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An Assessment of the Valuation Methods Used to Calculate the Index of Sustainable Economic Welfare (ISEW), Genuine Progress Indicator (GPI), and Sustainable Net Benefit Index (SNBI)

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  • Philip Lawn

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Abstract

For some time now, ecological economists have been putting forward a ‘threshold hypothesis’ – the notion that when macroeconomic systems expand beyond a certain size, the additional cost of growth exceeds the flow of additional benefits. In order to support their belief, ecological economists have developed a number of similar indexes to measure and compare the benefits and costs of growth (e.g., the Index of Sustainable Economic Welfare and the Genuine Progress Indicator). In virtually every instance where an index of this type has been calculated for a particular country, the movement of the index appears to reinforce the existence of the threshold hypothesis. Of late, a number of observers have expressed concerns about whether these alternative indexes reflect concrete reality or the prejudices of ecological economists. In view of these concerns, this paper closely examines the valuation methods used in the calculation the Index of Sustainable Economic Welfare, the Genuine Progress Indicator, and the Sustainable Net Benefit Index. It is argued that a consistent and more robust set of valuation techniques is required in order for these alternative indexes to gain broad acceptability. Copyright Springer 2005

Suggested Citation

  • Philip Lawn, 2005. "An Assessment of the Valuation Methods Used to Calculate the Index of Sustainable Economic Welfare (ISEW), Genuine Progress Indicator (GPI), and Sustainable Net Benefit Index (SNBI)," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 7(2), pages 185-208, June.
  • Handle: RePEc:spr:endesu:v:7:y:2005:i:2:p:185-208 DOI: 10.1007/s10668-005-7312-4
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    References listed on IDEAS

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    1. T.K. Rymes., 1992. "Some Theoretical Problems in Accounting for Sustainnable Consumption," Carleton Economic Papers 92-02, Carleton University, Department of Economics, revised 1993.
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    Cited by:

    1. Andrade, Daniel Caixeta & Garcia, Junior Ruiz, 2015. "Estimating the Genuine Progress Indicator (GPI) for Brazil from 1970 to 2010," Ecological Economics, Elsevier, vol. 118(C), pages 49-56.
    2. Boris Korobitsyn, 2015. "Methodological Approaches for Estimating Gross Regional Product after Taking into Account Depletion of Natural Resources, Environmental Pollution and Human Capital Aspects," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(3), pages 77-88.
    3. Menegaki, Angeliki, 2008. "Valuation for renewable energy: A comparative review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 12(9), pages 2422-2437, December.
    4. Brennan, Andrew John, 2008. "Theoretical foundations of sustainable economic welfare indicators -- ISEW and political economy of the disembedded system," Ecological Economics, Elsevier, vol. 67(1), pages 1-19, August.
    5. Kubiszewski, Ida & Costanza, Robert & Gorko, Nicole E. & Weisdorf, Michael A. & Carnes, Austin W. & Collins, Cathrine E. & Franco, Carol & Gehres, Lillian R. & Knobloch, Jenna M. & Matson, Gayle E. & , 2015. "Estimates of the Genuine Progress Indicator (GPI) for Oregon from 1960–2010 and recommendations for a comprehensive shareholder's report," Ecological Economics, Elsevier, vol. 119(C), pages 1-7.
    6. Kubiszewski, Ida & Costanza, Robert & Franco, Carol & Lawn, Philip & Talberth, John & Jackson, Tim & Aylmer, Camille, 2013. "Beyond GDP: Measuring and achieving global genuine progress," Ecological Economics, Elsevier, vol. 93(C), pages 57-68.
    7. Hayashi, Takashi, 2015. "Measuring rural–urban disparity with the Genuine Progress Indicator: A case study in Japan," Ecological Economics, Elsevier, vol. 120(C), pages 260-271.
    8. Brennan, Andrew John, 2013. "A critique of the perceived solid conceptual foundations of ISEW & GPI — Irving Fisher's cognisance of human-health capital in ‘net psychic income’," Ecological Economics, Elsevier, vol. 88(C), pages 159-166.
    9. repec:eee:enepol:v:108:y:2017:i:c:p:435-450 is not listed on IDEAS
    10. Lawn, Philip, 2013. "The failure of the ISEW and GPI to fully account for changes in human-health capital — A methodological shortcoming not a theoretical weakness," Ecological Economics, Elsevier, vol. 88(C), pages 167-177.
    11. repec:eee:ecolec:v:144:y:2018:i:c:p:292-303 is not listed on IDEAS
    12. repec:spr:bioerq:v:3:y::i:1:d:10.1007_s41247-017-0034-z is not listed on IDEAS
    13. repec:spr:bioerq:v:3:y:2018:i:1:d:10.1007_s41247-017-0034-z is not listed on IDEAS

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