Chapter 19: Accounting for the environment

1
Chapter 19 Accounting for the environment
19.1 Environmental indicators and state of the
environment reporting 19.2 Environmental
accounting theory 19.3 Environmental
accounting practice 19.4 Wealth and genuine
saving 19.5 Sustainable development indicators
2
Environmental indicators and state of the
environment reporting terminology
Environmental indicators/Environmental
statistics - biophysical data organised around
environmental issues State of the environment
report a compilation of environmental
indicators/statistics For the USA see Table 19.1
for EPA coverage go to http//www.epa.gov/roe
for the EPAs SOER For the UK see Table 19.2 for
DEFRA coverage go to http//www.defra.gov.uk/envi
ronment/statistics, and see also The environment
in your pocket published by DEFRA. Environmental
accounting monetary, sometimes biophysical,
data organised around economic categories
3
An almost practical step toward sustainability
An almost practical step toward sustainability is
the title of a lecture given in 1992 by Robert
Solow. Based on the analysis of a simple model
economy with QKaRß with aß1 and ßlt a, Solow
advanced two key propositions 1.properly
defined net national product measures the
maximum current level of consumer satisfaction
that can be sustained forever so it is a
measure of sustainable income 2.Properly
defined and properly calculated, this years net
national product can always be regarded as this
years interest on societys total stock of
capital Putting these together gives a rule
for sustainability as constant consumption 3.Main
tain the total stock of capital by consuming only
the interest on it In the simple model analysed,
this implies adding to the stock of reproducible
capital, K, an amount equal to the depreciation
of the stock of the non-renewable resource,
R. With depreciation measured as the Hotelling
rent arising in extraction this is Hartwicks
Rule.
4
Two important hedges
For Hartwicks rule to work in practice, the
prices used have to be the right ones, ie to
reflect perfect foresight, as eg with the rent
evolving according to the Hotelling Rule.
According to Solow it is Obvious that everyday
market prices can make no claim to embody that
kind of foreknowledge. Least of all could the
prices of natural resource products..The hope
has to be that a careful attempt to average out
speculative movements and to correct for other
the other imperfections I listed earlier would
yield adjusted prices that might serve as rough
approximations to the theoretically correct
ones.The important hedge is not to claim too
much. There is another hedge to be examined
shortly. The right prices are those that go
with a constant consumption path. They are not
those that hold along the optimal path unless
that involves constant consumption, which it will
not given standard assumptions.
5
A resource owner in a competitive economy 1
  B is the size of the bank account, units s C
is consumption expenditure, units s W is total
wealth, units s R is the total of permit sales,
units tonnes X is the size of the remaining stock
of mineral, units tonnes h is the price of a
permit, s per tonne V is the value of the mine,
units s i is the interest rate, assumed constant
over time
Bt Bt1 iBt1 (1 i)ht1Rt1 Ct (19.2)
Vt ht(Xt1 Rt1)
(19.3) ht (1 i)ht1 so Vt (1
i)(Vt1 ht1Rt1) (19.4) or Vt
Vt1 iVt1 (1 i)ht1Rt1
(19.5) Then (19.2) and (19.5) in Wt Wt1 (Bt
Bt1) (Vt Vt1) (19.6) gives Wt Wt1
iWt1 Ct (19.8) where Wt
Wt-1 implies Ct iWt1
(19.9) and Ct
iW0
(19.10) is the maximum constant
consumption stream
6
A resource owner in a competitive economy 2
Given that PV of x forever is x/i Ct iW0
(19.10) forever
gives W W0
(19.11) Income is Yt iBt1 (1
i)ht1Rt1 (19.12) For Wt Wt-1 Ct
iBt1 iVt1 for which It Yt Ct iBt1
(1 i)ht1Rt1 iBt1 iVt1
(1 i)ht1Rt1 iVt1 (19.13) which
by (19.5) is It (Vt Vt1)
(19.14) which is Hartwicks rule.
  B is the size of the bank account, units s C
is consumption expenditure, units s W is total
wealth, units s R is the total of permit sales,
units tonnes X is the size of the remaining stock
of mineral, units tonnes h is the price of a
permit, s per tonne V is the value of the mine,
units s i is the interest rate, assumed constant
over time
7
A resource owner in a competitive economy 3
For sustainable income as what can be consumed
without reducing wealth Ysus,t
iWt1 (19.15) which is Solows properly
measured income the level of consumption that
can be maintained forever and the interest on
wealth. Would a resource owner choose constant
consumption? It depends. In 11.4.1 it was
established that a necessary condition for
maximising the discounted sum of utilities over
time, subject to consumption equal to the change
in wealth, is (in the notation used here)
Uct/Uct-1 (1?)/(1i) so that ?lti implies
UctltUct-1 implies CtgtCt-1 ?i implies UctUct-1
implies CtCt-1 ?gti implies UctgtUct-1 implies
CtltCt-1 given the assumption of diminishing
marginal utility.  
8
Optimal and sustainable consumption paths 1
For a representative agent closed model economy
where QtKatRßt a ß 1 and ßlta C0t is the
optimal path CS0 is the highest feasible level of
constant consumption at t 0 CSt is the time
path under the optimal plan for the maximum level
of constant consumption that would thereafter be
sustainable indefinitely at T, COT is optimal
and CST is maximum sustainable consumption from T
onwards, given that the optimal path was followed
up to T
Figure 19.1 Optimal and sustainable consumption
paths
9
Optimal and sustainable consumption paths 2
At T, having followed the optimal path, C0T is
not sustainable. The maximum constant consumption
level from T on would be CST. Using the prices
and quantities from the optimal path will not
generally give correct signals about the future
level of sustainable income. To get the right
signals it is necessary to use the prices and
quantities that hold at T on the path CST.
Figure 19.1 Optimal and sustainable consumption
paths
10
Measuring national income theory 1
Consumption is the purpose of economic activity,
so why is the National Income measure of economic
performance defined as consumption plus
investment? Because current investment
contributes to future consumption. For
Max
St
is a function of current levels of the variables
consumption and investment that gives a single
valued measure of performance in terms of the
objective function.
11
Measuring national income theory 2
UC is the marginal utility of consumption. For a
linear utility function so that U(Ct) UCCt, and
using It for the change in the size of the
capital stock, this is UCCt UCIt a performance
measure in utils. Dividing through by UC gives
the performance measure NDPt Ct It
(19.17) where NDP is Net Domestic Product, also
known as NNI for Net National Income. From
(19.17), NDPt Ct It so that CtgtNDPt implies
Itlt0, which implies Kt1ltKt and Qt1ltQt. For
sustainable income as the maximum that can be
consumed without reducing the size of the capital
stock, NDPt is sustainable income.
12
Measuring national income theory - taking
account of the environment 1
The adjustments to the measurement of national
income required on account of economy-environment
interdependence are derived by considering
optimal growth models where the specification of
the constraint set reflects the nature of the
interdependence. For the model which is the basis
for Fig 19.1 production uses a costlessly
extracted non-renewable resource the result
is EDPt NDPt QRtRt NDPt htRt
(19.18) where EDP stands for Environmentally
Adjusted Domestic Product, QRt is the marginal
product of the resource in production, Rt the
amount used, and ht the Hotelling rent. The
second term on the rhs is the depreciation of the
resource stock. With NDPt Ct It, (19.18)
is EDPt Ct It htRt so that for total net
investment zero, It htRt, the Hartwick Rule,
consumption is equal to sustainable income.
13
Measuring national income theory taking
account of the environment 2
For a model where the extraction of the
non-renewable is costly, and new reserves can be
established at cost, EDPt NDPt (QRt GRt)(Rt
Nt) NDPt ht(Rt Nt) (19.20) where QRt
is the marginal product of the resource in
production, GRt is marginal extraction cost, and
Nt is additions to the known stock. For a model
where the resource input is a renewable EDPt
NDPt (QRt GRt)(Rt FSt) NDPt
ht(Rt-FSt) (19.21) where GRt is the marginal
cost of harvesting, FSt is the stocks growth
function, and St stock size. For sustainable
yield exploitation, Rt FSt and there is no
depreciation EDPt NDPt
14
Measuring national income theory taking
account of the environment 3
Renewable resources, such as forests, can yield
amenity services direct to consumption as well as
provide inputs to production. EDPt NDPt
(USt/UCt)St ht(Rt FSt)
(19.22) where USt is the marginal utility of
standing timber and UCt is the marginal utility
of produced commodity consumption. Typically USt
is unobservable, there is no market price.
Chapter 12 methods are needed. -------------------
--------------------------------------------------
----------------- These models are not mutually
exclusive production uses non-renewables,
renewables, flow resources. Production and
consumption generate waste flows. The environment
provides amenity and life support services. A
comprehensive model needs to capture all such
linkages.
15
Environmental accounting practice
It is generally agreed that, leaving aside
environmental considerations, the proper measure
of economic performance is Net Domestic Product,
NDP, which is Gross Domestic Product, GDP, less
the depreciation of reproducible capital. In
fact, GDP is more widely used than NDP. This is,
largely, because it is difficult to measure the
depreciation of reproducible capital. Environmenta
lly driven criticism of current accounting
conventions focuses on three issues Natural
resource depletion - should be treated in the
same way as depreciation of reproducible capital
measurement and valuation problematic
Environmental degradation air, water and land
quality reductions should be treated as
depreciation how to measure degradation from
what benchmark? Defensive expenditure , eg
clean-up costs, on the environment should be
deducted why not other defensive expenditure?
16
The UNSTAT proposals satellite accounting 1
System of integrated Environmental and Economic
Accounting, SEEA Balance Sheets and Satellite
Accounts
(19.23)
Environmental Cost is the change in the balance
sheet value, i.e. depreciation, of all
environmental assets, natural capital. Environment
ally Adjusted NDP could be defined as EDPt
NDPt ECt (GDPt DMt) DNt
(19.24) where DNt ECt
17
The UNSTAT proposals satellite accounting 2
SEEA does not envisage national statistical
agencies reporting EDP instead of GNP/NDP. SEEA
does envisage complementing the current GDP/NDP
accounts with balance sheets for natural capital
Satellite Accounts. Some counties do this
already for a limited range of environmental
assets some of those commercially exploited
eg fossil fuels, minerals, timber. Even in these
cases, measurement of depreciation is
problematic, mainly on account of difficulties
with unit valuation. SEEA does not envisage
treating defensive expenditures as part of EC. It
does recommend identifying and reporting
environmental defensive expenditures within the
accounting system.
18
The depreciation of non-renewable resources
The correct measure of the depreciation of a
stock of a non-renewable resource is D THR (P
c)(R N) (19.25) where D is
depreciation THR is total Hotelling rent P is the
price of the extracted resource c is the marginal
cost of extraction R is the amount extracted N is
new discoveries In a fully competitive economy
would have THR CIV with CIV for Change in
(market) value of the resource stock. Generally,
CIV is not observable. Nor is marginal cost, c.
19
Methods used for measuring the depreciation of
non-renewable resources
Net Price II D (P C)(R N)
(19.26) C for average cost, cgtC Net
Price I D (P C)R Change in Net Present
Value
(19.27)
Given C rather than c, an estimate of CIV.
El Serafys (user cost) rule D R(P C)/(1r)T
(19.28) In (19.27) and
(19.28), r is the interest rate, and T is deposit
lifetime
20
Measuring non-renewable depreciation - applying
four methods to the same data
Table 19.3 Alternative estimates of minerals
depreciation for Australia 1988/9 to 1991/2, ASS
x 106
 
Total of depreciations calculated for 33
minerals, using data from ABS (1995). r 7.5.
21
UK asset values
Table 19.4 UK asset values 1999 - 2007
Source Office of National Statistics 2008a 2007
- oil and gas less than 5 of Non-financial
Assets, less than 10 of Residential Buildings
22
Oil and gas deprecation in the UK
Figure 19.2 Oil and gas depreciation for the UK
2000-2007
Derived from data on year end asset value ONS
2008a
23
Australian asset values
Table 19.5 Australian asset values 2002 - 2006
Source ABS 2008. NFA non-financial
assets Subsoil all economically significant
non-renewable and mineral resources, valued using
the present value method about 5 of NFA, less
than Machinery and equipment, Dwellings Forests
are native forests, plantations get counted as
produced assets. Both valued at commercial value
of standing wood.
24
Environmentally adjusted national income -
Indonesia
The first attempt to do this? By the World
Resources Institute, using their estimates with
official GDP estimates. Depreciation for Oil
Net Price II Timber Net Price II allowing for
growth Soil physical loss valued using loss of
agricultural output The results are dominated by
changes in the price of oil, and new discoveries
of oil EDP rose by 51 1973 to 1974
Source Based on Repetto et al (1989)
25
Environmentally adjusted national income - UK
Table 19.7 UK GDP, NDP and NDP adjusted for oil
and gas depreciation
Source derived from ONS 2008b. FCC Fixed
Capital Consumption, depreciation of reproducible
capital DEPCTN end year to end year balance
sheet changes for OilGas These are current value
figures no adjustment for inflation
26
Environmentally adjusted national income -
Australia
Table 19.8 Australian GDP, NDP and NDP after net
depletion adjustment
While the Australian statistical agency, ABS,
does not adjust the national income estimates in
its main publications, it did do that in Year
Book Australia 2008. Units are millions of
current AUS. FCC Fixed Capital
Consumption ADJSTMNT the net depletion
adjustment which is subsoil (fossil fuels and
minerals) extraction plus land
degradation less subsoil additions
Source ABS 2008.
27
Wealth and genuine saving 1
EDPt Ct IRt DNt (19.29) So EDPt gt Ct for
(IRt DNt) gt 0 EDPt Ct for (IRt DNt)
0 EDPt lt Ct for (IRt DNt) lt 0 so that maximum
consumption consistent with not running down the
capital stock is Ct EDPt, so that EDPt is
sustainable income Sustainable development
requires Ct EDPt (19.30) Ct EDPt implies
that IRt and DNt are equal and of opposite sign
so that (IRt DNt) 0.
28
Wealth and genuine saving 2
With KRt for reproducible capital and KNt for
natural capital we can write Wt KRt
KNt (19.31) where W stands for wealth as
the aggregate capital stock. For Wt1 we can
write Wt1 (KRt IRt) (KNt DNt) so
that Wt1 - Wt IRt DNt which by equation
19.29 is Wt1 - Wt EDPt - Ct (19.32)  so
that Wt1 - Wt 0 if Ct EDPt.
Hence, Wt1 - Wt 0 (19.33) is equivalent
to the expression 19.30 as a test for sustainable
development. Wt1 - Wt is what is now widely
known as 'genuine saving' or 'genuine investment'
for period t.
29
Theory for an imperfect economy 1
The earlier theory supporting EDP as the proper
measure of national income was derived for an
optimising economy. Dasgupta (2001),for example,
argues that non-negative genuine
saving/investment is a test for sustainable
development that does not require the optimising
assumption. For constant population, social
well-being at is
(19.35)
A consumption stream beginning at t 0 is said
to to correspond to a sustainable development
path if at t
Vt1 Vt, see Appendix 19.3, is equivalent to
(19.36)
where
and pit is the accounting price for asset i
Is Genuine saving
Is Change in asset i
30
Theory for an imperfect economy 2

• The accounting price for asset i is the change in
  Vt consequent on an infinitesimally small change
  in the size of i at t, other things equal.
• Accounting prices depend upon four related
  factors
• the conception of social well-being,
• the size and composition of existing stocks of
  assets,
• production and substitution possibilities among
  goods and services, and
• the way resources are allocated in the economy. (
  Dasgupta 2001 p 123)
• The price of getting away from results based on
  the assumption of optimisation is the assumption
  that the accountant can forecast all of the
  utility consequences of small perturbations in
  all relevant asset stock sizes through to the
  distant future.
• And, no differences in the conception of social
  well-being?

31
Problems with genuine saving as a sustainability
test 1
Clearly, no accountant could could have the
information for a comprehensive measure of
genuine saving. The implicit claim must be that
aggregating over a wider range of assets using
estimates of accounting prices will produce a
better guide to policy than looking just at
investment in reproducible capital. While
plausible, this is not generally true looking
at an extended but incomplete range of assets may
produce a result further from the truth. Genuine
savings/investment results need to be treated
with caution as tests for sustainable development
and guides to policy.
32
Problems with genuine saving as a sustainability
test 2
Table 19.9 Numerical example for incomplete
genuine saving accounting
 
Source Common 2007b
 
Table 19.9 Numerical example for incomplete
genuine saving accounting
Time KR K1N K1S K1H K0N K0S K0H W
0 100 1000 100 100 500 100 100 2000
1 102 950 101 101 550 110 120 2034
Change 2 -50 1 1 50 10 20 34


KR KeN KeS KeH We
0 100 1100 50 50 1300
1 102 1000 51 51 1204
Change 2 -100 1 1 -96
Actual genuine saving is 34 Looking just at
reproducible capital says 2 Measured genuine
saving is 96 - opposite sign to actual.
33
World Bank estimates of genuine saving
In World Bank (2006), for each country Genuine
saving Gross Saving (GNI less private and
public consumption, plus foreign transfers)
- Depreciation of
reproducible capital (replacement value)
Educational expenses
(public sector operating expenses)
- Depletion of natural
resources (energy, minerals and forest depletion
using Net Price I)
- Pollution damages (CO2 damages at 20 per
tonne carbon emission) It is noted that we
should be cautious in interpreting a positive
genuine saving rate as There are some important
assets omitted from the analysis. A negative
genuine saving rate should also be interpreted
cautiously.
34
World Bank - Genuine saving and income

Vertical axis is of GNI
1970 1975 1985 1995
2004
Figure 19.3 Genuine saving by income group
35
World Bank - Genuine saving in world regions

Vertical axis is of GNI For the world, genuine
saving is around 10 over 1974-2004 Middle East
and Africa strongly influenced by oil and gas
extraction, and price changes for such. Results
here consistent with rents being consumed, rather
than invested in reproducible capital.
1974 1980 1990 2004
Figure 19.4 Genuine saving for selected regions
and the world
36
World Bank total wealth and its components
Table 19.11 Asset values for income groups and
the world, per capita
Source World Bank 2006 Per capita asset values
increase with income Ratio of produced to
natural capital value increases with
income Share of natural capital as agricultural
land decreases with income Share of subsoil
assets in natural capital increases with income
37
Accounting for international trade 1
Consider 2 trading economies, 1 and 2. Let x12 be
exports from 1 to 2, and x21 be exports from 2 to
1. Let y represent total output, and f represent
final demand, comprising c for consumption and s
for saving/investment. We can then write   y1
x12 c1 s1 x12 f1 (19.37) y2
x21 c2 s2 x21 f2   If we define
coefficients q12 x12/y2 and q21 x21/y1,
equations 19.37 can be written as   y1 0
q12y2 f1   y2 q21y1 0 f2   which in
matrix notation, using upper case letters for
matrices and lower case for column vectors,
is   y Qy f   with the solution   y (I -
Q)-1 f Lf (19.38)  where I is the identity
matrix.
38
Accounting for international trade 2
Now, let   D1 DM1 DN1 dm1y1 dn1y1
z1y1   D2 DM2 DN2 dm2y2 dn2y2
z2y2   where M and m subscripts refer to human
made capital and N and n subscripts refer to
natural capital, so that we can write for total
global depreciation   D z1y1
z2y2   or, in matrix notation   D
zy (19.39)   where z is z1 z2.
Substituting for y in Equation 19.39 from
Equation 19.38 gives   D zLf   or   T
ZLF (19.40)   where Z and F are matrices
with the elements of z and f along the diagonals,
and zeroes elsewhere. For the two country case,
Equation 19.40 is      
39
Accounting for international trade 3
T ZLF where Z and F are matrices with the
elements of z and f along the diagonals, and
zeroes elsewhere. For the two country case
In the matrix T the row elements give
depreciation in a country arising by virtue of
final demand in that and other countries, while
column elements give depreciation in all
countries by virtue of final demand in one
country. So, row sums, DiIN , give depreciation
in i, and column sums, DiATT, give depreciation
attributable to i. Thus, in the two-country case
here t11 t12 is the depreciation of total
capital actually taking place in country 1, while
t11 t21 is the depreciation of capital in the
global economy that is on account of,
attributable to, final demand in country 1.
40
Accounting for international trade 4
A slight extension of the method of Proops and
Atkinson allows for consideration of these issues
on a per capita basis. Let P be the matrix with
the reciprocals of population sizes along the
diagonal and zeroes elsewhere. Then, for the
two-country case,   A TP ZLFP (19.41)  
is     so that column sums from A, diATT, give
depreciation in all countries attributable to per
capita final demand in country i. And,   B PT
PZLF (19.42)   is     so that row sums
from B, diIN, give per capita depreciation in
country i on account of global final demand.
These depreciation measures can be compared with
si, per capita saving in i.
41
  Per capita saving and depreciation by region 
Some entries from Table 19.11 Excesses of per
capita saving over depreciation difference from
global excess
In natural capital only nonrenewables accounted
for here. For the world as a whole, genuine
saving positive Looking at things on the
attributable basis does not much alter the
general picture Africas contribution always
negative Mid East usually negative Takes no
account of ability to save income levels.
 
42
Sustainable development indicators 1
Sustainable development indicators efforts by
official agencies, and others, to provide data on
the natural environment and the economy relevant
to sustainable development, other than via
modified national income or wealth
accounting. 1994 UK government adopted strategy
for sustainable development 1996 began
publication of indicators to monitor
progress Sustainable development indicators in
your pocket (DEFRA) is organised around four
priority areas ( see also DEFRA website
) Sustainable consumption and production Climate
change and energy Protecting natural resources
and enhancing the environment Creating
sustainable communities and a fairer
world Aggregation to produce a single
bottom-line indicator is explicitly rejected
it is not practicable or meaningful to combine
all 126 disparate indicator measures into a
single index of sustainable development. Aside
from the technical difficulties involved, some
indicator measures are more important than others
and key messages would be lost (DEFRA 2008b)
43
Sustainable development indicators 2 ISEW/GPI
ISEW Index of sustainable economic welfare GPI
Genuine progress indicator Daly and Cobb 1989
version ISEW ? (C/D) (E F G H) (I J
K L M N O P Q R S T U) (V
W)/Pop (19.43) C is personal consumption
expenditure D is an index of distributional
inequality E is an imputed value for extra-market
labour services F is an estimate of the flow of
services from consumer durables G is an estimate
of the value of streets and highway services H is
an estimate of the value of publicly provided
health and education services I is expenditure on
consumer durables J is an estimate of private
defensive spending on health and education K is
expenditure on advertising at the national
level L is an estimate of commuting cost M is an
estimate of the costs of urbanisation N is an
estimate of the costs of automobile accidents O
is an estimate of water pollution costs P is an
estimate of air pollution costs Q is an estimate
of noise pollution costs R is an estimate of the
costs of wetlands loss S is an estimate of the
costs of farmland loss T is an estimate of the
cost of non-renewable-resource depletion U is an
estimate of the cost of long-term environmental
damage V is an estimate of net additions to the
stock of reproducible capital W is the change in
net overseas indebtedness
44
GDP and GPI compared
Despite differences in the adjustments made to
personal consumption across ISEW/GPI exercises,
results generally similar For every society
there seems to be a period in which economic
growth brings about an improvement in the quality
of life, but only up to a point the threshold
point beyond which if there is more economic
growth, quality of life may begin to deteriorate.
(Max-Neef 1995) Sensitivity analysis (Neumayer
2000) suggests that if here is a threshold, it is
not due to movements in the environmental
components of the index. Results do appear to be
sensitive to assumptions about unpaid labour.
GDPpc
GPIpc
2004
1974
1950
Figure 19.5 GPI per capita and GDP per capita for
the USA 1950-2004
Source Talberth et al 2007
45
The economy and the environment again what the
economy does
Environment
The economy extracts materials and energy from
the environment, using them along with capital
and labour to produce the means to the
satisfaction of human needs and wants, and
inserts back into the environment an equal mass
of waste (Chapter 2) Common (2007a) suggests that
a natural measure of economic performance would
be E S/I with E for efficiency S for
satisfaction I for (environmental) input
Extractions
Insertions
Economy
Satisfactions
Figure 19.6 What the economy does
46
Aggregation without prices
E S/I For S use HLY H x LY where HLY is Happy
Lifetime Years H is the average score
for self-assessed happiness/satisfaction (Chapter
3) LY average life expectancy at
birth For I there is no uniquely correct measure.
Use as proxies Energy use a measure of work
done, which is what impacts on the
environment Ecological footprint the area of
land and water to provide environmental inputs
and absorb wastes Greenhouse gas emissions the
source of the major environmental problem now
facing the world
47
Performance converting environmental impact into
satisfaction
Table 19.15 Highest and lowest E scores
ECE commercial energy. ETE total energy. EF
ecological footprint. EG1 greenhouse gas
emissions including land use changes EG2
greenhouse gas emissions excluding land use
changes 1 toe for tonnes oil equivalent. 2 all
ghgs converted to heating equivalent CO2
48
Efficiency based sustainable development
indicators
1. Each nations ghg emission allowance to be its
population size multiplied by an equal per capita
share of the set global emissions total. For the
ith nation
where
Country i experienced sustainable development if
Ei,t1gtEi,t and GHGi,tGHGi and GHGi,t1
GHGi. If, that is, E increased and emissions
stayed within equitable allowance. 2. For Fi as
a nations share of the worlds available
productive land and water(per capita share of
global times population size), country i
experienced sustainable development
if Ei,t1gtEi,t and Fit Fi and Fi,t1 Fi If,
that is, E increased and footprint stayed within
equitable allowance.