The new set of 17 Sustainable Development Goals is a bold new step by countries to correct the short-sightedness of many of our existing policy discourses, including the gaps we did not address through the Millennium Development Goals. They aim to address not only the aspirations of today’s generations, but also the hopes and dreams of future ones. They are not just focused on a single dimension of well-being but cut across both its subjective and objective constituents. Focusing on the ends is definitely a step in the right direction. Countries will need resources to achieve these laudable goals. To realize the education goal, for example, countries will need to invest in training teachers, building schools, and information technology, among other things.
Similarly, in halting biodiversity loss, investments need to be made to conserve and/or restore forests, for example, and to protect endangered species. However, our present economic systems are so structured that only investments in tangible assets—such as roads, schools, bridges and other infrastructure—are considered in decision-making. Investments in people are rarely considered in countries’ economic strategies, and even less so are investments in such natural systems as forests, fisheries and ecosystems.
These are instead treated to a large extent as expenditures in the national accounting system. It will not be sufficient, therefore, for the international community merely to approve these goals and adopt them as guidelines unless they also build strong implementation frameworks rooted in the logic of national economic growth. If the SDGs are to succeed, they cannot merely complement national policies: they must become integral to economic policymaking.
The question is, are the proposed SDGs doomed to fail from the very start? Countries use Gross Domestic Product (GDP) as the quintessential indicator to evaluate whether they are progressing. GDP is the market value of all final goods and services produced in a country, and captures the flow of income it can produce from the assets it possesses. This is not to say that maximizing GDP is a bad goal. But it is equally—or more—important to ensure that this flow of income is sustainable. And that involves making sure that the basket of assets that a country owns increases, rather than decreases, over time.
None of our international targets on growth, poverty, employment, human settlements, oceans, inclusive institutions, etc. will succeed unless we can strengthen and safeguard the resource base which sustains them.
This necessitates a fundamental restructuring of our national accounting systems. What is required is the development of an indicator that supplements GDP by providing a new world view of sustainable development based on the logic of long-term sustainability. One such framework is the Inclusive Wealth Index, developed in 2012, which measures the inclusive wealth of nations by assessing the social value of a country’s productive base, including its previously overlooked natural and human capital.
The most recent Inclusive Wealth Report—a collaborative effort from the United Nations University and the United Nations Environment Programme, released in New Delhi in December 2014—assessed the changes in inclusive wealth in 140 countries between 1990 and 2010. It was sobering to find that only 61 per cent of them showed positive growth rates for inclusive wealth per capita (see map).
The report also revealed that the system of national accounts used by most countries tracks only approximately 18 per cent of a country’s assets: the remaining 82 per cent of inclusive wealth—of which human and natural capital account for 54 per cent and 28 per cent, respectively—is ignored or only partially covered. Unsurprisingly, the state of natural capital is a cause of concern: it increased in only 24 countries, and made the largest contribution to changes in wealth in only 12. The potential for investment in natural capital is large and is worth exploring when countries design implementation strategies for the SDGs and economic development simultaneously.
The good news is that countries have already begun to acknowledge the utility of broadening their system of national accounts to include inclusive wealth accounts. The Indian Government, for example, has established a high-level panel to explore the challenges and opportunities to develop inclusive wealth accounts. Operating under the auspices of the National Statistics Authority and the intellectual leadership of Sir Partha Dasgupta of Cambridge University, the panel identified measures that can be implemented in the short-, medium- and long-term to facilitate a transition from the present system of national accounts to one of inclusive wealth accounts.
Countries with large natural resources would do well to create such accounts in order to allow them to monitor and track how well the resources are managed and used and, more importantly, the sustainable basis of their social, economic and environmental policies.
The Inclusive Wealth Index also has the potential of providing a broader picture of inequality. At the moment, most inequality indicators—such as the Gini coefficient—only monitor it in terms of income or material wealth. The Inclusive Wealth Index, on the other hand, includes access, ownership and the use of human and natural capital across various sectors of society. The planned theme for the 2016 report is inequality and sustainability.
Looking to the future, how we measure the progress of our new development agenda over the next two decades will be fundamental in ensuring the success and sustainability of the SDGs. Unless we begin to supplement mainstream indices, such as GDP, we will not be able effectively to measure and improve the well-being of individuals and societies around the world.
The critical mass around the SDGs, and the transformative shifts envisioned for the post-2015 world, makes this an opportune time to ask these questions. Unless we make fundamental changes, we may not be able to do much more in the next 15 years than we have achieved in the last 15. Business as usual within the present economic systems is not an option if we are serious about achieving the Sustainable Development Goals. ▲