Developing Sustainability Indicators for Wales: Index of Sustainable Economic Welfare for Wales
Lead Researchers: Dr Max Munday and Dr Annette Roberts
Background
In November 2000, the Welsh Assembly Government (WAG), committed, under the Government of Wales Act (1998) to promote sustainable development. The duty has brought a number of new challenges, not least the explicit need to test new and existing policies and spending against the broad principles of sustainability. Equally important are principles of monitoring and evaluation of progress under this legal duty using, what are at present, an underdeveloped suite of complementary approaches to assessing regional economic progress.
One problem that has come to the fore is that overarching Development of alternative economic indicators of sustainability in Wales, and construction and refinement of an index of sustainable economic welfare in Wales. Project built on initial pilot work by Aberystywth University, and a scoping study already undertaken for the Countryside Council for Wales. Focus of investigation is to develop components to construct an index for the period 1990-2000.
Targets for the regional economy continue to be set in terms of conventional economic aggregates, but with difficulty in linking these explicitly to sustainable development objectives and indicators. The regional government in an attempt to counter and monitor these problems has published its own set of sustainability indicators for Wales, based largely on those developed at the UK level. The headline sustainability indices comprise indicators of employment activity, educational attainment, crime rates, housing (unfit dwellings), climate change (greenhouse gas emissions), air and water quality, wildlife population, waste recycled, Welsh language, electricity production from renewables, and ecological footprint values. Whilst these monitoring indicators are useful, one problem is that they are in mixed units of account, and then fail to deliver any overall picture of sustainability and welfare trends.
A number of aggregate complementary approaches are already being explored or are in development in Wales for monitoring and measuring progress towards sustainability. These encompass environmental, economic, and socio-economic measures. Researchers in BRASS are assisting the development of alternatives which include the ecological footprint, and the index of sustainable economic welfare (ISEW).
The ISEW is an indicator of long run economic welfare. In constructing an ISEW the objective is to adjust elements of the accepted regional accounting framework for a series of determinants of welfare including income inequality, and activities adding to/taking away from welfare but outside market processes, environmental damage, and the use of environmental assets.
The index has as its base personal consumption spending. Adjustments are then made to consumption to arrive at the index value for a given year.
ISEW = Cadj + P + G + W - D - E - N
Where:
Cadj = consumer spending adjusted for income inequality
D = defensive private expenditures
P = non-defensive public expenditures
E = costs of environmental degradation
G = growth in capital and net change in international position
N = depreciation of environmental capital base
W = non-monetarised contributions to welfare
