An international conference 'Beyond GDP' was held in Brussels in late 2007 highlighting that many governments are facing similar challenges to Scotland. Many policy areas (health, environment, economy) and countries are trying to identify measures that reflect a broad view of progress. At present there is no international agreement on a measure that draws together economic, environmental, social and wellbeing perspectives of sustainable development.

The conference highlighted that GDP is a good economic measure and will continue to be used by governments, and alongside this there is also a need for additional measures of progress that encompass societal, environmental and personal wellbeing. This acknowledges the fact that the focus of conventional income measures such as GDP is such that they do not aim to reflect a broad view of progress, the importance of capturing well-being and quality of life issues, and the need to account for environmental issues.

This desire for additional measures that encompass societal, environmental and personal wellbeing is not new and was the catalyst for the Additional Measures of Progress Steering Group, which was set up in summer 2006 to fulfil a commitment in the Sustainable Development Strategy Choosing our Future to review the evidence and options for additional and improved ways of measuring progress.

Additional Measures of Progress Steering Group

In reviewing the evidence the Additional Measures of Progress Steering Group concluded that there are as yet no internationally recognised measures of progress in this broad sense, capturing economic, environmental, social and wellbeing perspectives. The Steering Group investigated a potential basket of measures that could complement the National Performance Framework. In concluding its work the Steering Group presented three recommendations on additional and improved ways of measuring progress to Scottish Government Ministers in July 2008:

• with the inclusion of Ecological Footprint in the National Performance Framework, the Scottish Government should set up a group to develop Economic - Environmental Input-Output Accounts to provide a sound basis for footprint calculations and wider applications, subject to an initial assessment of costs and potential benefits;
• the Scottish Government should continue to monitor developments in wider measures of progress that incorporate wellbeing, like the Index of Sustainable Economic Wellbeing (ISEW); and
• the Scottish Government should host a seminar for analysts, policy makers and interested stakeholders on the work of the Steering Group and developments in additional measures of progress.

The Scottish Government is now taking forward each of these recommendations.

National Performance Framework

The Steering Group has reviewed the evidence on additional measures of progress alongside the Scottish Government National Performance Framework (NPF), which brings a new context, including purpose targets defining the characteristics of sustainable economic progress, with measures for GDP and climate change emissions. This is supplemented by a range of social, economic and environmental national indicators and targets which include indicators on ecological footprint and wellbeing (using the new WEMWEBS scale). Updates on these indicators are available on the Scotland Performs web site which provides the latest information on how Scotland is performing in terms of the National Performance Framework.

Evidence the Steering Group considered

A number of pieces of research have been undertaken for the Steering Group focusing on the criteria for an additional measure of progress in Scotland and looking at potential additional measures of progress against these criteria.

The Steering Group considered the issues stimulated by a discussion paper presented by Karen Turner et al, University of Strathclyde. The discussion paper, prepared in summer 2006, offers an analysis of the issues and problems associated with aggregate measures of sustainability, and together with other evidence informed the initial thinking of the Steering Group. This discussion paper forms part of the series of economic discussion papers, aimed at generating and informing debate on topical areas of economics.

Aggregate measures of sustainability can capture a wider range of issues, drawing them together into a single indicator is problematic, and the Turner et al paper discusses the measurement problems associated with this kind of aggregation. Changes in individual components and their relationship with other indicators need to be clear if overall messages about the direction of travel are to be fully understood. The discussion paper provided an informative base for the Steering Group in reviewing the evidence on aggregate measures and considering these alongside a basket of indicators as a potentially more effective way of measuring progress.

The Steering Group agreed to build further on this analysis by focusing on two key aspects of additional measures of progress:

• identifying the criteria for an additional measure of progress in relation to the objectives of the strategy (including what are the necessary / desirable characteristics)
• identifying potential candidate indicators and assessment of these as measures at a Scotland level.

A second discussion paper prepared by Pareto Consulting addressed the first aspect, the criteria for an additional measure of progress in relation to the sustainable development objectives in Scotland. The Steering Group commissioned this paper to identify the criteria for an additional measure of progress in relation to the objectives of the Scottish sustainable development strategy (including what are the necessary / desirable characteristics).

Complementing this work the Scottish Environment Protection Agency (SEPA) commissioned two pieces of research to aid the second aspect, assessment of potential candidate indicators:

• evaluation of Five Potential Additional Measures of Progress on Sustainable Development in Scotland, and
• an expert workshop on economy-environment statistics and potential calculation of an ecological and /or carbon footprint using input-output techniques hosted by the University of Strathclyde.

A short summary of both these pieces of work is given below.

Summary of report on evaluation of five potential additional measures of progress on sustainable development in Scotland

While the report takes a different approach to additional measures of progress than the Steering Group, looking to find one measure that can be reported alongside GDP, it provides a useful commentary on each of the measures evaluated. The measures assessed were: environmental sustainability index; ecological footprint; human development index; index of sustainable economic welfare and genuine savings. In summary the report suggests that of these the best option for a single additional measure of progress on sustainable development is genuine savings. The reports highlights that if it is accepted that sustainable development cannot be amalgamated into a single index, then ecological footprint is the preferred headline measure.

Summary of workshop on calculation of footprint using environmental input-output techniques

The workshop identified three key benefits of adopting an input-output approach:

• Environmental input-output analysis would facilitate decomposition of overall footprint indicators - ie using input-output multiplier analysis to examine the extent to which different activities contribute to the aggregate footprint measurement.
• If an appropriate economic-environmental model can be built around the input-output accounting framework to permit impact analysis of alternative policy options, this will add to the analytical support available to policy makers.
• Uses of an environmental input-output accounting framework are not limited to footprint calculations. Such a framework could facilitate the construction of a wide range of environmental indicators, aiding policy makers.

Background to Additional Measures of Progress Steering Group

The Group was established in summer 2006, drawing on a range of expertise. Members from the Scottish Government were: Prof Ian Sanderson (Chair), Director of Corporate Analytical Services; Dr Gary Gillespie, Head of the Office of the Chief Economic Advisor (replacing Fiona Robertson in March 2007); and Kim Fellows, Head of Greener Scotland Directorate. External members were: Prof Jan Bebbington, Sustainable Development Commissioner for Scotland and University of St Andrews; and Dr Karen Turner, University of Strathclyde.

The Steering Group was set up to oversee and direct a commitment in the Sustainable Development Strategy Choosing our Future to review the evidence on the options for additional and improved ways of measuring progress. The remit of the Steering Group was agreed as follows:

• 'The Additional Measures of Progress Steering Group will review the evidence on the options for additional and improved ways of measuring progress, with an initial report by the end of 2006. The Steering Group will present its findings to the Cabinet Sub-Committee on Sustainable Scotland.
• Additional measures of progress are those which reflect a broad view of progress, capturing well-being, quality of life and environmental issues together with economic progress.'

Following the change in Scottish Government in May 2007, the Steering Group reported directly to the Cabinet Secretaries for Finance and Sustainable Growth and Environment and Rural Affairs, in place of the Cabinet Sub-Committee on Sustainable Scotland.