion, or barefoot-doctor programs,which serve subsistence, participa-tion, understanding, and identity.)Some pseudo-satisfiers can appearto meet needs but actually fail to meetthem or even undermine them. (Ex-pensive brand-name sneakers maypurport to establish identity or free-dom, but actually make their wear-ers look alike and manipulate themfor the benefit of corporations thatmake and market the sneakers.)

Satisfiers are the equivalent of in-termediate ends on the Daly triangle.The list of basic needs might be afruitful beginning for indicators of

46 M. A. Max-Neef, Human ScaleDevelopment. New York: ApexPress, 1991.



68

ultimate ends. (I could think of oth-ers I might add, such as beauty andtranscendence/enlightenment/grace.)

If we search sincerely and if weare open to answers that may not looklike scientific formulae, I believe thatultimate ends can be defined, at leastqualitatively, and that the definitionsare not so different from one humansoul to another. We may disagreehotly about our models of whatmeans can lead to the ends, but whenit comes to the ends themselves, theessential human values, we are, quitesimply, all human.

Even if we agree on no more thanthis — that the dominant cultures aremobilizing enormous flows of re-sources, spewing out unsupportablequantities of wastes, building hugecapital structures, and not clearlyachieving happiness — then there isalready a strong reason to stop usingindicators that count a larger physi-cal economy as “good” and to searchfor indicators of more importance.

Integration (translatingultimate means intoultimate ends)

The central indicators ofsustainable development willintegrate the whole Daly triangle.

Suppose that we could, by whatevermeans you can imagine, assess thewell-being of a given society. And

suppose we could measure thethroughput from nature that is be-ing used to achieve that well-being.Then we would be able to come closeto the three indicators that answer thecentral questions of sustainable de-velopment.

• Are people well-off, satisfied,happy? (Sufficiency and equity —top of the triangle.)

• Is the most possible well-beingachieved with the least possiblethroughput of material and energy?(Efficiency of the translationmechanisms from the bottom tothe top of the triangle.)

• Are the natural systems that sup-port the material and energythroughput healthy, resilient, andfull of evolutionary potential? (Sus-tainability, bottom of the triangle.)

The information system fromwhich these central indicatorscan be derived will measurecapital stocks at every level andthe flows that increase, decrease,and connect those stocks.

An integrated account of theinterlinked stocks and flows at all lev-els of the pyramid, quantified wherepossible, estimated otherwise, couldprovide the information base fromwhich sustainable development indi-cators are derived. (Just as underly-ing accounts of interlinked moneyflows provide the base from which theGDP is derived.)

We will know we’rereally talking aboutsustainabledevelopment when theconversation shifts fromefficiency to sufficiency.Efficiency isquantifiable andsatisfies the Cartesianmind. Sufficiency willdrive the Cartesianmind crazy.

— Wes Jackson

69


population humancapital

socialcapital

happiness,realizationfulfillment

industrialcapital

consumer goods

household capital

service capital

pollution–abating capital

resource–obtaining capital

military capital

investment depreciation

industrial output

public infrastructure

ultimate ends

intermediate ends

intermediate means

ultimate meansnaturalcapital


70

These stocks and flows should bemeasured in whatever units make sense;units that will be quite different at dif-ferent levels of the system. There is atendency in economics, which mea-sures almost everything with thenumeraire of money, to assume thatbecause money is interchangeable, thenall forms of capital are intersubstitut-able. If there is not enough labor, sub-stitute built capital. If there are notenough resources, compensate withmore resource-obtaining capital.

To some extent intersubstitutabil-ity is possible, and within that possi-bility arise all the marginal cost andbenefit questions that are interestingto economists. But, as Herman Dalypoints out, it just doesn’t work to sub-stitute fishing boats for fish, or saw-mills for trees. The absence of treesrenders sawmills valueless, as the ab-sence of fish does for fishing boats.Larger pumps can counter a fallinggroundwater table for awhile, but thissubstitution is not sustainable. Builtcapital and natural capital are morecomplementary than substitutable. Thesame could be said for human andsocial capital and built capital.

The assumption of total substi-tutability of any form of capital forany other is just as simple-minded asis the assumption of no substitutabil-ity. Therefore indicators should besought that capture, up and down thepyramid, the extent to which the vari-ous forms of capital complement andenhance or undermine and undercuteach other.

There are systematic schemes forassessing the total viability of asystem. These schemes can serveas checklists for sustainabledevelopment indicators.

One of these schemes is HartmutBossel’s set of orientors, which mea-sure the ability of any system to meetenvironmental challenges by appro-priate system responses.47 There areseven Bossel orientors, which can bemeasured for systems at any level,from a single organism to a wholesociety. They are:

• existence (the ability to sustainphysical needs);

• psychological needs (the ability togenerate internal well-being, satis-faction, happiness — applicable tohuman systems only);

• effectiveness (the ability to take ac-tions that produce desired effects);

• freedom of action;

• security;

• adaptability;

• coexistence (the ability to live inharmony; not to create costs fromincompatibility with others or withthe environment.

Though Bossel derived theseorientors from systems theory ratherthan from social science, they bear aresemblance to Max-Neef ’s list ofbasic needs. Like Max-Neef, Bosselemphasizes that these orientors arecomplementary, not substitutable. Eachof the orientors has to be satisfied to

47 H. Bossel, Concepts and Tools ofComputer-Assisted Policy Analysis.Basel: Birkhaeuser, 1977.

71

a certain degree if the system (or per-son or society) is to be functional. Aviable system requires balanced atten-tion to all needs. Where one attemptsto compensate a needs deficit by ex-cess satisfaction of another need,pathological behavior results.

I find the Bossel scheme a usefulchecklist to see that a proposed set ofindicators is comprehensive. It sug-gests to me areas I might not havethought about, parts of the systemthat must be monitored, to be surethat the entire system can achieve sus-tainable development.

Other more informal kinds of“integrative checks” emerged fromour workshop conversations. We in-vented the “Nazi test” — if we ap-plied any suggested set of indicatorsto Nazi Germany, would it have re-vealed the obvious problems of thatsociety? Or the “Maya test” — if wecould have measured these indicatorsfor the Maya empire, would they haverevealed its incipient collapse? Intime to prevent that collapse?



72

7. Sample indicators

The proof of any indicator scheme isin the indicators it produces, and thesocietal behavior those indicators helpto inform. The scheme suggested inthis report calls not only for indica-tors, but for an underlying informa-tion system and set of dynamic mod-els, none of which currently exist(though there are plenty of proto-types).

Where to start? What indicatorsto start with?

There is no “best” answer to thatquestion. I have given many sampleindicators throughout this report,hoping to stimulate creative thinkingand even outrageousness on the partof many people, in order to shakeloose old thinking, welcome newworldviews, and begin to suggest in-dicators that can actually move ustoward sustainable development. I’llgive some more examples here.

The Balaton Group workshopparticipants came up with this list:

While you and I have lips and voices whichare for kissing and to sing withwho cares if some one-eyed son of a bitchinvents an instrument to measure Spring with?

— e e cummings

73

For natural capital

• Renewable resources used/totalnatural resources used

• Time to oil or gas depletion / leadtime for renewable substitute

• Agricultural land loss (to urban-ization, desertification, erosion)/total arable land

• Loss of primary forests / total pri-mary forests remaining

• Unit of effort (money, labor, in-vestment, time) necessary toadd a unit to identified reservesof nonrenewables

• Fish caught per unit of fishingeffort

• Soil organic matter content (timetrend)

• Output to sink / capacity of sinkto absorb or assimilate (espe-cially for CO2)

• CO2 emission per capita, relativeto “fair earthshare”

• Quality of river water enteringcountry or city / quality leavingcountry or city

• Number of synthetic chemicalsin use

• Area used for organic agriculture/area used for chemical intensiveagriculture

For built capital

• Average productive lifetime ofcapital

• Maintenance inputs to capitalstock / productive output of capi-tal stock

• Capital stock / end use output

• Resource (material and energy)throughput / end use output

• Ratios (balance) between variousforms of built capital

For human and social capital

• Infant and child mortality rate

• Total fertility rate (births perwoman over that woman’s ex-pected lifetime)

• Education level of the bottom 10percent of twenty-year-olds

• Education and skills attributes ofpopulation matched with educa-tion and skills requirements ofbuilt capital

• Average layers of managementbetween employees and own-ers

• Income of the top 10 percent /income of the bottom 10 percent

• Percent of government office-holders’ total income comingfrom bribes, payoffs, and privatecampaign contributions

• Percent of time necessary tosecure survival needs

• Percent of time contributed tocivic, religious, and other non-profit causes

• Juvenile crime rate

For ultimate ends

• Population of the local “totem”species (salmon in Seattle,eagles in Maine, seals in theNetherlands)

• Proportion of leisure time perperson (and equity of its distri-bution)

• Human openness in the streetsand squares

• Number and size of places ofrest and beauty (e.g., forests,parks, temples)

• Flexibility in choosing transportmode and housing

• Percent of people who say theyhave “enough”

Sample indicators


74

Environmental

• Surface water quality

• Acres of major terrestrial eco-systems intact

• Contaminants in biota

• Accumulated quantity of spentnuclear fuel

• Status of stratospheric ozone

• Greenhouse gas emissions

• Ratio of renewable water supplyto withdrawals

• Fisheries utilization (percentoverfished)

• Invasive exotic species

• Conversion of cropland to otheruses

• Soil erosion rates

• Timber growth/removal

• Identification and managementof toxic waste sites

• Outdoor recreational activities

• Extreme weather events

48U.S. Interagency WorkingGroup on Sustainable Develop-ment Indicators, op. cit.

A thoughtful list of fourty-one indicators developed for the United States includes the following, allof which are available with significant time series.48 Notice that many are grounded in criticalcapital stocks and in leading-indicator rates of flow.

Economic

• Capital assets

• Labor productivity

• Federal debt to GDP ratio

• Investment as a percent of GDP

• Energy consumption per capitaand per $ of GDP

• Materials consumption percapita and per $ of GDP

• Inflation

• Investment in R&D as a percentof GDP

• GDP per capita

• Income distribution

• Consumption expenditures percapita

• Unemployment

• Percentage of households inproblem housing

Social

• Population

• Children living in families withonly one parent

• Teacher training level

• Contributions of time and moneyto charity

• Births to single mothers

• School enrollment by level

• Participation in arts and recreation

• People in census tracts with 40percent or more poverty

• Crime rate

• Life expectancy

• Educational achievement rates

• Homeownership rate

75

If I played the “ten indicators or you’llbe shot at dawn” game with myself,I’d come up with a list like the fol-lowing (assuming that I am workingon national-level indicators). I amaware that many items on this list arehard to define and measure. I’d useany quick and dirty surrogate mea-sure I could find to start with andthen work to make them better. I as-sume that these would be aggregateindicators, with a “click” revealing thedisaggregated source data.

• Ecological footprint and rate ofchange (ultimate means)

• Aggregate measures of natural,built, human, and social capitalsand rates of change (ultimate andintermediate means, intermediateends)

• Real well-being — measured bysurvey data if necessary — and rateof change (ultimate ends)

• Physical throughput/well-being(throughput efficiency from ultimatemeans to ultimate ends)

• Four kinds of capital/well-being(intermediate means and ends toultimate ends)

• Built capital balances (intermediatemeans)

• Most limiting sources and sinksand rates of change (ultimatemeans)

• Most critical respite/responseareas (throughout the triangle)

• Untouched natural areas and ratesof change (ultimate means)

• Something wacky and human —smiles on faces on the street, hugsper day, clowns per capita (ultimateends)

I present all these lists not as final,considered opinions, but as chal-lenges. What would you choose?

Sample indicators


76

8. Implementing, monitoring,testing, evaluating, andimproving indicators

Indicators don’t guarantee results.But results are impossiblewithout proper indicators. Andproper indicators, in themselves,can produce results.

Designing the instrument panel is justone small step in the journey of sus-tainable development. Getting indica-tors actually measured, reported, in-stitutionalized, evaluated, and im-proved are further steps that requireenormous creativity, tact, and energy.Whole books can be (and have been)written about these steps.49

Then, beyond the indicators, is thechallenge of action, the connection ofindicators to actual instruments ofchange, the creation of political will,the compilation of resources, theevaluation of results, etc., etc.

I can’t presume to launch intothose topics here; the Balaton work-

Where there is no reliable accounting andtherefore no competent knowledge of theeconomic and ecological effects of our lives,we cannot live lives that are economicallyand ecologically responsible.

— Wendell Berry

shop did not get into them; and weneed not apologize for that. It is suf-ficient to take one step at a time. Thedesign of the instrument panel is ob-viously a critical step, without whichthe whole system can never fly. Thereis a good reason why so many policybodies, international agencies,funders, and systems thinkers are fo-cusing upon the design of indicatorsof sustainable development. They allsense that if the indicators aren’t right,then no amount of measuring, re-porting, funding, action, politicalwill, or evaluation will lead towardsustainable development. A systemwithout an accurate information sys-tem, without information clearly re-lated to its real goals, cannot reachthose goals.

Of course, conversely, having theindicators right does not guaranteeimplementation, action, resources, or

49 See, for example, P. Hardi andT. Zdan eds., and “TheCommunity IndicatorsHandbook”, both op. cit.

77

results. But I think the right indica-tors actively help. The presence ofclear, powerful information almostautomatically stimulates problem-solving and action.

If you need one last example of thatdictum, I just heard one on publicradio. An animal shelter in Marylandwas distraught at the fact that it hadto kill 13,000 lost or abandoned ani-mals per month. Pleas for people toadopt animals, stronger pleas to neu-ter pets, produced no visible results.So the shelter took to televising, oncea week, on a local cable TV channel,in unblinking detail, the euthanizationof a dog. The adoption rate immedi-ately tripled. (It was too soon to tellwhat happened to the rate of neu-tering pets.)

Informing people clearly, honestly,and compellingly of the full conse-quences of their actions can changethose actions. It is the absence of suchinformation, especially about conse-quences over the long term and overlong distances, that has led to ourpresent state of unsustainable, ineq-uitable development.

AND there are a few useful lastthings to say about the steps beyondindicator design — about the actualmeasurement, reporting, institution-alizing, evaluating, and improving ofindicators.

Indicator measurement can be acostly, bureaucratic process. Butit can also be relatively simple.There may be clever ways tomeasure indicators that don’teven require numbers ordisturbing the system in any way.

Chicago’s Museum of Science andIndustry knows which are its mostpopular exhibits by the wear and tearon its floor tiles. The tiles around thehatching chicks have to be replacedevery six weeks. In other parts of themuseum the tiles last for years.

A car repair shop, wanting to knowhow to spend its advertising money,learned what the popular radio sta-tions were by asking its mechanicsto jot down the dial setting on theradio of every car that came in forrepairs.

You can tell which journal articles aremost read in a library by the dirtsmudges on the edge of the pages.Turn a bound journal sideways, andyou can find the important articles im-mediately by the dark-edged pages.50

These examples are included simplyto open the discussion beyond theusual vision of computerized databases. Computerized data bases arefine things, without which my ownwork could not be done, but they areexpensive to maintain and more use-ful for research and study than forinforming a society and leading toaction. Long lists of numbers mayunderlie an effective instrumentpanel, but the most immediate indi-cators need to be graphic, sensual,

50 These examples and manymore are contained in E. J. Webb,D. T Campbell, R. D. Schwarz,and L. Sechrest, UnobtrusiveMeasures: Nonreactive Research inthe Social Sciences. Chicago: RandMcNally, 1966.

Implementing, monitoring, testing, evaluating, and improving indicators


78

real, compelling. Perhaps they neednot require a corps of bureaucrats toobtain or maintain. People with train-ing in advertising, public relations,focus groups, graphic art may bemore helpful than people with exper-tise in database management.

The process of finding,implementing, and improvingsustainable development indicatorswill not be done right at first.Nevertheless, it is urgent to begin.

It’s important to remind ourselves ofthe magnitude of our task. We don’tknow what an advanced, sustainable,equitable society looks like. We havenever seen one. We are required toenvision a cultural, technical, socialrevolution, or evolution, as thorough-going as the Agricultural Revolutionor the Industrial Revolution, andthen to invent the instruments andinformation feedbacks that will guideus through this tremendous transfor-mation.

We will not get it right the firsttime.

Even if there were consensus to-morrow on a selection of indicatorsand shared understanding of theirapplication, still there is a high prob-ability that some or all indicators mayturn out to be misleading. Or maybethe monitoring system will not beadequate, or the interpretation of in-dicators will be faulty, or the actorsand decision-makers in the system

will clarify their information needs,and come to new understandings ofhow to implement change. Maybe(almost certainly) we will learn as wego that the whole notion of sustain-able development opens up a largerand more challenging set of oppor-tunities than we had realized.

So it is tempting, given all the ca-veats and challenges in this report and,indeed, in every report on sustainabledevelopment indicators, to be daunted,to postpone the task, to wait for morethinking, more modeling, more agree-ment — to wait for perfection.

While we are waiting for perfec-tion, fisheries are collapsing, greenhousegases are accumulating, species are dis-appearing, soils are eroding, forests areovercut, people are suffering.

So it is important to get somepreliminary indicators out there andinto use, the best we can do at themoment. That way, as long as we arewilling to evaluate and make correc-tions, we can start to learn, which isthe only way we can ever achieve sus-tainable development.

It should not be so difficult tocome up with indicators that are al-ready better than the ones we nowuse. As long as we regard them withhumility, as tentative, subject to cor-rection and improvement, tools forlearning rather than final, expert pro-nouncements, we will be on our way.

We need to learn, but we need to wasteno time with our learning.

donella meadows institute

Documents