Posts

By Robert Costanza

First published by Solutions

The ongoing COVID-19 pandemic has focused attention on human health in the short term. How do we slow the spread of the virus and contain the damage? It has also revealed the dependence of the global economy on long supply chains and high demand for services.  The likelihood of a global economic crisis caused by the virus is high.  Governments around the world are putting in place emergency stimulus packages aimed at preventing this, but we may be missing the real lessons the crisis has to teach.

The first is that human health and sustainable wellbeing should be the real goals of our increasingly interlinked and interdependent economic, social, and natural systems. The headlong pursuit of GDP growth at all costs has blinded many countries to the other factors that contribute to sustainable wellbeing and the hidden costs of GDP addiction.  Countries are investing massive amounts to keep GDP from falling in the short run, while ignoring the fact that GDP was never designed to measure societal wellbeing and is an increasingly poor guide to real progress. The vast majority of GDP growth is now going to the top 1% of the population and growing inequality is having severe negative effects on community wellbeing.  People who are just scraping by cannot afford health care and cannot afford to miss work, even when they are sick. This is a major issue during the current COVID-19 crisis.  It should be obvious that a more equitable distribution of income and wealth and a stronger social safety net would help control future pandemics and would also improve sustainable human wellbeing at all times.

The other major problem with our blind pursuit of GDP growth is that it ignores the damages to our ecological life support system that our current approach to growth causes.  Climate disruption is only the best known of these.  Natural ecosystems provide non-marketed benefits that support sustainable human wellbeing in a complex variety of ways, including flood and storm protection, water supply, recreation, carbon sequestration, and many others.  The value of these services globally has been estimated to total $US 125 trillion in 2011, significantly larger than global GDP at the time.  In addition, we are losing $US 20 trillion a year of ecosystem services due to changes in land use and mismanagement, including desertification, loss of wetlands and coral reefs, deforestation, flooding, and bushfires.

To address these problems, we need a fundamental shift in our economic paradigm and our approach to development.  We need an economy and society based achieving sustainable wellbeing with dignity and fairness for humans and the rest of nature. This is in stark contrast to current economies that are wedded to a very narrow vision of development – indiscriminate growth of GDP that is not shared and has severe negative side effects.

A wellbeing economy on the other hand is embedded in society and the rest of nature. It must be understood and managed as an integrated, interdependent system of social relations that pursues balance and prosperity, rather than the maximization of production and consumption. It is an economy that values both social and natural dimensions as fundamental components of national wealth and as critical factors in determining wellbeing.

Wellbeing is the outcome of a convergence of factors, including good human mental and physical health, equitable access to government and community institutions, racial and social justice, good social relationships and a flourishing natural environment. Only a holistic approach to prosperity can achieve and sustain wellbeing. A system of economic governance aimed at promoting wellbeing will therefore account for all the impacts (both positive and negative) of economic activity. This includes valuing goods and services derived from a healthy society (social capital) and a thriving biosphere (natural capital). Social and natural capital are part of the commons. They are not (and should not be) owned by anyone in particular, but instead belong to everyone and make significant contributions to sustainable wellbeing.

Transformative change often happens when a crisis opens the door. Can we use the COVID-19 crisis to confront the questions now being asked of the current system, which has caused ongoing economic, financial, social, and ecological problems?  To make this transformation we need to galvanize a critical mass and promote tested alternatives that can achieve our common goals. In order to achieve the transformation to the new economy and society we all want, we need to work together as a unified front. The new Wellbeing Economy Alliance (WEAll) is designed to help facilitate that transformation.

WEAll is a global movement of individuals and organizations coalescing around the need to shift economies away from a narrow focus on marketed goods and services (i.e. GDP) to one more broadly focused on sustainable wellbeing. These include activists, NGOs, academics, governments, and entrepreneurs of various types from around the world. There are many espoused versions of these basic ideas using different approaches and languages, but sharing a common goal.  The United Nations Sustainable Development Goals (SDGs) are an important step in articulating this common goal. The challenge is to acknowledge, harmonize, and amplify these many initiatives, while allowing a diversity of language to communicate with a variety of audiences.

The ongoing COVID-19 crisis may have a silver lining if it opens the door for the long overdue transition to a world focused on the sustainable wellbeing of humans and the rest of nature – the world we all want.

Robert Costanza is a WEAll Ambassador, and Chair of Public Policy at the Crawford School of Public Policy, Australian National University. He has authored or coauthored over 350 scientific papers, and reports on his work have appeared in Newsweek, U.S. News and World Report, The Economist, The New York Times, Science, Nature, National Geographic, and National Public Radio.

WEAll members and partners have collaborated to publish a new academic paper in the journal ‘Sustainability’ on the wellbeing economy.

Led by Luca Coscieme of Trinity College Dublin, the paper was also contributed to by: Paul Sutton ,Lars F. Mortensen ,Ida Kubiszewski ,Robert Costanza ,Katherine Trebeck ,Federico M. Pulselli ,Biagio F. Giannetti  and Lorenzo Fioramonti.

The authors explain the article as follows:

Increasingly, empirical evidence refutes many of the theoretical pillars of mainstream economics. These theories have persisted despite the fact that they support unsustainable and undesirable environmental, social, and economic outcomes. Continuing to embrace them puts at risk the possibility of achieving the Sustainable Development Goals and overcoming other global challenges. We discuss a selection of paradoxes and delusions surrounding mainstream economic theories related to: (1) efficiency and resource use, (2) wealth and wellbeing, (3) economic growth, and (4) the distribution of wealth within and between rich and poor nations. We describe a wellbeing economy as an alternative for guiding policy development.

In 2018, a network of Wellbeing Economy Governments (WEGo), (supported by, but distinct from, the larger Wellbeing Economy Alliance—WEAll) promoting new forms of governance that diverge from the ones on which the G7 and G20 are based, has been launched and is now a living project. Members of WEGo aim at advancing the three key principles of a wellbeing economy: Live within planetary ecological boundaries, ensure equitable distribution of wealth and opportunity, and efficiently allocate resources (including environmental and social public goods), bringing wellbeing to the heart of policymaking, and in particular economic policymaking. This network has potential to fundamentally re-shape current global leadership still anchored to old economic paradigms that give primacy to economic growth over environmental and social wealth and wellbeing.

You can read the article in full here.

This piece was originally published by UN Association 

The Sustainable Development Goals (SDGs) speak to an agenda that is familiar the world over, even though different terms might be used to describe the key ideas: quality of life, flourishing for all people and sustainability for the planet. These ideas are increasingly coalescing around the notion of wellbeing, in all its dimensions.

This shared vision for a better way of doing things can be found across a range of sources. It is embedded in the scripts of many religions. It is contained in the world views of First Nations communities. It can be read in the scholarship of development experts and in research findings about what makes people content. This vision echoes in evidence from psychology about human needs and from neuroscience about what makes our brains react. Perhaps most importantly, it can be heard loud and clear in deliberative conversations with people all over the world about what really matters to them. It is set out in the 17 SDGs, and perhaps is best captured by the overriding mantra of ‘leave no one behind’.

An economy that leaves people behind
This is a call to ensure that everyone is included, that no one is marginalised. ‘Leave no one behind’ implies that it is the system, our collective institutions and their interactions, which does the ‘leaving’ – not that it is those left behind who are to blame. Taking this system-wide viewpoint enables a conversation about the interconnected nature of people’s opportunities and conceptualisations of development, how they interact with the environment, and how shifts in one sphere have consequences in the other. In the worst-case scenario, these interactions can spark spirals that devastate lives, threaten human rights and undermine peace.

The systemic nature of these processes means that it is inadequate to keep plastering over “wounds caused by inequality by building more prisons, hiring more police and prescribing more drugs” (as Danny Dorling puts it in his book Injustice: Why Social Inequality Still Persists). Expenditure on such items is a grave testament to the failure to help people flourish and enjoy quality of life. This tally is even higher when one looks at the expenditure necessitated by environmental breakdown – cleaning up after climate-change-induced flooding or storms, treating asthma exacerbated by toxic particles in the air, and buying bottled water when rivers and streams are polluted.

Of course, such expenditures are the preserve of those fortunate enough to have the resources to spend. Environmental breakdown hits those without such resources the hardest due to their increased vulnerability. People’s ability to escape from sources of toxicity and risk is determined by whether they can command access to uncontaminated, safer land and food sources, or if they are among the great numbers of those who must make do with what is left.

The vulnerability of those who are least to blame reflects the unequal distribution of power, resources and opportunity: economic resources are as unequally shared as the impact resulting from plunder of natural ones.

An unequally shared harvest
One of the best-regarded authorities on economic inequality is the World Inequality Report. The 2018 publication revealed that in recent decades income inequality, measured by the top 10 per cent’s share of income, is getting worse in almost all parts of the world. Statistics compiled by Credit Suisse show that the richest one per cent own as much wealth as the rest of the world. The gap between the real incomes of people in the Global North compared to those in the Global South has expanded by approximately three times since 1960. Taking the broader definition of poverty adopted by Peter Edward’s ‘ethical poverty line’ (identifying the income threshold below which life expectancy rapidly falls, currently $7.40 a day) as many as 4.3 billion people live in poverty.

Those GDP-rich economies that most epitomise the current economic model provide some of the starkest evidence that the prevailing system distributes inadequately. The McKinsey Global Institute reports that 81 per cent of the US population is in an income bracket which experienced flat or declining income over the last decade. The figure is 97 per cent in Italy, 70 per cent in Britain and 63 per cent in France. People living in GDP-rich countries are struggling to get by. In the UK, for example, the use of food banks has risen dramatically in recent years.

Those who reap most of the rewards of this system are also those putting the planet in most danger. On climate change, figures published by Our World In Data show that the richest countries (high and upper–middle income countries) emit 86 per cent of global CO2 emissions. In the UK, emissions are strongly correlated with income, while in the US, the richest 10 per cent have a carbon footprint three times that of people in the poorest 10 per cent of incomes.

Rebuilding the system
It is not unusual to hear people who are concerned about the state of the world pointing to the levels of inequality. They cite the lack of sufficient job quality, bemoan the plunder of the planet and declare that the economic system is ‘broken’.

But if one peers beneath the symptoms, it becomes apparent that the root cause of so much of this is directly due to how the economy is currently and proactively designed. Our economic system does not sufficiently account for nature, is blind to distribution of resources, and elevates measures of progress that encompass perverse incentives (such as short-term profit and GDP at the expense of human wellbeing).

The system is not broken: it is doing what it was set up to do. The roots of inequality and environmental breakdown are found in a heady mix of institutions, processes and power relations that shape allocation of risk and reward. Decisions taken over many years by successive governments have resulted in: inadequate minimum wage levels and inadequate social protection; different rates of tax on income compared to capital; relatively low rates of top income tax (particularly in the UK and US compared to other OECD countries, and compared to previous levels); loopholes inserted in legislation that enabled tax avoidance; undermining of unions’ scope to collectively bargain and fight for workers’ pay and conditions; narrow ownership of many firms; and corporate governance that fixates on short-term profit.

The same system dynamics are seen in the links between inequality and environmental impact. These links arise through: the pressure to consume status items to maintain the appearance of wealth; the consumption patterns of the richest; the way inequality undermines collective efforts to protect environmental commons; and the break that inequality exerts on pro-environmental policies. These structures are deliberate, even though the side effects may not be. Although they stretch back many decades (centuries even), they can be dismantled and designed differently.

Building a wellbeing economy
The patterns highlighted above suggest that while the vision might be to leave no one behind, today’s reality is that some might be too far ahead – hoarding economic resources and doing much damage to natural ones. This arrangement is a construct that reflects political decisions and choices by enterprises.

A wellbeing economy can be built that would deliver good lives for people from the beginning, rather than requiring so much effort to patch things up, to cope and recover after the damage is done, and to redistribute what is unevenly shared. A wellbeing economy can be achieved by reorienting goals and expectations for business, politics and society.

A wellbeing economy is one that is regenerative, that is cooperative and collaborative, and that is purposeful. It will have equal opportunity at its core: not simply by meekly redistributing as best one can the outcomes from an unequal economic system, but by structuring the economy so that better sharing of resources, wealth and power is built in. For example, it would entail:

  • regenerated ecosystems and extended global commons;
  • a circular economy serving needs rather than driving consumption from production;
  • people feeling safe and healthy in their communities, mitigating the need for vast expenditure on treating, healing and fixing;
  • switching to renewables, generated by local communities or public agencies wherever possible;
  • democratic economic management (in terms of power, scale and ownership);
  • participatory, deliberative democracy with governments responsive to citizens;
  • purpose-driven businesses with social and environmental aims in their DNA, using true-cost accounting;
  • economic security for all, and wealth, income, time and power fairly distributed, rather than relying on redistribution;
  • jobs that deliver meaning and purpose and means for a decent livelihood;
  • recognising and valuing care, health and education in the ‘core’ economy outside the market; and
  • focusing on measures of progress that reflect real value creation.

A growing movement is forming around the idea of such an economy. It comprises academics laying out the evidence base, businesses harnessing commercial activities to deliver on social and environmental goals, and communities working together not for monetary reward, but following the innate human instincts to be together, to cooperate and collaborate. Such efforts will be made so much easier as pioneering policymakers are emboldened to step away from the constraints imposed by a 20th century vision of ‘development as GDP’. Instead, they must embrace a new agenda for the 21st century – an economy geared up to deliver human and ecological wellbeing. This work bodes well for the creation of a world in which no one is left behind.