Development Concerns
Pnar Deniz
Outline
Sustainable Development
Importance of Adjusted Net Saving in Sustainable Development
An Ecological Perspective in Sustainable Development: Ecological
Footprint
An indicator for Development: Human Development Index
Sustainable Development
The term Sustainable Development has become popular since the UN
Conference on Environment and Development held in Rio de Janeiro in 1992.
"Sustainable development is development that meets the needs of the present
without compromising the ability of future generations to meet their own needs.
The starting point of theory formation is the ethical idea of sustainability. It is
based on obligations toward future generations and presupposes
intergenerational equity.
Concerning specific resources and services (e.g. fresh water, the atmosphere as a
carbon sink, the wide variety of ecosystems), it is evident that continuing growth
at these utilization rates is unsustainable.
Problems on earth are diverse: underdevelopment, poverty, drought
and famine, environmental depletion, wastage, waste of resources
etc.
The aim of Sustainable Development is to solve these problems and
create a situation that is of long-term durability for all present and
future generations, known as intra- and intergenerational equity.
Sustainable Development contains within it two key concepts:
the concept of needs, in particular the essential needs of the world's poor, to
which overriding priority should be given,
the idea of limitations imposed by the state of technology and social organization
on the ability of the environment to meet present and future needs.
In his essay, Malthus argued that the geometrical power of
increase in human numbers (world population), and an
arithmetical growth in agricultural production, would
regularly combine to produce famine, increased mortality,
and longer hours of work.
According to Malthus, population growth would reach
such a level that the land would no longer be able to
support it, and widespread starvation would occur.
Sustainable Development concept has three main pillars: social,
economic and ecological aspects.
Adjusted net saving (ANS)
Adjusted net saving (ANS) measures the true rate of saving in an
economy after taking into account investments in human capital,
depletion of natural resources and damages caused by pollution.
Adjusted net saving, known informally as genuine saving, is an
indicator that aims to assess an economys sustainability based on the
concepts of extended national accounts.
Positive savings allow wealth to grow over time thus ensuring that
future generations enjoy at least as many opportunities as current
generations.
In this sense, adjusted net saving seeks to offer policymakers who have
committed their countries to a sustainable development pathway, an
indicator to track their progress in this endeavor.
Adjusted net saving is derived from the standard national accounting
measure of gross saving by making four adjustments:
(i) consumption of fixed capital is deducted to obtain net national saving
(ii) current public expenditure on education is added to account for investment
in human capital
(iii) estimates of the depletion of a variety of natural resources are deducted to
reflect the decline in asset values associated with extraction and depletion
(iv) deductions are made for damages from carbon dioxide and particulate
emissions.
How to calculate Adjusted Net Saving
Gross national saving Consumption of fixed capital = Net National Saving
Consumption of fixed capital is the decline, during the course of the accounting
period, in the current value of the stock of fixed assets owned and used by a producer
as a result of physical deterioration, normal obsolescence or
normal accidental damage.
Net National Saving + Education Expenditure Energy depletion Mineral depletion
Net forest depletion Damage from carbon dioxide emissions Damage from particulate
emissions = Adjusted Net Saving
The indicator is measured in percentage by dividing ANS by Gross National Income
(GNI)
The Need for Adjusted Net Saving
Saving is a core aspect of development. Without the creation of a surplus for
investment, there is no way for countries to escape a state of low-level subsistence.
Resource dependence complicates the measurement of the saving effort because
depletion of natural resources is not visible in standard national accounts. The same is
true for pollution damages to existing assets.
Adjusted net saving overcomes this problem by measuring the change in value of a
specified set of assets, excluding capital gains.
If a countrys net saving is positive and the accounting includes a sufficiently broad
range of assets, economic theory suggests that the present value of wellbeing is
increasing. Conversely, persistently negative adjusted net saving indicates that an
economy is on an unsustainable path.
Adjusted net savings, excluding particulate emission damage (% of GNI) - Turkey
Adjusted net savings, excluding particulate emission damage (% of GNI)
25
20
15
10
5
0
974 976 978 980 982 984 986 988 990 992 994 996 998 000 002 004 006 008 010 012 014
1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2
Source: http://data.worldbank.org/indicator/NY.ADJ.SVNX.GN.ZS?locations=TR
The United Nations Conference on Environment and Development
(UNCED), also known as the Rio Summit, Rio Conference, Earth Summit
was a major United Nations conference held in Rio de Janeiro in 1992.
The issues addressed included:
systematic scrutiny of patterns of production particularly the production of toxic
components, such as lead in gasoline, or poisonous waste including radioactive
chemicals
alternative sources of energy to replace the use of fossil fuels which are linked to
global climate change
new reliance on public transportation systems in order to reduce vehicle emissions,
congestion in cities and the health problems caused by polluted air and smog
the growing scarcity of water
Kyoto Protocol
1992 Earth Summit results in the United Nations Framework Convention on
Climate Change (UNFCCC)
Parties to the UNFCCC agreed on reducing greenhouse gas emissions, based on
the premise that (i) global warming exists and (ii) human-made CO2 emissions
have caused it.
They signed The Kyoto Protocol, an international treaty adopted in Kyoto, Japan,
on 11 December 1997 and the Protocol entered into force on 16 February 2005.
There are currently 192 parties to the Protocol.
Excluding the US, Andorra, South Sudan and Canada, which withdrew effective December
2012.
Dependence on Oil
Oil is a valuable resource without which modern life would not be
possible.
What is oil mostly used for?
Energy!
Oil is one of the major global energy sources, and is used both as a
fuel and to generate electricity. Currently nearly 40% of the EUs
energy supply comes from oil.
OPEC Basket Price (US$)
recovery
The slow down of
Chinese economy
US crisis
Source: OPEC (2016) http://www.opec.org/opec_web/en/data_graphs/40.htm
How to secure energy after depletion of
resources?
Renewable energy sources will also be very important in helping us to
make the best use possible of our oil supplies. The EU has set a target
to have 20% of energy produced from renewable sources by 2020,
meaning that governments will be finding ways to increase the use of
technologies such as wind, wave and solar power.
Threats to Sustainability: Environmental
Degradation Poverty leads to
Population Growth
and is a primary cause
of ecological
degradation.
People are forced to
overexploit the
resources in order to
satisfy their own basic
needs.
Environmental Kuznets Curve
The relationship between
Environmental Degradation and Income
per Capita.
Countries with a low per Capita Income
has an increasing environmental
influence, countries with a high per
Capita Income reach a situation with
decreasing environmental impact.
The consequence is that only countries
with a high per Capita Income can
implement environmental precautions
effectively.
Ecological Footprint
It is the impact of human activities measured in terms of the area of
biologically productive land and water required to produce the goods
consumed and to assimilate the wastes generated.
More simply, it is the amount of the environment necessary to
produce the goods and services necessary to support a particular
lifestyle.
People living in richer, more developed countries generally have a
higher Footprint than those living in less developed countries.
Human Development Index (HDI)
The Human Development Index (HDI) is a summary measure of average
achievement in key dimensions of human development: a long and healthy
life, being knowledgeable and have a decent standard of living. The HDI is
the geometric mean of normalized indices for each of the three
dimensions.
The health dimension is assessed by life expectancy at birth
The education dimension is measured by mean of years of schooling for adults aged
25 years and more and expected years of schooling for children of school entering
age.
The standard of living dimension is measured by gross national income per capita.
The HDI uses the logarithm of income, to reflect the diminishing importance of
income with increasing GNI.
Calculating the human development indices
Step 1. Creating the dimension indices
Minimum and maximum values (goalposts) are set in order to
transform the indicators expressed in different units into indices
between 0 and 1. These goalposts act as the natural zeros and
aspirational goals.
The justification for placing the natural zero for life expectancy at 20 years is
based on historical evidence that no country in the 20th century had a life
expectancy of less than 20 years.
Societies can subsist without formal education, justifying the education
minimum of 0 years. The maximum for mean years of schooling, 15, is the
projected maximum of this indicator for 2025. The maximum for expected
years of schooling, 18, is equivalent to achieving a masters degree in most
countries.
The low minimum value for gross national income (GNI) per capita, $100, is
justified by the considerable amount of unmeasured subsistence and
nonmarket production in economies close to the minimum, which is not
captured in the official data. The maximum is set at $75,000 per capita.
Kahneman and Deaton (2010) have shown that there is a virtually no gain in human
development and well-being from annual income beyond $75,000. Assuming an annual
growth rate of 5 percent, only three countries are projected to exceed the $75,000
ceiling in the next four years.
Step 2. Aggregating the dimensional indices to
produce HDI
The HDI is the geometric mean of the three dimensional indices:
HDI data are available at:
http://hdr.undp.org/en/composite/HDI
http://hdr.undp.org/en/data
Country groupings
HDI
0.85
0.8
0.75
0.7
0.65
0.6
0.55
0.5
0.45
0.4
1980 1985 1990 1995 2000 2005 2010 2011 2012 2013 2014
Brazil China Croatia Hungary
Poland Russian Federation South Africa Turkey
Main Topics under Development Concerns
Agriculture & Rural Development
Aid Effectiveness
Climate Change
Education
Energy & Mining
Environment
Gender
Health
Infrastructure
Labor & Social Protection
Poverty
Science & Technology
Social Development
Trade
Urban Development
Some Websites for Sustainable Development
and Ecological Issues
World Bank: www.worldbank.org
International Monetary Fund: www.imf.org
United Nations Conference on Trade and Development (UNCTAD):
www.unctad.org
United Nations Development Programme (UNDP): www.undp.org
Food and Agricultural Organization (FAO): www.fao.org
World Trade Organization (WTO): www.wto.org
World Health Organization (WHO): www.who.int
United Nations Industrial Development Organization (UNIDO): www.unido.org
International Labour Organization (ILO): www.ilo.org
References
http://hdr.undp.org/en/content/human-development-index-hdi
http://data.worldbank.org/data-catalog/sustainable-development-goals
http://ec.europa.eu/environment/beyond_gdp/download/factsheets/bgdp-ve-ans.pdf
https://stats.oecd.org/glossary/detail.asp?ID=430
http://www.opec.org/opec_web/en/data_graphs/40.htm
http://elearn.uni-sofia.bg/pluginfile.php/84407/mod_resource/content/2/LectureNotes_Barbian-
Sofia2014.pdf
http://www.futurenergia.org/ww/en/pub/futurenergia2007/resources/sp07.htm
