Environment to Round off GDP as Measure of Europe’s Success

At a time when Europe struggles to emerge from economic recession, the European Union vows to create indicators for its well-being that go beyond calculating the Gross Domestic Product (GDP). The European Commission said Tuesday that it will propose in 2010 a pilot environmental index that complements GDP as a measure of progress by gauging water use and pollution, greenhouse gas emissions, loss of natural landscapes, air pollution and waste generation.

The EU also plans to implement more timely social indicators, including more accurate reporting on inequality.

“GDP was not intended to be a measure of well-being,” a Commission press release said Tuesday. “It doesn’t pick up on issues that are vitally important to the quality of our lives such as a clean environment, social cohesion or even how happy people are.”

The proposals are part of the Union’s efforts to make the shift towards a low-carbon, resource-efficient economy.

“To meet the challenges of the 21st century we need more integrated and transparent policies,” European Environment Commissioner Stavros Dimas said in the press release. “To change the world we need to change the way that we understand the world, and to do this we need to go beyond GDP.”

The proposed actions, however, will only complement, and not replace, GDP as a yardstick of economic and social development.

Introduced after the Great Depression in the 1930s, GDP measures the total final market value of all goods and services produced within a country during a given period. Although it effectively indicates a country’s economic growth, it has long been criticized by civil society groups for overlooking non-marketed economic activities as indicators of well-being and wealth.

Despite the Commission’s plans to move beyond it, however, some NGOs are still skeptical, EUobserver reported.

“Fifteen years have passed since initial discussions, and we are no closer to implementing measures for environmental sustainability, societal progress and well-being,” said Tony Long, director of the European Policy Office at the World Wildlife Fund (WWF).

He added that the Commission’s plans also exclude other indices, such as WWF’s “Living Planet Index” – which reflects the health of the planet’s ecosystems — and the “Ecological Footprint” — which shows the extent of human demand on these ecosystems.

Read more here, here and here.

Read “GDP and beyond : measuring progress in a changing world.”

Check out Circle of Blue’s coverage of the EU water policy here.

Sources: European Commission, EUobserver