1

Kazi F. Jalal

Faculty, Harvard Extension School

Lecture #1112/04/07

SUSTAINABLE DEVELOPMENT INDICATORS

2

Lecture Outline 1. Introduction

2. Environmental quality indices

-Cost of remediation

-Environmental elasticity

- Environmental diamond

3. Human development index (HDI)

5. Social development indices (SDI)

6. Summary & conclusions

3

4

In my policy-making I need an indicator in money terms for losses in environment and resources, as a counterweight to the indicator for production, namely national income. If a theoretically sound indicator is not possible, then think up one that is rather less theoretically sound.

A Former Indonesian Minister for Population and Environment, 1986

A concerted effort to enhance habitability of our planet is unlikely to succeed unless we know “where we are” and “where we want to go.” To answer these questions, we must first consider exactly what we include in the term “environment.” If we restrict our definition to overly simplified definitions, such as the amount of a specified pollutant in the air, we have very little difficulty in measuring the environment. However, as we broaden our definition to include all the physical components, or all the physical and biological, or all the physical, biological and cultural ones, environment becomes exponentially more difficult to describe.

W.A. Thomas, 1972

5

Environmental quality indicesEnvironmental quality indices

Cost of Remediation Environmental Elasticity Environmental Diamond

7

Cost of Remediation (COR)Cost of Remediation (COR)

8

Definition and ConceptDefinition and Concept

COR is the cost of moving the present state of environment to a more acceptable level based on a set of pre-determined standards

Three steps... Assess existing environmental quality Establish a set of environmental standards or

targets Estimate aggregated costs of achieving

environmental standards or targets

9

Advantages of CORAdvantages of COR

It is in monetary terms and can be an effective counterweight to traditional economic indicators such as GDP

Costs of remediation of different components of the environment can be added, subtracted freely and, thus, it partially avoids the weighting problem

10

Leopold Matrix ImpactsWeight ->

Magnitude(1-5)*

Water

25%

Air

25%

Soil

30%

Ecosystem

20%

Total

100%

Pre-construction

* * 1-5 * * *

Construction

Post-construction

11

TargetsTargets

Air and Water

Pollutants: Five pollutants including COD, suspended solids and heavy metals (water); total suspended particulates (TSP) and sulfur (air)

Targets: 90% reduction in water and air pollutant emissions (1990 levels) in 10 years

12

TargetsTargets

Land: Three Components Soil Erosion Control

– Target: 70% of eroded area will be controlled to achieve 70-95% erosion reduction within 10 years,

Forest cover– Target: 20% of total land cover within 10 years,

Municipal Solid Waste Management – Target: All municipal wastes will be collected and

disposed immediately

13

TargetsTargets

Ecosystem/Biodiversity Conservation

Target: Protected areas as a % of total land area,

Threatened species per 1000 ha Percentage of wetlands threatened Indonesia 10-year plan of building national

parks and conservation areas

14

PRC cost data on air, water and land (soil erosion control and reforestation) pollution control are used and extrapolated to other countries.

WB’s cost estimates on solid waste management in developing countries and IUCN’s cost data for Indonesia on ecosystem management (of parks and conservation areas) are used and extrapolated to other countries.

Cost AssumptionsCost Assumptions

15

Table 1. Table 1. Annualized Cost of Remediation for DMCs ($million in 1990 US$)Annualized Cost of Remediation for DMCs ($million in 1990 US$)

Country Water Air Land Ecosystem COR(total)BAN 13.70 30.34 321.47 52.39 417.89

BHU 0.16 0.35 8.50 24.45 33.45

CAM 0.31 0.70 78.11 30.85 109.97

LAO 0.26 0.58 38.46 33.18 72.48

MON 5.91 13.08 2,773.26 13.39 2,805.64

MYA 3.56 7.87 260.74 65.20 337.36

NEP 0.78 1.74 115.60 48.90 167.02

PAK 53.97 119.49 867.20 36.09 1,076.76

SRI 3.50 7.76 65.12 147.86 224.24

VIE 12.97 28.71 200.75 251.48 493.91

PRC 1,430.13 3,166.07 12,657.97 299.79 17,553.96

IND 418.97 927.53 4,882.97 852.23 7,081.70

INO 100.10 221.61 953.92 296.30 1,571.93

PNG 1.73 3.82 12.94 70.44 88.92

PHI 39.59 87.65 319.67 160.67 607.57

THA 67.00 148.32 557.63 47.73 820.68

FIJ 0.52 1.16 7.48 20.37 29.53

KOR 199.84 442.41 203.24 61.71 907.19

MAL 43.15 95.52 138.78 329.48 606.93

SIN 24.42 54.07 14.65 14.55 107.70

TOTAL 2,420.58 5,358.76 24,478.44 2,857.06 35,114.83

Table 1Table 1

16

Figure 1Figure 1

Figure 2Figure 2

18

Environmental Elasticity (EE)Environmental Elasticity (EE)

19

Definition and ConceptDefinition and Concept

EE is a ratio : aggregate percent change in environment /

aggregate percent change in economy

Principal merits: dynamic; uses data for two points in time to

capture environmental changes w.r.t economic trends

it is a trend indicator as opposed to a state indicator

20

Figure 3Figure 3

(0,1)

II I

Economic Aggregates

(Denominator)

(1,0)

IV

(-1,0)

III

(0,-1)

Positive Environmental change

relative to

Positive Economic change

Negative Environmental change

relative to

Positive Economic change

Negative Environmental change

relative to

Negative Economic change

Environmental Aggregates (Numerator)

Positive Environmental change

relative to

Negative Economic change

Fig. 3: Map of Environmental Elasticity

21

Table 3Table 3 Table 3 Average Annual Change Rates (AACR) of Selected Environmental-Economic Indicators

Country Tot. Com. Eng. Use % Pop w S.D.W. Fertilizer Use/ha Forest Cover Env. Aggregate Total GDP

AACR (1980-93) AACR (1980-91) AACR (1980-93) AACR (1980-90) AACR (1980-early 90) AACR (1980-93)

Viet Nam 2.6% 2.91% 36.21% -1.44% -9.34% 7.10%

Nepal 8.1% 15.90% 23.31% -1.07% -4.15% 5.00%

Bangladesh 7.9% 9.45% 9.75% -2.73% -2.73% 4.20%

Lao PDR 2.6% 2.92% -2.12% -0.90% 0.39% 4.80%

India 6.7% 7.31% 2.13% -0.62% -0.53% 5.20%

Mongolia 2.2% -3.09% 4.35% -0.86% -2.62% 3.80%

Pakistan 6.8% 3.77% 6.98% -2.69% -3.18% 6.00%

P.R. China 5.1% 5.45% 7.75% -0.65% -2.01% 9.60%

Sri Lanka 1.9% 10.16% 0.72% -1.50% 1.51% 4.00%

Myanmar -0.8% 5.45% -2.38% -1.22% 1.85% 0.80%

Indonesia 7.5% 7.51% 7.01% -1.00% -2.00% 5.80%

Philippines 3.5% 7.08% 3.15% -2.91% -0.62% 1.40%

P. New Guinea 2.4% 9.84% 8.32% -0.30% -0.29% 3.10%

Thailand 10.5% 1.25% 20.21% -2.91% -8.09% 8.20%

Korea, Rep. 9.5% 0.25% 2.10% -0.15% -2.87% 9.10%

Singapore 7.7% 0.00% 0.14% 0.00% -1.96% 6.90%

AVERAGE 5.3% 5.38% 7.98% -1.40% -2.31% 5.17%

22

Table 4 Table 4 Table 4. Environmental Elasticity (1980) -early 1990s)

+ Env

+ Env

+ Eco

+ Eco

+ Env

+ Env

+ Eco

+ Eco

+ Env

DiagramRankingValueCountry

Myanmar 2.32 1

Sri Lanka 0.38 2

Lao PDR 0.08 3

P. New Guinea -0.09 4

India -0.10 5

+ Eco

Group Characteristics

A

A

A

B

B

23

+ Env

+ Env

+ Eco

+ Eco

+ Env

+ Env

+ Eco

+ Eco

+ Env

DiagramRankingValueCountry

Singapore -0.28 7

-0.32 8

Indonesia -0.35 9

Philippines -0.44 10

Pakistan -0.53 11

+ Eco

Group Characteristics

B

B

B

B

B

P. R. China -0.21

+ Env

+ Eco B

Korea, Rep.

6

24

+ Env

+ Env

+ Eco

+ Eco

+ Env

+ Env

+ Eco

+ Eco

+ Env

DiagramRankingValueCountry

Bangladesh -0.65 12

-0.69 13

Nepal -0.83 14

Thailand -0.99 15

Viet Nam -1.32 16

+ Eco

Group Characteristics

B

B

B

B

C

Mongolia

25

Environmental Diamond (ED)Environmental Diamond (ED)

Definitions and ConceptsDefinitions and Concepts

A graphic tool based on WB’s Development Diamond (DD)

DD: GDP per capita, life expectancy, gross primary school enrollment, access to safe drinking water

ADB Environmental Diamond (ED) ED: air, water, land, ecosystem

27

100%Access to safedrinkingwater

100%100%

100%

GDP per capita

Life expectancy

Primary schoolenrollment

100%

Ecosystem100%

100%

100%

Air

Water

Land

Global Average Reg’l AverageHypothetical Country Hypothetical Country

Development Diamond Environmental Diamond

28

Table 5Table 5Table 5 Selected Environmental Indicators for Environmental Diamonds

Country Energy Consumption % Pop w Safe Fertilizer Use Forest Cover (%)

kg/c (oil eq), 1993 Drinking water,1991 100g/ha,1993 1990

Viet Nam 77 50% 1347 25.0%

Nepal 22 37% 391 35.5%

Bangladesh 59 78% 1032 5.6%

Lao PDR 39 28% 42 55.7%

India 242 75% 420 15.7%

Mongolia 1089 66% 108 8.9%

Pakistan 209 50% 1015 2.4%

P.R. China 623 71% 3005 13.0%

Sri Lanka 110 60% 964 25.8%

Myanmar 39 33% 69 42.7%

Indonesia 321 42% 1147 57.5%

Philippines 328 81% 540 26.0%

Papua New Guinea 238 33% 308 77.8%

Thailand 678 72% 544 24.8%

Korea, Rep. 2863 78% 4656 65.7%

Singapore 5563 100% 5600 0.0%

AVERAGE 441 69% 1217 21%

29

Table 6:Table 6:Table 6: Scores for Constructing Environmental Diamonds

Country Air Water Land Ecosystem

(Energy Use/c) (% Pop w/o S.D.W) (Fertilizer Use/ha) (% Land w/o Forest)

Viet Nam 17% 159% 111% 95%

Nepal 5% 200% 32% 82%

Bangladesh 13% 70% 85% 120%

Lao PDR 9% 229% 3% 56%

India 54% 79% 35% 107%

Mongolia 245% 108% 9% 115%

Pakistan 47% 159% 83% 124%

P.R. China 140% 92% 247% 110%

Sri Lanka 25% 127% 79% 94%

Myanmar 9% 213% 6% 73%

Indonesia 72% 184% 94% 54%

Philippines 74% 60% 44% 94%

Papua New Guinea 54% 213% 25% 28%

Thailand 153% 89% 45% 95%

Korea, Rep. 645% 70% 383% 43%

Singapore 1253% 0% 460% 127%

AVERAGE 100% 100% 100% 100%

Figure 4Figure 4Figure 4. Environmental Diamonds

0%

50%

100%

150%

200%

250%Air

Water

Land

Ecosystem

Viet Nam

AVERAGE

0%

50%

100%

150%

200%

250%Air

Water

Land

Ecosystem

Bangladesh

AVERAGE

0%

50%

100%

150%

200%

250%Air

Water

Land

Ecosystem

India

AVERAGE

Figure 4Figure 4Figure 4. Environmental Diamonds

0%

50%

100%

150%

200%

250%Air

Water

Land

Ecosystem

Sri Lanka

AVERAGE

0%

50%

100%

150%

200%

250%Air

Water

Land

Ecosystem

Indonesia

AVERAGE

32

Table 7Table 7Table 7 Country Rankings Based on RMS Values

Rank Country RMS Total (eq. wt) (%) Group Characteristics

1 Philippines 70 A

2 India 74 A

3 Bangladesh 81 A

4 Sri Lanka 89 A

5 Thailand 103 B

6 Viet Nam 108 B

7 Nepal 109 B

8 Papua New Guinea 111 B

9 Pakistan 111 B

10 Myanmar 113 B

11 Indonesia 113 B

12 Lao PDR 118 B

13 Mongolia 146 B

14 PRC 159 B

First is the best. A = less than average; B = more than average.

33

II: SOCIAL DEVELOPMENT INDICATORS

a) Human Development Index

b) Social Development Elasticity

34

a) Human Development Index(HDI) Summary measure of three basic dimensions of

human development: a. a long & healthy life as measured by life

expectancy at birth b. Knowledge as measured by adult literacy

rate(2/3) and combined primary,secondary & tertiary gross enrollment ratio(1/3)

c. a reasonable standard of living (gdp/capita in pppUS$)

Measuring HDI a.Fix goalposts for max and min value for each b.Calculate three indices (life expectancy,

education and GDP) and add them.

35

Goalposts for calculating HDI**UNDP(2005): Human Development Report

Indicator Maxm. value Minm. Value

Life expectancy at birth

85 25

Adult literacy rate (%) 100 0

Combined gross enrollment ratio(%)

100 0

GDP per capita (PPP US$)

40,000 100

36

HDI Calculation______________

HDI= D1+D2+D3Where: D1=longevity index; D2= Knowledge index and

D3= standard of living index. Individual indices are calculated as:

D= (actual value-min. value) /( max value-min.value)

37

Calculating HDI1.Calculating life expectancy index (D1) D1 =(actual value-min. value)/(max. value-min

value); 2.Calculating knowledge index (D2)D2= 2/3 adult literacy index+ 1/3 gross

enrollment index3. Calculating GDP index (D3)D3 = (log actual value –log min. value)/ (log

max. value – log. Min. value)4. HDI = 1/3 (D1+D2+D3) (HDI values >0.8 represents “high”; >0.5<0.8 represents “medium”

and <0.5 represents “low” Human Development)

38

b) Social Development Elasticity (SDE)

SDE is a ratio : percent change in ratios of income distribution /

aggregate percent change in economy

Principal merits: dynamic; uses data for two points in time to

capture socio-economic changes w.r.t economic trends

it is a trend indicator as opposed to a state indicator

39

40

41

Social Development Elasticity

Cntry Year Q1 Q2 Q3 Q4 Q5 GDP %C GDP

Q5/

Q1

%C Q5/Q1

Q4/Q2

%C Q4/Q2

SE1 SE2

PRC 1989 6.46% 11.58% 15.87% 24.06% 42.03% 15128.07

6.51-10.15

2.08-2.93 1.26 0.36

1990 7.01% 11.89% 16.14% 23.98% 40.98% 163414.99

5.85-4.22

2.0235.92 0.28 -2.40

1991 6.44% 11.40% 14.85% 31.25% 36.06% 187921.71

5.6023.56

2.74-11.97 -1.09 0.55

1992 6.02% 10.70% 15.81% 25.82% 41.65% 2287 6.92 2.41

IND 1989 9.10% 12.90% 16.60% 21.70% 39.70% 494413.03

4.36-1.51

1.68-1.07 0.12 0.08

1990 9.10% 13.10% 16.90% 21.80% 39.10% 558814.82

4.308.35

1.66-0.49 -0.56 0.03

1991 9.00% 12.50% 15.90% 20.70% 41.90% 641612.87

4.660.32

1.663.38 -0.02 -0.26

1992 8.80% 12.50% 16.20% 21.40% 41.10% 7242 4.67 1.71

Social Development Elasticity Social Elasticity 1 for PRC and India

1989-1992

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

T1 T2 T3

Time FrameT1=1989-1990 T2=1990-1991 T3= 1991-1992

So

cia

l Ela

sti

cit

y V

alu

es Social Elasticity 1

for PRC

Social Elasticity 1for India

89 90 91 92

+VE Income Distribution

-VE Income Distribution

42

Social Elasticity 2 for PRC and India1989-1992

-3.00

-2.50

-2.00

-1.50

-1.00

-0.50

0.00

0.50

1.00

T1 T2 T3

Time FrameT1=1989-1990 T2=1990-1991 T3= 1991-1992

So

cia

l Ela

sti

cit

y V

alu

es

Social Elasticity 2for PRC

Social Elasticity 2for India

Social Development Elasticity

89 90 91 92

+VE Income Distribution

-VE Income Distribution

43

Income Distribution

Lorenz Curve for India1989-1992

0%

20%

40%

60%

80%

100%

1 2 3 4 5 6

Quintile

Inco

me

Dis

trib

utio

n as

%

of N

atio

nal I

ncom

e

Ideal Line 1989 Data 1992 Data

44

Income Distribution

Lorenz Curve for PRC1989-1992

0%

20%

40%

60%

80%

100%

1 2 3 4 5 6

Quintile

Inco

me

Dis

trib

utio

n as

%

of N

atio

nal I

ncom

e

Ideal Line 1989 Data 1992 Data

45

46

Summary & Conclusions

Indicators of SD are many; Like an automobile dashboard each indicator serves a different purpose

Human Development Index (HDI: determines human well-being by measuring their level of income, education and longevity

Cost of remediation (COR): indicate the amount of wealth a society has to forgo to realize environmental goals; COR as % of GDP growth indicates need for resource allocation

Environmental Elasticity (EE): expresses dynamic relationship between GDP growth and environmental degradation (environmental efficiency of economic growth)

Environmental Diamond: reveals the state of environment at a given point of time (static concept)

Social Development Elasticity (SDE): expresses dynamic relationship between gdp growth and the income gap between the rich and the poor (socio-economic efficiency of GDP growth)

To repair environmental damage already inflicted in the region, Asia needs $35b/year for 10 years; Of this, the cost of repair of land degradation (i/c solid wastes disposal) comprises 70%, air pollution control 15%, ecosystem restoration 8% and water pollution control 7%.