Green Growth Indicators: OECD Experience

1. Green Growth Indicators: OECD Experience Seminar on Green growth and Official Statistics Korea Paul Schreyer (OECD)

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

3. 1. OECD Green Growth Strategy

4. 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

5. ...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.

6. ...what’s 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

7. 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

8. 2. OECD Green Growth Indicators

9. ... indicators report

10. 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

11. 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

12. Framework

13. Indicator groups and topics

14. …full list of about 25 indicators (extract)… with considerable gaps

15. …qualifier for each indicator

16. Measuring Well-being: what’s the link? • Different objectives • OECD’s 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

17. 3. Measurement Agenda

18. 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:

19. 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

20. 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)

21. 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

22. 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

23. 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

24. 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

25. 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@oecd.org Join the discussion!

26. Thankyou! Paul.Schreyer@oecd.org www.oecd.org/greengrowth