Tony Irawan

The Methodology of the EIIW-vita Indicator

There are many sustainability approaches applied in the literature and naturally one will want to carefully consider the methodology being applied. Ultimately, a composite sustainability indicator which takes several dimensions of sustainability into account should, at the very least, be consistent, informative, and relevant, for households, investors, and policymakers alike. Ideally, one will want to be able to aggregate national indicators across a number of countries; thus, one could also have access to information on global sustainability. It will be important to choose those elements of a composite indicator which give reliable information about the sustainability of production on the basis of current economic patterns, while also taking into account the international dimension of production and consumption. An examination of the methodology of indicator building is a necessary part of a comprehensive analysis.

Traditional Approaches to Environmental Degradation and Innovation Theory

Standard approaches to damaging of the environment greatly emphasize the issue of nonrenewable resources. This focus is not surprising, as some vital resources used in industry are important nonrenewable inputs. However, one should not overlook the fact that innovation dynamics and technological progress typically can mitigate some of the problems in the long run—here, the focus is on both process innovations, which economize on the use of resources, as well as product innovations, which might bring about the use of different nonrenewable or of synthetic chemical inputs. At the same time, one may argue that until 2050 there will be considerable global population growth and most of the output growth will come from Asia—including China and India. In these countries, emphasis on fighting global warming is naturally not a top priority, but rather economic catching-up figures prominently in the political system, and economic analysis suggests that China and India still have a large potential for both economic catching-up and long-term growth, respectively (Dimaranan et al. 2009). Nevertheless, one may emphasize that economic globalization also creates new opportunities for international technology transfer and for trade with environmental (green) goods. If there is more trade with green goods and if certain countries successfully specialize in the production and export of such goods, the global abilities in the field of environmental modernization might be sufficient to cope with global warming problems: This means the ability to fight global warming on the one hand and on the other hand the ability to mitigate the effects of global warming. A potential problem of putting more emphasis on innovation dynamics is that a wave of product innovations could trigger additional emissions, which would partly or fully offset the ecological benefits associated with higher energy efficiency which would result in a generally more efficient way to use natural resources.

Green Innovation Dynamics

Innovation dynamics are crucial for achieving sustainable development and, from this perspective, innovation systems and green entrepreneurship are important, as is the institutional framework of economic policy. Resource-saving technological progress and progress in the field of energy efficiency are key challenges. The latter refers to the global warming problem. That such a problem exists can hardly be questioned. Between 1880 and 2010, the global mean temperate increased and greenhouse gas emissions have contributed to this.

Why the Global Sustainability Perspective Is Important for Asian Countries

For the last decade, Asian countries have been enjoying a positive and steady economic growth. It is projected that the economy of Asia will grow steadily at 5.4 % in 2014 and 5.5 % in 2015 (IMF 2014). Despite some disruptions, such as the global economic crisis, the Asian economy still grew positively due to its strong domestic demand (IMF 2014). However, one question remains, “Is Asian economic growth sustainable?” Here one may use the EIIW-vita Global Sustainability Indicator to monitor current progress with respect to the sustainability of Asian economic growth.

General Sustainability Trends for Key Countries in the World Economy

Covering global sustainability requires having a consistent composite indicator and focusing on the development of sustainability over time and across countries (as well as looking at the aggregate result for the world economy). The indicator considered is constructed, in the basic version, of three elements. An extended version, which is available for a shorter time period—there is a problem of data availability—additionally takes into account the role of water productivity. Subsequently, the dynamics of the EIIW-vita Global Sustainability Indicator is analyzed with a specific focus on leading OECD countries but also with a focus on future key economic players in the world economy, namely, Brazil, Russia, Indonesia, India, China, and South Africa (BRIICS). Taking a closer look at these countries (with a rather low income or medium per capita income), which are expected to show relatively high growth in the first half of the twenty-first century, is particularly interesting, not least because the expected economic catching-up process in itself raises some specific challenges with respect to sustainability.

Green Modernization Issues and Sustainability Indicators

Climate policy has become a key element of modern economic policy in a world economy facing the challenges of long-run economic growth—associated with a rising use of energy—and the need to limit global warming. A global temperature rise of more than 2° relative to 1850 seems to bring a considerable risk of warming and hence there is a need for enhanced energy efficiency on the demand side and for a rising share of renewables, which, however, cannot be achieved without considerable cost. Innovation is a natural part of the process toward a less CO2-intensive way of energy generation and it is also necessary for sustainability. The latter is a broad concept and requires that current generations adjust their production and consumption patterns—i.e., lifestyles—in such a way that future generations will have no less favorable prospects for economic prosperity and a healthy life than the current population. In the public debate, as in the discussions in the political system, there is a need to understand the comprehensive challenges of sustainability; to that end, a compact composite indicator for sustainability is needed to signal the current ecological stress and the ecological quality, respectively. Thus, this book is about the relevance of constructing and using a global sustainability indicator (GSI).

New Indicator Concept

At a basic level, one could build indicators based on the individual, which is often a good way to motivate individuals to reconsider their respective lifestyles. Alternatively (or in a complementary way), one may develop indicators with a focus on individual countries so that the focus is more on political action, including opportunities for international cooperation. A consistent theoretical basis for a global sustainability indicator is useful, and it is therefore argued here that one should focus on three elements for assessing global sustainability. An indicator set will be suggested in which the main aspects are: