Quality of life counts

CHAPTER 2
Criteria for sustainable
development – the framework
and models

ECONOMIC, SOCIAL AND ENVIRONMENTAL CAPITAL

2.1 In the academic literature, sustainable development is characterised as development in

which total “welfare” is not decreasing over time. Just as economic development is
sustainable provided economic (or man-made) capital is non-decreasing, sustainable
development requires total capital – that is, economic capital, human and social capital and
environmental capital – to be non-decreasing. “Capital” in this context refers both to the
stock and to the quality of the resources – for example, the skills, health and knowledge of
the population, and the quality of air and other natural resources.

2.2 In practice it is not possible to measure the total stock of capital directly, though estimates
have been made of the monetary values which might be assigned, in order to assess whether
increases in, say, economic capital have outweighed decreases in, say, environmental
capital1,2. But such valuations are controversial and are not widely accepted. There is in any
case considerable debate about the extent to which one type of capital can be substituted
for another – for example, whether improvements in people’s health or increases in man-
made capital can compensate for the loss of species of wildlife. The indicators cannot reflect
this. But they can illustrate the extent to which different aspects of economic, human,
social and environmental capital are improving, declining or conflicting. They can
therefore help society and policy makers to make informed value judgements about
whether, overall, welfare is improving. The indicators cannot reflect all aspects of welfare.
But they are transparent and have been developed following a wide consultation on the
strategy itself and on the indicators more specifically (described more fully in chapter 7).
Reference has also been made to the various international initiatives to develop indicators
and the indicator sets developed by other countries (see also chapter 6).

1 Pearce, D. W. and Atkinson, G. 1993. Capital theory and the Measurement of Sustainable
Development: An Indicator of Weak Sustainability. Ecological Economics 8.
2 Expanding the Measure of Wealth. World Bank 1997

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 Criteria for sustainable development – the framework and models

Extract from the sustainable development strategy3

Sometimes discussion of sustainable development, particularly in richer countries, has focused
mainly on environmental limits. But economic and social boundaries must also be recognised.
An economy in long term recession is not sustainable. Nor is a situation where many people
are denied opportunity and face poverty and exclusion. Development which ignores the
essential needs of the poorest people, whether in this country or abroad, is not sustainable
development at all.

We are all familiar with the idea of economic capital, and the need to conserve it.
Families save money for a rainy day; businesses invest in order to expand and flourish; local
and central governments lead the way in investing in schools, hospitals and roads.

Our social capital consists of the skills and knowledge, health, self-esteem and social networks
of people and communities in the UK. The failure of urban renovation schemes of the recent
past, which concentrated on physical investment alone – for example some 1960s and 1970s
housing estates – demonstrate the importance of building social capital as well as bricks
and mortar.

Environmental capital provides the third side of the triangle. We cannot protect every bit
of the environment forever; in some cases, individual development decisions will require
trade-offs between economic, social and environmental objectives. But it is important to seek
opportunities to achieve objectives simultaneously, and to consider the cumulative impact of
decisions on overall environmental capital. The Government aims to prevent further overall
deterioration, and to secure enhancements which contribute to an overall improvement in
quality of life. That means environmental indicators in this Strategy moving in the right
direction, alongside those on economic and social objectives.

Throughout this Strategy, the emphasis is on developing our economic and social
capital while exercising sound stewardship over our environmental capital.

OBJECTIVES, TARGETS AND SUSTAINABILITY REFERENCE VALUES

2.3 Each core indicator is associated with an objective4, to demonstrate the direction in which
it would be desirable for it to move. Some of the objectives and indicators are linked to
specific targets. However, as the analyses in chapter 5 help to illustrate, achieving
sustainable development is about integrating the various objectives, which are often linked.
Progress towards one objective may impact adversely on progress towards other objectives.
The balance between these objectives will change over time, and it may not be possible or
desirable to set a specific target for each indicator.

3 Paragraphs 4.2 – 4.6

4 There are also a few contextual indicators, not linked to any objective but included because they give
relevant background information, which helps to explain trends in other indicators – for example,
indicators of demographic change.

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Quality of life counts

2.4 However, in some cases there are scientifically determined and generally accepted limits
or “sustainability reference values” (SRVs5); if these were breached it would imply that
progress was unsustainable in this area. In the environmental areas, such limits exist for
concentrations of certain pollutants in air and water, for example. There are also SRVs
for social issues – for example, we would consider it unacceptable for people to be dying
of starvation, or to be without access to clean water or decent habitation. Similarly, an
economy in long term recession is unsustainable. Consultation following the publication of
the preliminary indicators in 1996, and during development of the current set, highlighted
the need for the indicators to flag up where sustainable limits were being breached; we need
to know “what’s in the red zone”.

2.5 While ensuring we are not breaching SRVs is a necessary condition for sustainable
development, it is not sufficient. In many areas there are no known SRVs. Some SRVs
can be breached at a local level whilst remaining consistent with sustainable development
at a national or international level; a good example of this is river water quality.

2.6 In terms of social capital, basic human needs are more than met in the UK. So to assess
whether we are achieving sustainable development we need to consider whether we are
developing our economic, social and environmental capital, as characterised by the
achievement of the set of widely accepted objectives and targets, as well as whether we
are breaching SRVs.

Figure 2.1 Some interactions between economic, social and

environmental capital

Human and
Social Capital
eg health, skills,
knowledge,
community spirit Income; employment
opportunities
Labour; consumption of
goods and services

Direct impacts from Economic

Health impacts; living, human activity; Capital
working, leisure environmental
conditions awarenesss and actions eg buildings, structures,
to preserve the machinery, vehicles
environment

Resources; absorption/
dispersion of pollution
Emissions of pollutants,
waste, investment in
environmenal protection
Environmental
Capital
eg minerals, forests,
species of flora/fauna,
air, water, soil

5 An environmental SRV is defined as ‘any value for an environmental variable which is established and
broadly agreed, mainly on a scientific basis, to be either acceptably safe or tolerable for human health
and welfare, ecosystems or other natural resources’.

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 Criteria for sustainable development – the framework and models

2.7 The objectives in the Strategy, and the targets associated with them, have been set for
achievement in the future. It is beyond the scope of this report to include projections,
except where they have already been published, and it should be noted that published
projections do not include the impact of new policies. However, chapters 3 and 4 include
a benchmark assessment for each indicator of whether the direction of change is consistent
with meeting these objectives over two time periods: 1970–1998 and 1990–1998.
These time frames are essentially arbitrary, but the first has been selected to provide a
longer-term perspective – roughly, one generation of 25–30 years. The second reflects
more recent trends.

THE INDICATOR FRAMEWORK

2.8 Since sustainable development covers a very wide range of objectives and indicators, an
organising framework is helpful in highlighting the key areas and priorities, and the links
between the issues and the indicators. There is no international consensus on a particular
framework, though most used by other countries or international organisations have been
based on the three main areas – economic, social and environmental issues. This approach
also informed the framework of the United Kingdom Strategy and indicators, although it
also sought to show how issues were linked by presenting them under six themes:

• assessing overall progress and priorities – using the headline indicators;

• sustainable economy – covering efficient use of resources, economic stability and

competitiveness, education and skills of the population, employment and equal
opportunities, ethical trading, action by producers and consumers in priority areas
(the home, home appliances, food and drink, personal transport, tourism and leisure);

• building sustainable communities – local economic vitality and equity between

communities in the UK, health, access to services, culture and sport, housing,
planning and design, local environmental quality, crime, institutional arrangements
and participation;

• managing the environment and resources – indicators covering persistent pollutants,

climate change and energy, air quality, fresh water, seas oceans and coasts, soil,
landscape and wildlife, forests, minerals extraction and use;

• sending the right signals – indicators on the mechanisms by which sustainable

development can be put into practice, through government setting an example,
through policy instruments like taxes and regulation, through information and
campaigns to change people’s behaviour;

• international co-operation and development – measures of global population and

global poverty, aid to developing countries, implementation of international
agreements, comparison of UK resource consumption with that of other countries.

2.9 The complete framework of objectives and indicators is set out in Annex A of this report.
It should be noted that, for convenience and to avoid duplication, each indicator has been
situated once within the framework (except for the headline indicators, which appear in
their own separate overview section, and are also summarised within the topic-specific
sections). In practice, because of the crosscutting nature of the issues and objectives, many
of the indicators – arguably the better indicators – reflect more than one issue.

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Quality of life counts

HIERARCHIES OF INDICATORS – DIFFERENT INDICATORS FOR

DIFFERENT PURPOSES AND AUDIENCES

2.10 The objectives within the strategy have a clear hierarchy. At the top are the four very broad
objectives – maintenance of economic growth, social progress, effective protection of the
environment, prudent use of resources. Below these are more specific objectives – for
example: improving health, meeting climate change targets to cut greenhouse gas emissions.
Achievement of these second order objectives is reflected through the headline indicators.

2.11 Below these second order objectives are more specific objectives which are more closely
linked to particular policies and specific actions by particular groups or sectors – for
example, central or local government, the health service, manufacturing industry and
consumers. These objectives could be disaggregated further. A number of sectoral
sustainable development strategies have been produced or are being developed, for
example, for waste, chemicals, business, air quality, soil, construction and water supply.
Many individual organisations are now developing their own specific strategies for
sustainable development. Related strategies on health, poverty, welfare, education etc. also
have their own associated indicators. Regional bodies, local authorities and community
groups are developing sustainable development indicators for their area (see also chapter 6).
At each succeeding lower level of the hierarchy, the number of potential indicators, at
different levels of detail and geographical scale, is multiplied, as illustrated in Figure 2.2.

2.12 The national core set of indicators is intended:

• to describe, overall, whether we are achieving sustainable development;

• to highlight key national-scale policy initiatives relevant to sustainable development

and to monitor whether we are meeting key targets and commitments in those areas;

• to educate the public about what sustainable development means;

• to raise public and business awareness of particular actions which they need to take in
order to achieve more sustainable development;

• to report progress to international audiences;

• to help to make transparent the trade-offs and synergies between sustainable

development objectives.

2.13 An indicator has therefore been included in the national core set if it satisfies one of the
following criteria:

• it is an overarching “state of the nation” indicator, describing a key objective (broadly,

these are the “headline indicators”);

• it reflects a key international or national commitment or target;

• it supports a key message for individuals or business especially in relation to key actions
needed, for example on energy efficiency, health and safety at work, ethical trading etc;

• it is recommended for use in international reporting, for example as proposed by

UNCSD (unless another indicator reflecting the same or similar issue is felt to be more
appropriate in the UK).

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 Criteria for sustainable development – the framework and models

2.14 There are certain scientific and technical criteria, which an indicator also needs to satisfy.
It should:

• be representative;

• be scientifically valid;

• be simple and easy to interpret;

• show trends over time;

• give early warning about irreversible trends where possible;

• be sensitive to the changes it is meant to indicate;

• be based on readily available data or be available at reasonable cost;

• be based on data adequately documented and of known quality;

• be capable of being updated at regular intervals;

• have a target level or guideline against which to compare it (but see para 2.3 above).

2.15 Overall, the indicator set also needs to be as comprehensive as possible and reflect an
appropriate balance between the issues. In practice, this is difficult. Data are more readily
available in some areas, and some issues are hard to quantify. Further work to develop the
indicators is described in chapter 8.

AGGREGATED INDICATORS

2.16 The United Nations has for some years published a “human development index” (HDI)6
which is a composite measure reflecting life expectancy, educational standards and average
incomes. Each of the components in the index is given equal weight and it is particularly
intended for measuring progress in developing countries. Eurostat (the Statistical Office
of the European Communities) is developing “environmental pressure indices” in which
selected indicators in ten key areas are weighted together to produce an aggregated measure
of progress in each area. The indicators and weights were chosen subjectively by a panel
of experts.

2.17 Another approach is to develop a form of “green national product” in which economic
output is adjusted for changes in environmental capital (resource depletion and
environmental pollution, or more usually, the estimated costs of remediating environmental
pollution) and social capital (such as health, income inequality)7. In this approach, the
components are valued in monetary terms. In cases where resources have a market value,
monetary valuation is easier, although market prices do not necessarily reflect the full
environmental and social values of these assets. But where assets do not have a market
value, prices can only be assigned by subjective measures, such as people’s willingness to pay
(for example, to preserve species of wildlife, or to avoid environmental damage).

6 United Nations Development Programme (1998). Human Development Report 1998.

7 New Economics Foundation (NEF) and Friends of the Earth. 1997. More Isn’t Always Better: A special
briefing on growth and quality of life in the UK.

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Quality of life counts

2.18 The government takes the view that, while some of these ideas are useful as tools for raising
awareness, they are not yet scientifically valid or technically robust and so cannot be used to
monitor progress year on year in a reliable way. The choice of components, and the way in
which they are weighted together, is largely subjective. A different choice of components, or
of weights, would give different results, and hence the resulting measures are potentially
misleading. Further, conflicting movements in the individual components may result in the
masking of important underlying trends. Perhaps the most important difficulty with such
indicators is that they are less easily understood by the public, so they do not meet the
objective of helping people to understand what sustainable development means, nor will
individuals feel that their actions could have any influence on a composite index.

2.19 The government considers that the headline indicators present an alternative, more
transparent and comprehensive, picture than any aggregated measure, which would
inevitably be subject to criticism about the choice of components and weights used. A full
description of the headline indicators, and an analysis of the trends and the overall picture,
is set out in chapter 3.

PRESSURE, STATE, RESPONSE AND DPSIR MODELS

2.20 A number of models have been proposed for developing indicators, and illustrating the
links between issues, particularly for environmental indicators. The best known of these is
the “pressure, state, response” model developed originally by OECD. This is also the basis of
the United Nations Commission for Sustainable Development (UNCSD) framework of
sustainable development indicators. It has been adapted by the European Environment
Agency into the “DPSIR” model – driving forces, pressures, state, impact, responses8.

2.21 These models were developed primarily to help in understanding the interactions between
the economy and the environment so they are not entirely appropriate for dealing with
sustainable development. For example, in both PSR and DPSIR models growth in traffic is
seen only as a driver of pressures on the environment. But it is people’s desire for access – to
goods and services, to work, to social and leisure opportunities – which is the underlying
driver, not (in most cases, anyway) the desire to travel in itself. So a sustainable
development model also needs to capture the increased welfare (or increased human
capital) from improved access. Furthermore, the PSR and DPSIR models do not readily
translate to social issues like education. The expert working groups on indicators (see
chapter 7) felt that the DPSIR model was a useful analytical tool, particularly in developing
indicators reflected the environmental impacts of a particular sector, but that most non-
technical users would find it confusing for the model to be used explicitly in presenting the
indicators. Furthermore, it is not entirely convergent with the ordering of the Strategy
framework. Nevertheless, the environmental indicators have, where possible, been
classified according to the DPSIR model in the electronic technical annex (see the section
on the website later in this chapter).

8 Europe’s Environment: the Second Assessment. p.9 EEA 1998

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 Criteria for sustainable development – the framework and models

Figure 2.2 Some of the links between sustainable development indicators

and other related indicator initiatives

International sustainable
development strategies

International sustainable
development indicators

Modernising government UK sustainable National Strategies on

development strategy eg health, education,
welfare to work, poverty
OPA, PSA1 Core national sd Indicators for national
indicators indicators & “headline” strategies
indicators

Regional bodies Sectoral sustainable

eg regional round tables
or chambers, Regional
Development Agencies
RDA indicators, regional
competitiveness
indicators
Regional sustainable
development frameworks
Regional sustainable
development indicators
development strategies
eg waste, chemicals,
business, construction
Sectoral sustainable
development indicators

Best Value Local Agenda 21 and Business sustainable

local sustainable development plans
development strategies
Best Value indicators Local sustainable Individual businesses
development indicators indicators

1 Output and Performance Analysis and Public Service Agreements

INDICATOR TYPOLOGY

2.22 The EEA has also developed a useful “typology” of indicators9,10. The classification of the
core set of indicators according to the typology will be illustrated in the technical annex.
Nearly 60 of the indicators are descriptive indicators (type A), and over 40 others are
performance indicators (type B), which are linked to a target or goal. Only 8 of the
individual indicators are efficiency indicators (type C), but analyses of eco-efficiency,
and linking the environmental indicators to social and economic indicators are illustrated
in chapter 5. The remaining indicators are either contextual indicators or those ‘to be
developed’ in the future. None of the indicators is a total welfare indicator (type D),
although taken as a whole the core set of indicators reflect a broad overall assessment
of welfare covering many parts of the social, environmental and economic dimensions
(see also the section on aggregated indicators earlier in this chapter).

9 European Environment Agency. Technical report No 25 Environmental indicators: Typology and

overview. EEA, Copenhagen
10 European Environment Agency (1999). Technical report No 18 Towards a Transport and Environment
Reporting Mechanism (TERM) for the EU, part 1. EEA, Copenhagen

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Quality of life counts

The EEA Typology of Environmental Indicators

Type A: descriptive indicators of what is happening to the environment or human

health eg emissions and concentrations of pollutants

Type B: performance indicators linked to a reference value or policy target,

illustrating how far the indicator is from a desired level

Type C: efficiency indicators illustrating the efficiency of production and

consumption processes, eg energy consumption per unit of output

Type D: total welfare indicators which aggregate together economic, social and
environmental dimensions to illustrate whether, overall, welfare is increasing.

ENVIRONMENTAL “SATELLITE” ACCOUNTING

2.23 The UK in common with a number of other countries and international organisations such
as the UN is developing environmental accounts which, together with indicators, are
central to the assessment of the relationship between the economy and the environment,
for example in analysing the effect of policy initiatives such as the Climate Change Levy.
The accounts aim to provide information on the links between the environment and the
economy in a consistent and systematic way.

2.24 Environmental accounts complement indicators. Indicators may be derived directly from
environmental accounting work and the accounts highlight areas which may be usefully
monitored by indicators. But indicators also extend the scope of accounts by looking
beyond calculated emissions, discharges, production of wastes etc by government,
businesses, and people to the effects these have on environmental quality – air quality,
the quality of rivers and the sea for example.

2.25 Environmental accounts cover areas that are not well measured in the traditional
national accounts, by analysing the emissions of pollutants by sectors of the economy
(eg atmospheric pollutants such as ammonia, black smoke, methane, and lead) and linking
them to the input-output tables and other economic data held within the national
accounts. The accounts can also show the contributions that the depletion of natural
resources like oil and gas make to the economy.

2.26 Reports on the progress made in developing environmental accounts in the UK and the
latest results were published by the Office for National Statistics (ONS) in 1998 and in
the Blue Book 199911. The UK is also contributing to the work of the London Group of
international experts in environmental and national accounts aimed at producing a revised
system for integrating environmental and economic accounting (SEEA) first produced by
the UN12.

11 UK Environmental Accounts, 1998; and United Kingdom National Accounts, The Blue Book, 1999
12 Integrated Environmental and Economic Accounting, interim version, UN 1993

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 Criteria for sustainable development – the framework and models

THE WEBSITE AND ADDITIONAL INFORMATION

2.27 Quality of life counts will also be available on the DETR website at
http://www.environment.detr.gov.uk/sustainable/index.htm. Initially the electronic version
will include selected extracts from the publication, but it will be extended to include the
whole text and charts, together with the underlying data and additional information which
are not presented in this paper version.

2.28 A few of the indicators, namely air emissions (H9, N3, P2, P3 and U6) and bird
populations (H13), are estimates based on data and modelling. In these cases past
estimates may be revised when new data or improved methodologies are developed and
applied retrospectively to earlier years. For example, adjustments in the methodology for
emission estimates are made to accommodate new technical information and to improve
international comparability. These indicators reliably reflect general medium-term or long-
term trends, but not too much reliance should be attached to levels for individual years
or on short-term changes from year-to-year. Further details of the methodologies used and
estimates of the reliability of the figures will also be given in the electronic technical annex.

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