Green Growth Indicators: OECD Experience

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Green Growth Indicators OECD Experience

• Seminar on Green growth and Official Statistics
• Korea
• Paul Schreyer (OECD)

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Presentation

• OECD Green Growth Strategy
• Green growth indicators
• Framework
• Link to measurement of well-being
• Debates
• Measurement agenda, including some thoughts on
  monetary valuation

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• 1. OECD Green Growth Strategy

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Background

• Mandate to OECD in 2009
• Report to Ministerial meeting in 2011
• Green Growth Strategy
• Green Growth Indicators
• Tools for Delivering on Green Growth
• Special reports on
• Agriculture
• Energy

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...to start with, a definition of Green Growth

• Green growth is about fostering economic growth
  and development while ensuring that the natural
  assets continue to provide the resources and
  environmental services on which our well-being
  relies. To do this it must catalyse investment
  and innovation which will underpin sustained
  growth and give rise to new economic
  opportunities.

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...whats different from Sustainable Development?

• SD provides important context for GG
• GG more narrowly focused and with a strong
  policy component
• Green growth
• Emphasises flows and greening of growth
• Emphasises economic opportunities fostering
  innovation, investment and competition that can
  give rise to new sources of economic growth
• Takes an optimistic stance about of growth and
  resilient ecosystems

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Sources of green growth

• Green growth can open up new sources of growth
  through
• Enhanced productivity
• Innovation
• New markets
• Confidence
• Stability
• and also reduce risks of negative shocks to
  growth from
• Bottlenecks from resource scarcity
• Imbalances in natural systems

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• 2. OECD Green Growth Indicators

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... indicators report
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Four dimensions

• Low-carbon, resource-efficient economy
  Indicators of environmental and resource
  productivity
• Rising productivity is not enough often, an
  absolute decline in environmental pressures is
  needed to keep the natural asset base intact
• Capturing the direct interaction between people
  and the environment indicators of environmental
  quality of life
• Economic opportunities from environmental
  considerations and policy responses

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Four dimensions fit theoretical framework of
standard environment-economy growth models

• Indicators of environmental and resource
  productivity ? Production possibility frontier
• Keep the natural asset base intact ? Stock-flow
  relationship
• Indicators of environmental quality of life ?
  augmented utility function
• Economic opportunities and innovation ? Shifts in
  production possibility frontier

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Framework
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Indicator groups and topics
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full list of about 25 indicators (extract) with
considerable gaps
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qualifier for each indicator
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Measuring Well-being whats the link?

• Different objectives
• OECDs Work on Measuring Progress HH
  perspective and outcomes
• Indicators of
• material well-being
• quality of life
• Well-being over time sustainability
• Includes Environmental quality of life
• Environmental sustainability

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• 3. Measurement Agenda

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Measurement agenda (1)

• Environment-economy accounting framework
• Key for consistent information
• Key for the construction of indicators
• SEEA currently being drafted under the auspices
  of the United Nations and several chapters have
  become available for global consultation
• OECD contributes to drafting
• OECD plans to contribute to implementation

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Measurement agenda (2)

• Accounts on land, in particular monetary
  valuation and volume measures
• Valuation of other natural resources, such as
  non-energy and energy mineral resources, and
  timber resources
• ? Both areas inside the asset boundary of the
  SNA and the SEEA useful for both the SNA and the
  SEEA implementation

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Digression on monetary valuation of natural assets

• OECD differentiated position
• Criterion 1 is asset inside the national
  accounts asset boundary?
• Yes should be amenable to monetary valuation
• Example land, subsoil resources, some biological
  resources, produced (orchards, fish from
  acquaculture) and non-produced (other fish,
  natural timber)

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Digression on monetary valuation of natural assets

• Criterion 2 private or social valuations?
• Private values
• Market prices can be invoked (after some
  adjustments) ? useful for balance sheets
• But externalities not valued ? not useful for
  tracking sustainability
• Social values
• Conceptually right measures to value assets and
  track (weak) sustainability
• But vast differences in existing monetary
  estimates raises question about usefulness of
  monetisation

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Digression on monetary valuation of natural assets

• Criterion 3 individual or combined assets?
• Individual natural assets
• Ecosystems as a combined asset
• Conceptually important to recognise ecosystem
  assets and services
• But major problems of quantification in physical
  terms (multi-dimensional, non-linear,
  space-dependent)
• Monetary valuation unrealistic

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Measurement agenda (3)

• Headline indicators
• Consensus about set of indicators rather than
  composite indicator
• Consensus about usefulness of small set of
  headline indicators
• No consensus about choice of headline indicators
• Renewed effort to derive headliners
• Task force with statisticians, environment
  experts and economic experts

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Measurement agenda (4)

• Extended growth accounting
• Better capture growth contribution of natural
  assets
• Draw on work on valuation of natural resources
• Adjusted multi-factor productivity measures
• Joint work with OECD economics department

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Join the discussion!

• International Green Growth Dialogue online
  community
• A secure site for sharing your perspectives and
  initiatives, and discussing the development of
  the Green Growth Strategy.
• To register, email your contact details to
  green.growth_at_oecd.org

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• Thank you!
• Paul.Schreyer_at_oecd.org
• www.oecd.org/greengrowth