In the second of a three-part series, Trevor Hancock looks at the problem of using GDP as a measure of social wellbeing and how an analysis of our ecological footprint can point to more sustainable and healthier options.
A new economics for a sustainable, healthy and just 21st Century
The Institute for Healthcare Improvement in the US has a motto that conveys an important principle applicable to society as a whole: “Every system is perfectly designed to achieve the results it gets”.
In the context of the healthcare system, this means that if there are high post-operative infection rates or high levels of staff burnout or inefficient, ineffective and poor quality care, these are the result not of individual failings but of a system failure. The system is inadvertently set up to deliver that result.
This applies to our present economic system. On the one hand, it has delivered great wealth – at least for some. It has certainly contributed to the quite remarkable increase in life expectancy we have seen in the past century or two. It has generally raised income levels and national wealth to the point that in many places we can provide clean water, sanitation, safe and healthy food, universal education, healthcare and well-planned cities and transport systems.
But at the same time, our economic system is perfectly designed to deliver massive ecological harm and high levels of poverty, growing inequality and unsafe and unhealthy living and working conditions for many.
As such, the current system has outlived its usefulness. It is not fit for purpose in the 21st Century; we need a very different economic system if we want different results.
At the root of our problem is our obsession with economic growth and gross domestic product (GDP). I will come back to the topic of growth shortly, but first I want to briefly explore why GDP is a misleading and awful way of measuring progress.
First, GDP was never intended to be used that way. Simon Kuznets, one of the key people behind the development of GDP, warned the US Congress in 1934 that it should not be used as a measure of social welfare: “the welfare of a nation can scarcely be inferred from a measure of national income.”
But that is exactly how we use it. State/provincial and national governments largely focus their policies around increasing GDP, somehow assuming, in a process of ‘magical thinking’, that this will improve social wellbeing. (Interestingly, city governments do not; they tend to use a more diverse and sophisticated set of measures that usually equate to the quality of life in the city.)
Perhaps the biggest problem with GDP is that it does not distinguish between beneficial and harmful economic activity. So when an oil tanker sinks and pollutes the beaches, the large economic cost of cleaning up is added to GDP.
This is generally true of all such expenditure. For example, I often challenge an audience to suggest the best way to add GDP with an investment of 25 cents. The answer is – buy a box of matches and burn down the largest building you can find. (I am not recommending any such action, to be clear!) The economic return on your 25-cent investment will be measured in tens of millions of dollars as the fire is fought, the building is torn down, rebuilt and refurnished, and the displaced businesses are relocated for the time being.
Or take the example of the tobacco industry. You would add to GDP by increasing the growing of tobacco, the manufacturing of tobacco products, marketing and sales. But you would also add to GDP all of the economic activity of the healthcare system in treating people with the many diseases caused by tobacco, although as the industry itself once pointed out (and then quickly tried to forget), you would also save money on retirement pensions because smokers die young!
On the other hand, GDP does not include all the many non-monetised activities that actually do contribute to community wellbeing and social welfare. These activities include volunteering, looking after dependent family members at home, educating children outside of school and growing your own food.
The point is, GDP is a terrible way of charting social progress and should be abandoned. There is a considerable literature on alternatives to GDP: the Genuine Progress Indicator, the Canadian Index of Wellbeing and Gross National Happiness and others, which readers may want to explore.
But note that the 2017 World Happiness Report pointed to an OECD statement in June 2016 that it is committed “to redefine the growth narrative to put people’s well-being at the centre of governments’ efforts”. And the head of the UN Development Program (UNDP) spoke against what she called the “tyranny of GDP”, arguing that “what matters is the quality of growth”.
Turning back to economic growth, the leading article in the business section of The Borneo Times on 19 October 2018 was headlined “Malaysia’s economy continues to expand at moderate rate”, and the article noted that this “moderate” growth was “within the original GDP growth target of five to six percent”.
Now 5-6% may not sound like very much (although about twice the target growth rate of many high-income countries of around 3%).
But that is because we ignore the remarkable effect over time of compound (and thus exponential) growth. A growth rate of 5% means a doubling time of about 14 years – every 14 years, you have twice as much as you started the 14 years with. So the GDP doubles in 14 years and doubles again over the next 14 years, meaning it is four times as much after 28 years as at the start.
After another 14 years, so 42 years later, it is eight times as big – and 16 times as big after 56 years. By 70 years – less than the life expectancy of a child born in Malaysia today – the economy will have grown 32 times.
Since economic growth is still largely linked to both resource consumption and pollution and waste production, these too will have grown by comparable amounts.
At a 6% growth rate, with a doubling time of about 12 years, the economy will have grown by 64 times after about 72 years – again, still well within that child’s life expectancy.
But we are already facing multiple ecological crises that threaten the underpinnings of our societies, our economies and our overall health and wellbeing.
Does anyone seriously believe the Earth can sustain even a doubling of our current impact, never mind a 32 to 64-fold increase over the lifetime of the next generation?
As Kenneth Boulding, a former President of both the American Economic Association and the American Association for the Advancement of Science famously remarked, “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”
This is why leading thinkers in the field of economics are proposing a new economics, more suited to meeting the needs of the world’s population – and the needs of the Earth – in the 21st Century. Some describe this as a “steady state economy”. In their book Enough is Enough Rob Dietz and Daniel O’Neill describe it thus:
an economy where resource use is stabilized within environmental limits, and the goal of increasing GDP is replaced by the goal of improving human well-being. It’s an economy where the goal is better lives, not more stuff.
Similarly Kate Raworth, in her book Doughnut Economics, states:
To meet all people’s needs within the means of the living planet, rich countries must overcome their dependency on GDP growth and develop economies that are regenerative and distributive by design.
Regenerative here means an economy that regenerates natural capital and restores ecosystems. Distributive means that the economic benefits are distributed equitably so that everyone’s basic needs are met – what she calls the social foundation.
Such an economy seeks the sweet spot, the ‘just right’ point at which everyone can lead healthy, productive lives, within the constraints of the Earth’s physical and ecological limits.
My current focus in healthy cities, what I call Healthy Cities 2.0, is about how this can come about at the local level.
Towards one-planet cities and communities
I live in another 200-year-old Victorian colonial port city, Victoria, capital of the Canadian province of British Columbia (BC).
So when I was invited by Think City to come to Penang to share my thinking about healthy cities and sustainable development, I was interested in the similarities – and some of the differences – in the challenges of being a healthy and sustainable city faced by both Victoria and Penang and the differing responses to those challenges.
First, let me talk about what I know best – Victoria. The Greater Victoria Region, with a population of about 350,000, sits at the southern tip of Vancouver Island, off the coast of BC. It consists of 13 municipalities ranging in size from 114,000 (Saanich, where I live) to 2,250 (Highlands).
Several of the so-called Western communities are rapidly growing suburban communities, and they are connected to the urban core (the City of Victoria, population 86,000) by one highway and a narrow road, presenting significant traffic problems.
The challenge that I am working on in my own community – through a group we call Conversations for a One Planet Region – is to become, as the name suggests, a one-planet region. This would be a place that has a high quality of life and good health for all while living within the limits of this one small planet that is our home.
Right now, Canada as a whole acts as if we have five planets, because our ecological footprint per person (the amount of biocapacity we use to meet our needs and dispose of our wastes) is five times the actual biocapacity of the Earth.
Malaysia, with its ecological footprint of 2.6 planets per person, is fast approaching the average footprint of high-income countries, which is 3.6 planets.
But we only have one planet, and despite the fantasies of Elon Musk and his followers, there are no other planets available to us – there is no Planet B.
So the challenge we face – the greatest challenge confronting humanity in the 21st Century, and especially the people of the high and middle-income countries – is how we reduce our footprint to the equivalent of one planet, while at the same time maintaining a high quality of life and good health for all the people.
For Canada, this will mean an 80% reduction in our footprint over the next few years, while for Malaysia it means a 60% reduction.
Measuring our local ecological footprint
The ecological footprint can be measured at any level, including at the level of the municipality, although it is somewhat complex and challenging to do so.
We were fortunate to have been chosen for a 2018 project led by Jennie Moore at the BC Institute of Technology, which measured the ecological footprint for several communities in North America, using a methodology she had developed for her PhD research, supervised by Professor William Rees at the University of British Columbia, who was one of the creators of the ecological footprint.
George Box, a noted statistician, once said – referring to statistical models – that “all models are wrong, but some models are useful”. By that he meant that models are not reality, just models.
Similarly, in my experience, all indicators are wrong – in that they ‘indicate’ but do not fully describe the situation, and they can be misleading. While the managerial philosophy that ‘if you can’t measure it, you can’t manage it’ may be true, the flip side of that argument is that if you measure the wrong thing, you end up managing the wrong thing, which is the case with GDP, as discussed earlier.
As with all indicators, the ecological footprint is not perfect, but it is at least measuring, however imperfectly, the right thing.
Moore’s method uses household expenditure data (available from the federal government) to determine what people purchase and then estimate the ecological footprint of those goods and services.
The result is an under-estimate as it does not include public services, since they are not purchased, nor does it include goods made for export from the region.
Nonetheless it is a useful indicator, showing where we collectively have an impact through our way of life. And it yielded some surprising results in our region.
First, the ecological footprints of both Saanich (the inner suburban municipality, where I live) and Victoria (the downtown core) – between them, about half the population of the Greater Victoria Region – are about three planet’s worth of biocapacity, much less than the Canadian footprint.
Part of the difference is that at a national level, which uses a somewhat different approach to measurement, government services and goods made for export are counted – and Canada exports a lot of fossil fuel, lumber and food, especially grain.
In addition, perhaps because unlike much of the rest of Canada the Greater Victoria Region has mild English-like winters and summers, we don’t use as much energy in the winter for heating and the summer for cooling.
In addition, 90% of our electricity comes from hydro-electric sources. So we don’t use much fossil fuel to generate that power; since carbon emissions are generally about half the total footprint, this makes a big difference.
But it is in the details that we find the greatest surprise. Almost half of the ecological footprint from both municipalities is from food, almost a quarter is from transportation and roughly one-sixth is from buildings.
Between them, these three account for 85% of the footprint in Victoria and 90% in Saanich, with transport accounting for the difference between the two municipalities (remember, Saanich is more suburban).
Digging deeper, we find that almost three-quarters of the food footprint in Saanich is due to consumption of an animal-based diet (meat, fish, eggs and dairy). This is not too surprising, there is considerable evidence that an animal-based diet – especially meat, and especially beef – is very energy and resource intensive and has a large footprint.
So one recommendation stemming from this research is that we markedly reduce the amount of meat and other animal products we eat, and shift to a low-meat diet. A good nutrition policy would be to follow Michael Pollan’s advice: eat food, not too much, mostly plants.
In addition, we know a lot of food that is bought is not eaten, so the research team also recommends reducing overall food purchasing by 25%.
Turning to transport, almost three-quarters of the transport footprint comes from private vehicle use, while almost three-quarters of the building footprint is from the operating energy of the building – heating, cooling and electricity supply.
The recommendations here are to:
- convert half of petrol private vehicles to electric power
- shift more people from private vehicles to active transport (biking, walking) and public transport (which means creating more dense, multi-use, liveable, walkable communities and ending urban sprawl)
- eliminate fossil fuel use and emissions in buildings (which would include not using electricity from fossil-fuelled generating systems, especially coal)
The good news is that there are important health co-benefits from all these approaches to reducing the ecological footprint.
There is good evidence that a low-meat, more plant-based diet can help reduce a wide range of chronic diseases.
Reducing food purchasing and consumption might help reduce obesity (reducing portion sizes served in fast food and other eating establishments and in supermarkets would help here).
Meanwhile reducing fossil fuel use in vehicles and building operations will improve air quality and help combat climate change.
Active and public transport will increase physical activity and reduce motor vehicle crashes, injuries and deaths.
But a study alone, useful though it is, cannot lead to the changes we need; that will take social and political will. This means we have to put all the issues I have discussed thus far on the social and political agenda if we are to create a one-planet region.
About the author
Dr Trevor Hancock is a public health physician and health promotion consultant and recently retired from his position as a professor and senior scholar at the School of Public Health and Social Policy at the University of Victoria in Canada.
In the 1980s he was one of the founders of the global Healthy Cities and Communities movement and was the first leader of the Green Party of Canada. He later co-founded both the Canadian Association of Physicians for the Environment and the Canadian Coalition for Green Health Care.
For more than 30 years he has worked as a consultant for local communities, municipal, provincial and national governments, healthcare organisations, non-governmental organisations and the World Health Organization.
His work now is focused on the massive and rapid global ecological changes that are the greatest challenge we face in the 21st Century, a growing threat to the health of the population, especially in cities, and the role of cities in responding to that challenge.
As one of the originators of the Healthy Cities movement more than 30 years ago, he was recently in Malaysia to deliver a keynote address at the eighth Alliance for Healthy Cities conference in Kuching. The alliance is a regional grouping that includes the South East Asian countries, Japan, China, Taiwan, Australia, New Zealand and Oceania. This extended essay in three parts is based on his speech there and two subsequent speeches for Think City in Penang and Kuala Lumpur (23 and 25 October 2018).