Embedding sustainable development as the ‘central organising principle’

Summary............................................................................................................................................2

1. There must be clarity about what is valued and the objective of sustainable development............................................................................................................2

2. Application of the principle must inform distinctive present day choices in policy and investment........................................................................................................3

3. Through its leadership the government can secure a sufficiently broad and deep mandate for its approach to sustainable development............................................4

1. There must be clarity about what is valued and the objective of sustainable development............................................................................................................................5

1.1 Wellbeing – the heart of the central organising principle.........................................5

1.2 Understanding well-being........................................................................................5

1.3 Is the wellbeing concept useful?..............................................................................7

1.4 Wellbeing over the life-course.................................................................................8

1.5 Equality and social justice dimension......................................................................9

1.6 Environmental wellbeing........................................................................................10

1.7 WAG approach to public health.............................................................................12

1.8 Wellbeing and the economy..................................................................................12

1.9 Should we replace GDP?......................................................................................13

1.10 GDP and Beyond...................................................................................................14

2. Making hard choices in policy and investment.................................................................16

2.1 Hard choices 1: Trade-offs between long-term and short-term outcomes.............16

2.2 Hard choices 2: Silo breaking and system thinking...............................................16

2.3 Hard choices 3: Using evidence............................................................................17

2.4 Hard choices 4: investment in resilience and future proofing................................19

2.5 Would a wellbeing approach change how we look at policy?................................19

3. It must be possible to secure a sufficiently broad and deep mandate for our approach to sustainable development.................................................................................................22

3.1 Some approaches to securing a mandate.............................................................22

3.2 Public acceptability changes over time..................................................................22

3.3 The behaviour change agenda..............................................................................23

4. Conclusion – sustainable development can be a central organising principle..............25

Annex 1: Difficulty in defining sustainable development – a snapshot...................................26

Annex 2. Measuring social and economic progress.........................................................................27

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Embedding sustainable development as the ‘central organising principle’

Summary

This paper discusses how the Welsh Assembly Government should embed sustainable development as its central organising principle. The Government of Wales Act (2006) establishes the current legal basis for the Assembly Government’s approach to sustainable development in Wales. Section 79 requires ministers to publish a scheme setting out how they propose, in the exercise of their functions, to promote sustainable development. The most recent scheme, One Wales, One Planet, was published by the Cabinet in May 20091. This establishes Welsh ministers’ commitment to the centrality of sustainable development in Wales2:

Sustainable development will be the central organising principle of the Welsh Assembly Government

Having established that sustainable development should be the central organising principle for a government, the question remains: “what does this actually mean in practice?”. We suggest three conditions must be met for the concept to be useful for a government. These are summarised in the sections below and elaborated in the rest of this paper.

1. There must be clarity about what is valued and the objective of sustainable development

A clear definition and overall aim must be agreed for use in Wales and command broad support – and it must be clear what is that we value and are trying to produce through sustainable development. To qualify as a ‘central organising principle’ for a government or country, the concept must be very widely applicable and make sense when applied an agenda that spans health, the economy, education, environment, planning etc. Drawing on the definitions used in One Wales, One Planet, we propose that the outcome from sustainable development should be ‘maximisation of wellbeing of Welsh citizens over the long term’ as an overall goal – a ‘super-outcome’ to which all other outcome objectives contribute. There are several important feature of this:

It is not exclusively or primarily a ‘green’ idea – it is a broad concept and covers all the components of well-being – health, material wellbeing, employment and self actualisation, community and social relations, etc

It is has a strong environmental basis, recognising that eco-systems provide valuable services that underpin the wellbeing of people – ranging from food and clean water to their value for amenity and aesthetics.

1 Welsh Assembly Government, One Wales: One Planet, a new Sustainable Development Scheme for Wales, 22 May 2009.[link]2 The SD scheme establishes sustainable development as the central organizing principle for the Assembly Government, but also

extends the approach to the wider public sector: “we will encourage and enable others in the wider public sector in Wales, to embrace sustainable development as the central organising principle”.

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It implies a shift of emphasis from measuring value through economic activity alone to a wider concept of ‘value’. Value is defined here as those things that contribute to wellbeing – much of which would be non-marketed or personally created.

It stresses long-termism – focussing on the full life course of an individual and the wellbeing of people in the future. It makes us consider natural, human, social, economic capital as stocks to manage and endowments to hand on, and avoiding the transfer of harms to the future.

We care about the distribution of wellbeing and fairness, placing greater weight on people with poor wellbeing and tackling misery. The objective could also be expressed as ‘harm minimisation’. The stronger role for government is in tackling misery.

The focus on ‘Welsh citizens’ is not parochial, but recognises interconnectedness, and that people in Wales are not indifferent to the rest of the world.

There is a good and growing evidence base about wellbeing drivers

These ideas are explored in greater depth in section 1.

1. Application of the principle must inform distinctive present day choices in policy and investment

The way the concept is applied must inform policy decisions and resource allocations in the present. If it does not present hard-edged, distinctive choices, it has limited practical value and becomes little more than a vague aspirational statement about the future. We argue that pursuit of wellbeing does surface hard trade-offs, and that these are different to the trade-offs of more conventional policy-making. For example

It will favour investments that yield higher benefits over the longer term at the expense of shorter term measures with lower gains. Sustainable development should lower implicit societal and political discount rates.

It can mean breaking down silos, better integration and system redesign to allow resources to flow to the most effective approaches, to exploit synergies and account for externalities.

It will rely on rigorous application of evidence – especially cost-effectiveness evidence, to ensure that we achieve as much as possible with the available resources

It may involve greater emphasis on resilience, future proofing, and system thinking – and increase investment at the expense of consumption

Generally we might expect this to mean:

Greater focus on prevention / early intervention: with manifestations in health, criminal justice, environment & energy, family policy, education etc.

More attention to dealing early and effectively with failure – as this has long terms costs and consequences. For example, do we focus enough on children who

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are failing at school, recognising that the school doesn’t bear the full life-course consequences? Do we allow too many to end up in prison?

More integration across silos – for example, so that we have the right links between NHS and social care to avoid bed-blocking, better handling of transition (eg. when someone comes out of prison), use of ‘upstream’ changes to farming practices rather than downstream water treatment for water quality.

Greater focus on mental health and recognition of drivers of wellbeing in, say, planning where greater weight could be given to securing housing supply

Note: this approach can be viewed as an assertive efficiency agenda. We can see sustainable development as achieving the outcomes that are most highly valued (wellbeing maximised and fairly distributed over the longer term), through the most efficient use of resources (cost effectiveness), irrespective of institutional barriers (silo-busting).

These ideas are explored in greater depth in section 2.

2. Through its leadership the government can secure a sufficiently broad and deep mandate for its approach to sustainable development

An active and committed government will lead and persuade its citizens through hard choices and sound trade-offs. However, in any democracy, the public has a veto at elections and can reject a government – and ministers should not be expected to do things that will lose elections. Further challenges may come from those involved in delivering changes: professions, service providers, regulators, public servants, or those that believe they will lose out can all potentially defect from sustainable development. However, the government is not a powerless hostage to public opinion, and by the way it governs it can lead. A government seeking to secure a mandate for sustainable development would:

Build trust and confidence – for example through external scrutiny, independent advice, piloting and experimentation, openness and searching evaluation.

Act consistently and comprehensively. People worry about investing in the long-term if they feel there will be free-riders or that the ‘rules’ will change later.

Create compelling narratives – that explain what we are doing and how we change Wales for the better over the longer term.

Seek to make larger changes over a longer period – ‘slow, big wins’. Governments overestimate what they can achieve in the short term and underestimate what they can achieve in the long term”.

Promote behaviour change and culture change– use techniques from behavioural science and economics to change attitudes, motivation and behaviour

Robust political leadership will determine the maximum rate at which change will be accepted by the public and stakeholders. However, there may be limits to the changes that any government can make before being overwhelmed by opposition and unintended consequences and this establishes a political constraint on SD.

These ideas are explored in greater depth in section 3.

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1. There must be clarity about what is valued and the objective of sustainable development

The term ‘sustainable development’ has become widely used and misused – a brief note on the definitional problems is at Annex 1. However, if it is to be a central organising principle for the Assembly Government, it must have a clear meaning as it applied in Wales.

1.1 Wellbeing – the heart of the central organising principleThe Government of Wales Act provides powers to Welsh ministers to promote and enhance economic, social and environmental well-being3. One Wales, One Planet provides the following definition, built on the legal foundations of the Act.

In Wales, sustainable development means enhancing the economic, social and environmental wellbeing of people and communities, achieving a better quality of life for our own and future generations

Note the strong citizen focus in this definition. In Wales, sustainable development is defined in terms of the enhancement of the well-being of people and communities, and quality of life. There is broad stated public support for this approach: a 2005 poll4, 89% of those surveyed in Wales agreed with the statement:

A government’s prime objective should be achieving the greatest happiness of the people, not the greatest wealth.

The other important feature of this definition is long-termism – reflecting the pursuit of wellbeing for future generations, locking in a commitment to maintain ‘endowments’ or natural, social, human and economic capital that will affect wellbeing in the future.

It is important to recognise that sustainable development is not only or primarily an environmental concept – it is not ‘greening up’ of government activity, but a broader and deeper concept.

1.2 Understanding well-beingThere is a growing literature on well-being and a compelling evidence base on what determines well-being is accumulating, with some good overview surveys5 6 7. In 2009, President Sarkozy of France commissioned a panel of eminent economists, including two Nobel laureates, to examine how better to measure economic performance and social progress8. The authors focus on well-being and sustainability as the overall objective:

3 GOWA (2006) establishes a number of functions for ministers, including several of a general nature such as implementing EU legislation or transfer of ministerial powers. The two specific functions relate to promotion of wellbeing (s.60) and support of culture (s.61). [link]

4 NOP for the BBC The Happiness Formula. October 2005. [link]. The detailed poll is accessible from this news story. The relevant statistic is drawn from page 97.

5 Young Foundation, The State of Happiness, 2010 [link]. 6 Social Market Foundation, Wellbeing: how to live the good life and what the government should do to help. [link] 7 Layard R, Happiness: lessons from a new science. Penguin, February 2005. A technical annex to the book has been made available

on line [link] 8 Stiglitz, Sen, Fitoussi , Report by the Commission on the Measurement of Economic Performance and Social Progress, October

2009 (for President Sarkozy of France) [http://www.stiglitz-sen-fitoussi.fr]

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“the unifying theme of the report, is that the time is ripe for our measurement system to shift emphasis from measuring economic production to measuring people’s well-being. And measures of well-being should be put in a context of sustainability.”

The chart below draws on the panel’s description of the dimensions of wellbeing.

Dimensions of Wellbeing

Material living standards

Physical health

Mental health

Knowledge, beliefs & capabilities

Fulfilling work & leisure

Political voice and engagement

Social connections

Local environment & place

Environmental systems

Security & resilience

Adapted and enhanced from: Stiglitz, Sen, Fitoussi , Report by the Commission on the Measurement of Economic Performance and Social Progress, October 2009 (for President Sarkozy of France)

The authors draw an important distinction between wellbeing now, and the means to maintain wellbeing in the future:

Sustainability poses the challenge of determining if at least the current level of wellbeing can be maintained for future generations

Current well-being has to do with both economic resources, such as income, and with non-economic aspects of peoples’ life (what they do and what they can do, how they feel, and the natural environment they live in). Whether these levels of well-being can be sustained over time depends on whether stocks of capital that matter for our lives (natural, physical, human, social) are passed on to future generations.

The main recommendations of the Commission on the Measurement of Economic Performance and Social Progress are summarised at Annex 2.

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1.3 Is the wellbeing concept useful? Though a relatively new field in social, psychological and economic research, there is now a considerable body of evidence and data that illuminate what does and does not contribute to wellbeing, and what governments may do to influence it. Information resources are expanding rapidly: the World Database of Happiness9 contains over 6,000 studies of measures of wellbeing, trends and correlations. A couple of illustrative examples are shown below:

Child wellbeing and income inequality Commuting and life satisfaction

Source: Pickett, K. E et al BMJ10 Source: Alois Stutzer and Bruno Frey11

The purpose of this paper is not to summarise this extensive literature, but to show that the concept has the potential to draw conclusions that inform policy and investment. For example, Deutsche Bank has examined economic drivers of wellbeing in OECD countries and drawn some conclusions:

Correlation example – tertiary education and happiness

Summary of research findings

Indicators for a happy society result of a cluster analysis of 22 countries1. High degree of trust in fellow citizens2. Low amount of corruption3. Low unemployment4. High level of education5. High income6. High employment rate of older people7. Small shadow economy8. Extensive economic freedom9. Low employment protection10. High birth rate

Source: Deutsche Bank Research, The broad basis of societal progress. 200812

Source: Deutsche Bank Research, The happy variety of capitalism. 200713

9 Erasmus University, Rotterdam. World Database of Happiness [link]10 Pickett, K. E et al. Child wellbeing and income inequality in rich societies: ecological cross sectional study BMJ 2007;335:108011 Stutzer A, Frey B, Stress That Doesn’t Pay: The Commuting Paradox Scandinavian Journal of Economics, vol. 110(2), pages 339-

366, [link]12 Stefan Bergheim, The Broad basis of societal progress: freedom, trust, tolerance, education and much more. Deutsche Bank

Research, 2008. [link] 13 Stefan Bergheim, The happy variety of capitalism, Deutsche Bank Research, 2007. [link]

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Another example compares the relative impact of different life events on wellbeing, relative to a change in income.

Relative impacts on wellbeing compared to a one-third loss of income

Source: Richard Layard, 200314. The table compares impacts on wellbeing arising from various life events with a one-third fall in income, set to a base of 1.

The findings in the wellbeing literature are often contested and subject differing interpretations. However, this is no different to most of the economic and social research we rely on to guide more conventional policy, and it does not preclude policymakers making assessments and judgments about what the research suggests we should do.

1.4 Wellbeing over the life-courseAs well as the wellbeing of future generations, it is also worth looking at the drivers of wellbeing over the life-course of an individual – often with the realisation that early interventions can pay large wellbeing dividends later in life. A major study by the Foresight Programme, Mental Capital and Wellbeing15, examined many drivers of well-being over the life-course. One of its ‘system maps’ is shown below.

14 Layard, R. What would make a happier society? Lionel Robbins Memorial Lectures delivered at LSE 5th March 2003 [link ]15 UK Department of Business Innovation and Skills, Foresight Programme, Mental Capital and Wellbeing, [link]

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Source: Foresight Programme: Mental capital and well-being – system maps, 2009

1.5 Equality and social justice dimensionThe definition above is elaborated to reflect social justice and equality objectives. We are clear that the distribution of well-being is important. The definition is qualified as follows:

In ways which promote social justice and equality of opportunity;

This means that we should give greater weight to improvements in the well-being of those with the lowest levels of well-being – the wellbeing formulation may be inverted to make the harm reduction and minimisation priority. Social justice might be defined in terms of the distribution of well-being between citizens. This concept that has a parallel in conventional economics – “equity weighting” is used in the relationship between income and welfare (a pound for a poor person is worth more than for a rich person)16. This idea is integral to pursuit of wellbeing because the research literature shows that many of the determinants of wellbeing are relative: a person’s wellbeing is determined with reference to others. More fundamentally, it has been argued recently (in ‘The Spirit Level’) that overall societal wellbeing outcomes are inversely related to inequality17:

“…the effects of inequality are not confined just to the least well off: instead they affect the vast majority of the population”.

16 A £1 increase in the income/consumption of a poor person has more value (‘utility’ U) than the same increase in the income of a rich person. HM Treasury uses an evidence-based approximation that utility doubles for each halving of consumption (C). In other words an extra £1 of consumption by someone earning £10,000 a year will be worth twice as much as to someone earning £20,000. The function is U=log(C). See HM Treasury Green Book, Annex 5 [link]

17 Wilkinson R, Pickett K, The Spirit Level, Allen Lane, 2009. [slideset]

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In some ways, this view implies that the redistributive trade-off in addressing inequality may not be as hard as they appear as everyone benefits. However, this analysis has been subject to serious challenge18.

1.6 Environmental wellbeingThe One Wales, One Planet definition also recognises that over the longer term, the natural and cultural environments are critical determinants of well-being. The definition is further qualified as follows:

In ways which enhance the natural and cultural environment and respect its limits using only our fair share of the earth’s resources and sustaining our cultural legacy.

Ecosystems services and wellbeing. Some commentators argue that an exclusive focus on well-being will undervalue the environmental dimension of sustainable development. In fact, ecosystems are integral to human wellbeing. The relationship between well-being and the environment is through ‘eco-systems services’ – valuable non-market outputs like water quality, landscape, soil productivity etc. that enhance wellbeing. This approach is expressed in the Millennium Ecosystems Assessment19 in the chart below.

When looking at major environmental systems, like the climate, oceans, forests, our concern is still ultimately about people. We are concerned about the stability of the climate because of what instability does to human welfare and things that matter to us, including wildlife. This ‘anthropocentric’ view recognises that nature itself is value-free and has been through large and violent changes in climate in history.

18 Policy Exchange, Beware False Prophets: Equality, the Good Society and The Spirit Level, July 2010. [link]19 Millennium Ecosystem Assessment, 2005. Ecosystems and Human Well-being: Synthesis. Island Press, Washington, DC.

2005. [link]

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Links between Ecosystems and Wellbeing

Source: Millennium Ecosystem Assessment, 2005

The new natural environment framework, A Living Wales20, will be a major statement of the implementation of sustainable development principles in Wales as applied to the natural environment. The first objective of the policy is:

sustainable development demands that we create a positive future path for development in its widest sense. This means building sustainable use of our land and seas into the direction of all policies, plans and programmes so that our economic, environmental and social needs are not placed in inappropriate conflict with one another.

Addressing climate change. For challenges like climate change, the required rate of change justified by the science and global equity almost certainly exceeds the current willingness of the public to accept major changes to lifestyles, consumption and to the economy, infrastructure and landscape. Research for WAG by the Tyndall Centre suggests that to have a 50% chance of meeting the widely held objective of holding global warming to less than 2 degrees Celsius, developed countries would need to peak emissions in 2012, then subsequently reduce by 8% pa by 2015 and 20% pa by 2020, moving to full decarbonisation by 2026-721. This is exceedingly challenging. Welsh Ministers have opted for a more modest target than this: from 2011, a 3% reduction per annum on emissions over which Wales has some control. Though this is more ambitious

20 A Living Wales, a new framework for our environment, our countryside and our seas, Welsh Assembly Government 2010 [link]21 Kevin Anderson. 3%, 6% and 9% - Emission Reduction Scenarios for Wales. Presentation to the WAG Cabinet sub-

Committee on Climate Change, Nov 2009.

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than most developed countries, it falls short of what science tells us necessary to avoid dangerous climate change. We are left with the challenge that ‘living within environmental limits’, if adopted rigorously, would require a degree of intervention for which we do not yet have broader public support. It is this that informs the third condition: that we must be able to secure a broad mandate for sustainable development. There are similar challenges with meeting ecological footprint22 targets.

Regulation, compliance and unregulated impacts. A great deal of government effort and private sector investment goes in to complying with regulations – health and safety, environmental, workplace rights and so on. Regulations can be seen as attempts by legislators to secure wellbeing outcomes by proxy (for example, in setting water or air quality standards) whilst establishing a level playing field so that all businesses face equal compliance costs. There is an ever-present danger of excessive focus on those aspects of wellbeing that are regulated at the expense of those that are not subject to regulation. For example, air quality standards aimed at health protection may close an industrial plant in a deprived area causing (unregulated) physical and mental health impacts associated with unemployment and greater deprivation. This is not argue against high environmental standards, but for legislators to take a rounded view of wellbeing and to introduce high standards carefully and with long transition times.

1.7 WAG approach to public healthSustainable development and public health have strong overlapping themes. The Welsh Assembly Government and its partners have identified four main ambitions for 2020 for the public health agenda, Our Healthy Future23. These are:

• Across society, we will take care of and responsibility for, our own and others’ health and well-being.

• Organisations and individuals will work together to improve and protect the health of the people of Wales.

• The gap between communities with poor health and those with good health will be reduced.

• Healthy public policy will support and enable people to lead healthy lives.

1.8 Wellbeing and the economyThe Assembly Government’s Economic Renewal Programme stresses the centrality of wellbeing and the important place of the economy in sustainable development:

‘As a Government, we want a strong economy, not as an end in itself, but for the integral contribution it can make to the quality of life and the economic, social and environmental wellbeing of people and communities in Wales, placing sustainable development as our central organising principle.

22 Ecological Footprint is a composite index based on estimated productive land area required to provide resources or mitigate a variety of environmental impacts. Wales’ ecological footprint is currently 5.16 global hectares per person, compared to a global availability of 1.88 global hectares. It tells us that we are using 2.7 times our fair share of the planet's resources to sustain our lifestyles. The 2008 assessment suggested Wales' ecological footprint is increasing at 1.5% per year. Unchecked, this means it could rise by 20% by 2020. See Stockholm Environmental Institute, Wales’ Ecological Footprint - Scenarios to 2020 for Welsh Assembly Government, 2008 [link]

23 Welsh Assembly Government, Our Healthy Future, Consultation summary. 2009 [link]

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Some argue that economic growth and GDP do not contribute to wellbeing beyond a certain level24 - an effect sometimes known as the Easterlin paradox, after the economist Richard Easterlin25. We do not accept this. More recent analytical research suggests there is a clear link between conventional measures of income and wellbeing: researchers at the University of Pennsylvania analysed income and wellbeing data for over 140 countries, and drew three main conclusions26:

First, we show that within a given country, richer individuals report higher levels of life satisfaction. Second, we show that richer countries on average have higher levels of life satisfaction. Third, analyzing the time series of countries that we observe repeatedly, we show that as countries grow, their citizens report higher levels of satisfaction. Importantly, we show that the magnitude of the relationship between satisfaction and income is roughly the same across all three comparisons, which suggests that absolute income plays a large role in determining subjective well-being.

It is however the case that there are diminishing marginal returns – meaning that each additional pound or dollar or income adds less to wellbeing.

1.9 Should we replace GDP?

There has been a long debate about the appropriateness of GDP or GNP as a measure of ‘progress’ or societal success. Perhaps the most eloquent words spoken about the use of conventional economic measures were spoken by Robert Kennedy in 196827:

… GNP — if we judge the United States of America by that — that GNP counts air pollution and cigarette advertising and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and it counts nuclear warheads, and armored cars for the police to fight riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.

Yet the Gross National Product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans

24 For example, Richard Layard – Lionel Robbins memorial lecture 2003 [link] argued that national average happiness is independent of national income above $15,000. The effect was referred to by the Archbishop of Wales in his Christmas 2010 message [link]

25 Easterlin R. Does Economic Growth Improve the Human Lot? Some empirical evidence, 1974. University of Pennsylvania [link].

26 Sachs D, Stevenson B. Wolfers J. Subjective Wellbeing, Income, Economic Development and Growth, University of Pennsylvania, for the Federal Reserve Bank of San Francisco. September 2010 [link]

27 Robert Kennedy, 18 March 1968, at University of Kansas

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There are measures that attempt to address some the deficiencies highlighted in Kennedy’s speech. These include the Index of Sustainable Economic Welfare (ISEW)28 and Genuine Progress Index29. However, we do not recommend adopting that approach for Wales. This is for three main reasons.

Firstly, there is limited political, official and public attention and resources available to give to embedding sustainable development. This capital needs to be used on developing the ideas and machinery that create meaningful change. It is more important to focus on articulating and making hard choices (see section 2) and on building a political mandate (section 3). GDP has its uses and abandoning it would needlessly arouse suspicion that we were no longer concerned with the economy.

Secondly, an aggregate index will often mix different very measurements and in doing so lose important information. We prefer to use a suite of indicators that characterise wellbeing in a disaggregated way. In fact, we should see this as a major purpose of the new National Survey for Wales.

Thirdly, it may distract from improving the way we consider more conventional economic data. President Sarkozy’s commission recommended a focus on the household perspective, greater attention to wealth and debt, and concern for income distribution – these ideas are to be welcomed.

1.10 GDP and BeyondIf we do not seek to replace GDP, there is great scope to widen the scope of measures of progress. There is now considerable activity in statistics organisation devoted to what is loosely termed “GDP and beyond”, drawing a deliberate contrast with “Beyond GDP”. There are several relevant initiatives underway:

Statistics Wales is incorporating wellbeing measures in the new National Survey of Wales30 and the Assembly Government Cabinet agreed in January 2010 that a new sustainable development indicator would be ‘the wellbeing of Wales’, with the ‘overall life satisfaction’ element of wellbeing to be measured using the National Survey31.

The UK Office for National Statistics is developing new measures for wellbeing32 and publishing research articles on the subject33

European national statistics organisations have agreed the Sophia memorandum on measuring progress, wellbeing and sustainable development34;

28 ISEW deducts ‘defensive’ spending, reflects changes in the stock of natural capital, and values non-marketed productive work (housekeeping, caring etc). It was developed in Daly, H. & Cobb, J. For the Common Good. 1989. [Wikipedia article]

29 GPI is promoted by ‘Redefining Progress’ organization [web link] [Wikipedia article]30 Statistics Wales, National Survey for Wales. 2011. [link]31 Welsh Assembly Government, Cabinet minutes, 11 January 2010. [link] 32 ONS, Measuring national wellbeing, Consultation. 2010 [link]33 ONS, Understanding wellbeing. September 2010 and ongoing. [link] 34 Sophia memorandum: measuring progress, wellbeing and sustainable development, Sophia Bulgaria, September 2010

[conference] [memorandum]

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The European Union has a broad project, GDP and Beyond, to support the Europe 2020 agenda35. The European Commission has issued a communication36 and the European statistical organisation, Eurostat, has developed a work programme37.

The OECD has a programme on measurement of the progress of societies38;

President Sarkozy of France established the Commission on the Measurement of Economic Performance and Social Progress lead by top economists.39

35 European Commission and partners: Beyond GDP: measuring progress, true wealth and the wellbeing of nations [link]. Note that this evolved into GDP and Beyond, to avoid the idea that GDP had become an obsolete measure.

36 COM(2009) 433 final. GDP and beyond: measuring progress in a changing world. August 2009. [link]37 Eurostat, GDP and Beyond, [link]38 OECD, Measuring the Progress of Societies, [link]39 Stiglitz J, Sen A, Fitoussi JP, Commission on the measurement of economic performance and social progress, 2008 and ongoing

[link].

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2. Making hard choices in policy and investment

The application of sustainable development as a central organising principle will lead to several forms of immediate ‘hard choices’ and different choices – if it does not, then it has little value. Each type of choice is about securing the best possible long-term well-being return from the available resources. These choices can be framed as a broad efficiency and effectiveness agenda for a government, and are particularly important when the resources are becoming more scarce. Four examples are suggested below.

2.1 Hard choices 1: Trade-offs between long-term and short-term outcomesSustainable development create trade-offs and tensions between dealing with the immediate needs of the current population and investing in better outcomes later in the life course of people who are young today or for future generations. A determination to pursue long-term outcomes presents governments with some very hard-edged choices about the use of resources and policy focus. For example, it may mean a gradual shift of resources to preventative health or early-years interventions with lower spending on treatment. It may mean action to 'grip' teenagers going wrong, rather than deal with the consequences later in life in prisons. It means making investments today that may bear fruit handsomely decades from now – a kind of societal “invest to save”. In a growing economy, these changes may be managed by allocating proceeds of growth to longer-term objectives.

2.2 Hard choices 2: Silo breaking and system thinkingSilo-breaking. The principle requires us to break down traditional administrative boundaries or ‘silos’. For example the best health outcomes may be achieved through the public health agenda largely pursued outside medical settings. Good schools may be more effective at reducing crime than the police. Highly disruptive families may impose costs on many different services, but there may be no service that sees the full picture and can act accordingly. Some of the best environmental strategies may be in 'resource productivity' and realised through a growing economy, new housing and new vehicles.

System thinking. In each case, the design of the optimum approach involves taking a view of the full system in which outcomes are determined. This in itself is difficult, as most policy makers are themselves located in a silo – for example with responsibilities for schools but not for impacts on criminal justice system or unemployment that may flow from school failure. This requires development of policy-making structures that allow a full system view of wellbeing determinants – and this does not happen spontaneously.

Breaking silos and promoting long-termism do not happen easily, but these are important concepts with the Enabling Government framework, reflecting its outcome focus. Techniques such as pooled budgets, commissioner-provider splits, innovation margins and institutional champions (for example, Hungary has a Commissioner for Future generations) can all help.

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The diagram below illustrates some of the challenges that arise from costs and benefits arising at different times and in different silos.

Hard choices – SD challenges

Future

Now

Same silo Different silo

Wellbeing interventions – where benefits fall relative to costs

Smart grid

Water metering

Climate adaptation

Public health

Youth inclusion vs prison

Intensive family interventions

NEETS to work

Renewables decarbonisation

Biofuels

Social care vs NHS beds

Catchment sensitive farming vs water treatment

Energy efficiency

The diagram (work in progress) maps the challenges of wellbeing programme redesign by showing where the investment costs and resulting benefits fall in different parts of the system or in the future.

Transfer of harms. If we have ‘innovative silos’, in which each attempts to maximise its own direct performance with the resources allocated to it, there will be a series of transfers or ‘dumping’ of harms or costs to other silos:

Between different parts of the public services – for example in the costs associated with school failure from education to criminal justice, or from the planning system to housing benefit, or from NHS mental health services to the police.

Between tiers of government (central to local) – eg. from pension provision to social care

Between sectors (from public to private) – for example in transport investment to congestion, from flood defences to households via flood insurance and cleaning up costs

2.3 Hard choices 3: Using evidenceIt may sound obvious, but the use of evidence, especially economic evidence related to long-term cost-effectiveness, should be an important guide to where policy and investment is focussed. One Wales, One Planet establishes this approach40:

Full costs and benefits - we will identify and take account of the full range of costs and benefits, including those over the long-term, those not measured in monetary terms (such as environmental costs and benefits), and those costs that are global as well as local in our policy making. We will promote whole system thinking, taking

40 Welsh Assembly Government, One Wales, One Planet, May 2009. See supporting principle 2 on page 26. [link]

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account of risks - especially to the economic, social and environmental wellbeing of communities - and uncertainties associated with action and inaction.

A good example is the data that describes cost of carbon reductions and the available potential for different technologies. The 'marginal abatement cost curve' for the UK in 2020 as set out in the 2007 UK Energy White Paper is shown below. The technologies to the left of the chart hanging below the axis are those that save users more than they cost – and these should generally have priority in policy and investment terms. Using this sort of evidence, and consideration of wider benefits would tend to focus energy investment on demand side energy efficiency measures rather than energy production technologies. On the basis of this sort of evidence we have reorientated WEFO funding towards energy efficiency. We should note, with some concern, that much of the national response to climate change adopts technologies from the right hand side of this chart: UK investment in renewables is by 2020 is expected to reach £136 billion, but only £21 billion for energy efficiency41.

Why is using evidence a ‘hard choice’? The reason it can be a hard choice to pursue evidence is that interest groups (both external and internal to government) can form around particular ideas, approaches or technologies. Further, evidence can challenge prior commitments, established ideas and received wisdom – all creating barriers to effective sustainable development (and sometimes in the name of sustainable development).

Evidence in public sector innovation. The private sector has an effective innovation system – unattractive ideas ultimately cause business failure, successful ideas are 'selected' by consumers and create growth. The key ingredient in private sector innovation is failure: this allows a lot of new ideas to be tried, but ensures resources are directed away from poor products or services. The equivalent function in the public sector is

41 Dieter Helm, in Delivering a 21st Century Infrastructure for Britain, Policy Exchange , 2009. [link]

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performed by scrutiny and voter disaffection – but this can cause public sector agents to 'close ranks' and defend poor ideas or ineffective spending. A rigorous approach to evidence and evaluation is one way that the public sector can mimic some of the innovation drivers in the private sector, providing the evidence is acted upon.

The Assembly Government is strengthening its approach to evidence-based policy-making through development of the Policy Mill, Policy Gateway and Policy Integration Team – it is also, of course, the core business of civil servants to use evidence. However, the structural changes implied by adopting wellbeing as an organising principle may require more profound programme redesign. Some possible examples of how our approach may change are set out in the following section.

2.4 Hard choices 4: investment in resilience and future proofingThere are trade-offs between consumption and investment in infrastructure. This is visible in the interpretation of the duty of regulators42 to protect consumer interest by holding bills down (freeing up income for current consumption), but sometimes at the expense of investment that would serve consumers or citizens better in the future. There are immense challenges in infrastructure: decarbonising and securing energy supplies; introducing economic demand management (smart grids, road pricing, congestion charging); developing a supply infrastructure for electric vehicles; climate change adaptation through water and flood management; digital inclusion and the move to very high speed broadband; meeting housing and mobility demands of a growing, aging, affluent and atomising population; and the aggressive pursuit of resource productivity in natural resources, waste and energy. ‘Social infrastructure’, for example for social and health care and for all tiers of education will face similar demands.

A government pursuing sustainable development will be diverting a greater share of national resources into investment and into infrastructure, at the expense of current consumption.

2.5 Would a wellbeing approach change how we look at policy?The use of wellbeing-maximisation as a central organising principle is only worthwhile if it changes the way we design our policies and services. These are some examples, not a comprehensive list of how a long-term wellbeing maximisation approach may change the way we make policy or deliver services43:

Schools Ensure the incentives and performance management for schools give proper weight

to addressing the needs of those failing and at risk of leaving unqualified, considering the lifetime negative wellbeing consequences. The full lifetime cost of failure is not fully internalised in schools incentive structures

42 Note ‘under investment’ pre-dates the current privatised regulated industries – one of the prime motivations for water privatisation was to correct historic under-investment in environmental measure and water quality.

43 These are not conclusions, more like questions that might be prompted by applying a ‘long-term wellbeing maximisation’ principle.

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Teach ‘resilience’ – drawing on the evidence that it improves academic performance and employability.

Health Place progressively greater emphasis and resources to evidence-based

preventative measures, as envisaged in Our Healthy Future, and relatively less to treatment – though recognise that demographics and societal preference will drive underlying demand

Challenge the approach to the last years of life – considering whether the expense and intensity of interventions in the last two years of life provide the dignified death that most people say they want.

Place greater emphasis on mental health, with investment in cognitive behavioural therapies.

Families and community Integrate services and intervene intensively for the 2-3% families at most risk. A

dysfunctional family can create costs up to £250,000/year across many different domains – and no single agency is likely to have the full picture or be able to make the optimum investment.

Focus on adults and parenting skills, even if the objective is to secure wellbeing and social mobility of the children

Find ways to help isolated older people to develop social networks and remain involved

Recognising that relationship breakdown has negative wellbeing consequences, provide support for couples in difficulty and address potential drivers o breakdown (drugs, debt, prison)

Promote opportunities for neighbours to get to know each other, based on clear evidence that this tends to enhance wellbeing

Criminal justice system Learn from Finland. Shift sentencing policy to minimise overall harm, including cost

to taxpayer and consequences of reoffending: generally moving to community sentencing, restorative justice and prison as a last resort.

Greatly expanding ‘youth inclusion’ programmes and focussing on failure at school.

Focus prisons on reducing reoffending, with greater attention aid to preparing for law-abiding life outside, avoiding extremely disruptive short-stay sentences and greater attention to transitions from custody to the community

Adopt a harm minimisation approach to drugs – perhaps including prescribing

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Economy Hard choices may lead to accepting a lower rate of GDP growth in exchange for

reduced inequality and wellbeing.

Focus on assisting the transition from economic inactivity to productive activity. The focus would be on unemployment and jobs at all levels in the economy, not just hi-tech or knowledge-based.

Focus on building the foundations of sustainable growth (establishing conditions in which forward looking and well managed businesses can thrive – with clear signalling about environmental and other wellbeing imperatives) rather than direct business support

Reshape apprenticeships and other programmes for teenagers to strengthen psychological fitness to help young people find and keep work

Ensure the planning system properly reflects the wellbeing value of employment and development

Design transportation, housing and economic development policy to reduce commuting time and allow a more localised economic and social geography

Environment and rural Promote resource efficiency as a dominant environmental strategy.

In energy sector transition, place greater emphasis on the demand side and energy efficiency – relatively less on renewables. Be wary of high carbon cost technologies (microgen, PV etc)

Address diffuse water pollution through catchment management on farms, with less reliance on expensive and energy intensive water treatment.

Recognise total cost of flooding includes private costs (pooled cleaning up costs through insurance) and seek harm minimising allocation between avoiding floods, reduction of impact when a flood happens and costs of damage/repair.

Give greater weight in the planning system to the value that people place on owning their own home and living in pleasant surroundings

More carefully differentiate protected areas – avoid overprotecting some and under-protecting others and give weight to accessibility as a wellbeing driver

Recast farming as a land management occupation and production of a mix of market good (food) and non-marketed goods and services – for which payments are made.

Only go beyond regulations made at UK or EU level where the wellbeing case justifies it (applies generically).

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3. It must be possible to secure a sufficiently broad and deep mandate for our approach to sustainable development

This section discusses the third principle for embedding sustainable development as a central organising principle: that the rate and extent of change in advancing sustainable development must be sufficiently acceptable to citizens. This idea is addressed in One Wales, One Planet, which defines one of the core principles for sustainable development as citizen involvement:

Involvement - people and communities are at the heart of sustainable development, so we will be inclusive in our involvement of all our stakeholders in the development of our policies and programmes, and the identification of solutions that meet their needs, pro-moting innovation in the way that we deliver services.

Securing a sufficient mandate’ is an expression of the same idea expressed in the negat-ive – that the agenda for sustainable development cannot go beyond what people and communities are willing to accept at any time, whilst aiming to change that over time. The negative expression is chosen because it reflects the reality of resistance to change and the real challenge that ambitious governments experience in bringing citizens with them.

3.1 Some approaches to securing a mandateSome approaches to winning public acceptance include44: Establishing a clear narrative that supports the policy and is maintained over time Promote a coherent governing philosophy – in this case sustainable development as a

central organising principle meaning the maximisation of wellbeing over the longer term Piloting and developing compelling case studies – allowing for problems to be ironed

out at small scale, while providing convincing exemplars that build confidence Carefully cultivating public trust in the government Allow, encourage and seek independent critique and advice Adopting behaviour change strategies (see below) Keep back resources to fund change and innovation (don’t allow all resources to be

consumed in the programmes of the past) Making large changes gradually to avoid dislocations and to allow for structural adjust-

ment. The following observation from Geoff Mulgan captures this idea:

Governments overestimate their power to achieve change in the short term, and under-estimate it in the long term

3.2 Public acceptability changes over time The discussion of major environmental challenges in relation to the ecological footprint and climate change (see 1.6 Environmental on page 10) suggests that profound and rapid changes are justified by the science. Ministers have determined that, at least for now, an ambitious but achievable rate of change should form the basis of our approach to environ-mental targets. This is an example of applying the principle of securing sufficient public ac-ceptance. However, attitudes and the willingness to accept or demand change will evolve 44 This section draws on the thinking of Geoff Mulgan. Lessons of power, Prospect Magazine, May 2005. [Link] and his book Good

and bad power: the ideals and betrayals of government. Penguin, 2006

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and measures that seem unrealistic now may be regarded as essential in 10 years. This dynamic has been the case with acceptability of restrictions on public smoking for ex-ample. However, smoking provides a reminder of how slow change can be. The Royal College of Physicians first highlighted the mortal risk from smoking in 1961. The impacts of smoking are largely personal and controllable through stopping, whereas impacts of cli-mate change are global, systemic and require unprecedented international and intergener-ational collective action, which even if achieved can only reduce the rate at which the haz-ard risks increase.

3.3 The behaviour change agendaPolicymakers have recognised that many of the most important decisions related to sus-tainable development are in the hands of individuals, families, communities and busi-nesses. For this reason, interest in influencing behaviour has grown rapidly in recent years and there is a substantial body of popular45 and professional work to draw on46 47 48

49.

The UK sustainable development strategy develops a simple model which focuses on four main elements (each beginning with ‘E’)50.

The 4-E model for behaviour change

From: Securing the future: UK sustainable development strategy, 2005. Chapter 2

The model captures four essential features of a behaviour change strategy:

45 Thaler and Sunstein Nudge: Improving decisions about health, wealth and happiness, 2008 [Nudge blog]46 Darnton A GSR Behaviour Change Knowledge Review. Reference Report: An overview of behaviour change models and their

uses, London. Government Social Research. 2008 [Link]47 GCN/COI Communications and behaviour change. 2010 [Link]48 Cialdini Influence: The psychology of persuasion. 2007 [Cialdini’s Wikipedia entry]49 New Economics Foundation Behavioural Economics: Seven Principles for Policy Makers, 2005 [link]50 UK Government, Securing the future: delivering the UK sustainable development strategy, [Link]. See Chapter 2, Helping

people make better choices.

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1. Encourage: establish an incentive structure 2. Enable: make it easy to respond to the incentives3. Engage: developing motivation to change behaviour4. Exemplify: lead by example and maintain trust

In Wales, we are adopting this framework – recognising the value of its simplicity and cov-erage and the merits of sticking with one memorable model. Within this model, it is import-ant to have detailed understanding of human behaviour. There is much work in this area, but a particularly useful formulation for policy-makers has been provided by the Institute for Government, termed ‘MINDSPACE’ (an acronym) 51

Many of the outcomes we seek from sustainable development and wellbeing maximisation require ‘co-production’ or decisions and action to be taken by individuals, families com-munities or businesses where regulation would not be possible or desirable and ‘soft’ measures are necessary. The science of behaviour change will become an important part of policy making and delivery for sustainable development.

51 Institute for Government, MINDSPACE Influencing behavior through public policy, 2010 [link]

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4. Conclusion – sustainable development can be a central organising principle

The overall theme of this paper is that it is possible to make sustainable development a ‘central organising principle’ for a government, wider public sector and nation.

The government must be able to state its objective clearly. In this case we propose the maximisation and fair distribution of wellbeing of people in Wales over the longer term. It will place greater emphasis on the long term outcomes and investment in resilience and infrastructure. It must draw rigorously on the cost-effectiveness evidence to know what works and ensure limited resources are used to greatest effect. In both policy-making and delivery it will need to take a full systems view and break down silos or other institutional barriers to maximising wellbeing. Finally, it will recognise sustainable development to be a political programme, requiring high standards or governance and trust building to secure a mandate for the hard choices that sustainable development must involve.

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Annex 1: Difficulty in defining sustainable development – a snapshot

The idea of sustainable development gained prominence following the Brundtland Commission in 198752

Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs

As an idea, ‘sustainable development’ commands widespread support: for example through 178 countries’ support for Agenda 21 and the Rio Declaration of 1992, its position as Millennium Development Goal seven, and through the 2005 UK Sustainable Development Strategy, Securing the Future. Yet as an idea, it is poorly defined and overused. It is often little more than an exhortation to resolve difficult problems and to reconcile the irreconcilable53, a vague aspiration to create a better future54 or a programme of primarily environmentally-based activities55. It has sometimes been used as a vehicle for promoting particular ideologies or economic prescriptions56 and it has been embraced by some extremely unlikely businesses57. It is sometimes described in terms of managing ‘capitals’58 and has its ‘weak’ and ‘strong’ variants59.

Critics divide into two main camps. Many argue that the term is too loose to be useful60:

I know that this term is obligatory, but I find it also absurd, or rather so vague that it says nothing

They argue that it fails through contradiction – who could favour development that is unsustainable? Others claim that the concept is so challenging that it only has meaning following huge changes in human civilisation that are well beyond what is generally described by proponents of sustainable development, for example that living within environmental limits cannot be consistent with economic growth61 or the resource demands of current and projected human populations are untenable62.

52 United Nations. "Report of the World Commission on Environment and Development." General Assembly Resolution 42/187, 11 December 1987 [Link]

53 For example, the Division of Sustainable Development in the UN says: “The achievement of sustainable development requires the integration of its economic, environmental and social components at all levels”.

54 For example, the UK Sustainable Development Strategy sates: “The goal of sustainable development is to enable all people throughout the world to satisfy their basic needs and enjoy a better quality of life, without compromising the quality of life of future generations”

55 The UK Sustainable Development Strategy focuses on four areas, of which three are environmentally driven: Sustainable Consumption and Production: Climate Change and Energy; Natural Resource Protection and Environmental Enhancement; and, Sustainable Communities

56 For example, Agenda 21 states: 2.3 The international economy should provide a supportive international climate for achieving environment and development goals by: (a) Promoting sustainable development through trade liberalization…

57 Paul Adams, CEO of the tobacco multinational BAT says: “For us, sustainability means addressing key business-related social, environmental and economic impacts in a way that aims to bring value to all our stakeholders, including shareholders.”

58 See Jonathan Porritt, former Chairman of the UK Sustainable Development Commission, Capitalism as if the World Matters, 2007. The concept was developed by Forum for Future and finds many variants in the literature. The five capitals of this model are – Natural, Social, Human, Manufactured and Financial.

59 Strong sustainability does not allow for substitution of natural capital for human capital, the weak version does, aiming to maintain total capital stock.

60 Luc Ferry, French philosopher, cited in translation on Wikipedia (link)61 For an exploration of these issues see Tim Jackson, Prosperity Without Growth? The transition to a sustainable economy, 2009.

Sustainable Development Commission. 62 International Policy Network, Morris J, Goklany I (eds) The population bomb revisited. Vol 1, 3, Electronic Journal of Sustainable

Development, 2009. www.ejsd.org

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Annex 2. Measuring social and economic progress

Recommendations from: Report by the Commission on the Measurement of Economic Performance and Social Progress by Professor Joseph E. Stiglitz, Professor Amartya Sen and Professor Jean-Paul Fitoussi

1: When evaluating material well-being, look at income and consumption rather than production

2: Emphasise the household perspective … The household perspective entails taking account of payments between sectors, such as taxes going to government, social benefits coming from government, and interest payments on household loans going to financial corporations. Properly defined, household income and consumption should also reflect in-kind services provided by government, such as subsidized health care and educational services.

3: Consider income and consumption jointly with wealth … Measures of wealth are central to measuring sustainability. What is carried over into the future necessarily has to be expressed as stocks – of physical, natural, human and social capital.

4: Give more prominence to the distribution of income, consumption and wealth

5: Broaden income measures to non-market activities … Many services that households produce for themselves are not recognized in official income and production measures, yet they constitute an important aspect of economic activity

6: Quality of life depends on people’s objective conditions and capabilities. Steps should be taken to improve measures of people’s health, education, personal activities and environmental conditions. In particular, substantial effort should be devoted to developing and implementing robust, reliable measures of social connections, political voice, and insecurity that can be shown to predict life satisfaction.

7: Quality-of-life indicators in all the dimensions covered should assess inequalities in a comprehensive way

8: Surveys should be designed to assess the links between various quality of life domains for each person, and this information should be used when designing policies in various fields

9: Statistical offices should provide the information needed to aggregate across quality-of-life dimensions, allowing the construction of different indexes.

10: Measures of both objective and subjective well-being provide key information about people’s quality of life. Statistical offices should incorporate questions to capture people’s life evaluations, hedonic experiences and priorities in their own survey.

11: Sustainability assessment requires a well-identified dashboard of indicators. The distinctive feature of the components of this dashboard should be that they are interpretable as variations of some underlying “stocks”. A monetary index of sustainability has its place in such a dashboard but, under the current state of the art, it should remain essentially focused on economic aspects of sustainability.

12: The environmental aspects of sustainability deserve a separate follow up based on a well-chosen set of physical indicators. In particular there is a need for a clear indicator of our proximity to dangerous levels of environmental damage (such as associated with climate change or the depletion of fishing stocks.)

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