Abstract
Throughout this paper, a set of indices for the measurement of the sustainability of national and regional economic systems is developed. The basic concept for the development of the indices sees economic sustainability co-determined by the natural and social environment of economic activity as well as by the operational principles of economic systems which are found in actions of payment.
Accordingly, indices of economic sustainability for the interfaces between economic systems and their social (Consumption Surplus) and natural environment (Ecological Sustainability) as well as for the exchange of money between economic subsystems (Solvency) are developed. Together with auxiliary indices, a set of indices for the measurement of the sustainability of national and regional economic systems is developed.
The calculation of the indices is based on an extended version of Supply and Use Tables Including Environmental Accounts. The extended SUTEA contains accounts for the ecological valuation of flows of resources and residuals as well as a novel classification of economic activity (survivability, production and consumption surplus).
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
For a concise overview see Perman et al. 1999, p. 57.
An understanding of economic activity built on payments as basic systemic operations can treat everything that usually serves as basic concept of economics (e.g. production, exchange, distribution, capital, labour) as derived elements. Luhmann 1988, p. 54 (translation by the author).
Within this system [the economic system, the author] payments enable payments. Thereby, an, in principle unlimited, future is inherent to the system. All systemic dispositions assure at the same time the future of the system. Beyond all aims, beyond all profits and all satisfactions, the system goes on. The system cannot stop its own operations because the meaning of money lies in spending money. The guarantee of the possibility to spend money (under conditions that make the acceptance of money appear worthwhile) gives an abstract security for the future that cannot be given in the form of goods. The appreciation of property, capital, jobs and the right to the supply [of goods and services, the author] are subordinated to this aim. Luhmann 1988, p. 65 (translation by the author).
For conceptual and measurement details see Gassner (2002).
The SPI, though originally developed for the evaluation of industrial processes, is applied to a wide variety of human activities, such as single productive, consumptive processes, value chains in LCAs or regional and national economic systems.
Consumption and investment can represent goods and services available to society once survivability requirements are met. Both (parts of) consumption and (parts of) investment are results of economic activity made available to society. It follows that the consumption surplus must comprise consumption goods as well as investment goods that are made available to the social environment of economic systems and that are not for survivability purposes.
For additional extensions and calculation instructions we refer the reader to Gassner (2002, p. 73).
References
Cobb CW, Cobb JB (1994) The green national product. A proposed index of sustainable economic welfare. University Press of America, Md.
Gassner J (2002) The sustainable economy indices—measuring the sustainability of national and subnational economic systems. Technische Universität Graz, Graz
Gassner J, Narodoslawsky M (2003) The sustainable economy indices—basic theoretical elements for the measurement of national and regional economic sustainability. Environ Plann A, submitted for publication
Hartwick JM (1977) Intergenerational equity and the investing of rents from exhaustible resources. Am Econ Rev 67:972–974
Hartwick JM (1978) Substitution among exhaustible resources and intergenerational equity. Rev Econ Stud 45:347–354
Holman JA (2001) Is the large U.S. current account deficit sustainable? Econ Rev Fed Reserve Bank Kansas City, First Quarter, pp 5–23
Krotscheck C (1995) Prozessbewertung in der Nachhaltigen Wirtschaft. Technische Universität Graz, Graz
London Group on Environmental Accounting (2001) System of environmental economic accounting 2000, Vorburg Draft, www4.statcan.ca/citygrp/London/publicrev/pubrev.htm
Luhmann N (1988) Die Wirtschaft der Gesellschaft. Suhrkamp, Frankfurt
Mann CL (1999) Is the U.S. trade deficit sustainable? Institute for International Economics, Washington, D.C.
Ott K (2001) Eine Theorie "Starker" Nachhaltigkeit. Natur Kultur, Jahrgang 2/1, 55–75
Pearce DW, Maradya A, Barbier EB (1989) Blueprint for a green economy. Earthscan, London
Perman RYM, McGilvray J, Common M (1999) Natural resource and environmental economics, 2nd edn. Longman, Essex
Solow RM (1974a) The economics of resources or the resources of economics. Am Econ Rev 64:1–14
Solow RM (1974b) Intergenerational equity and exhaustible resources. Rev Econ Stud Symp, pp 29–45
Solow RM (1986) On the intergenerational allocation of natural resources. Scand J Econ 88:141–149
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Gassner, J. Defining and measuring macroeconomic sustainability—the sustainable economy indices. Clean Techn Environ Policy 5, 265–272 (2003). https://doi.org/10.1007/s10098-003-0206-y
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10098-003-0206-y