Hmmm. Sounds questionable.

The notion of sustainable development is clearly appealing. But it's got a lot of work before it can be "operationalized." Probably never in a pure form, since it's going to have to stay at a pretty macro level and track only a handful of variables.

But at least it's asking some key questions. The "how do we measure" pushes forward the "what do we mean by this term" and "how do we think about it." It forces the discussion beyond wishful thinking or bromides. And it legitimates as part of sustainability some of the social issues that otherwise get neglected when only the political and economic dimensions are included. Might at least contribute to improving classic cost/benefit analysis.

The concept also emphasizes a dynamic model rather than an equilibrium-oriented model. So more power to them, even though the objective is an unattainable Holy Grail.

The reason I stuck this up was I just got the publication notice from the OECD, and I've been thinking about how to handle new publications that I probably won't read but look to be on topics that are likely to be discussable. Sustainable development is clearly a big one. So I'm starting with this entry to see how to a few sustainable development categories/links might work. For the next week or so, I'm just going to be throwing up a lot of content to get a feel for how categories work and don't work.

I think there's some value in green accounting or satellite accounts -- William Nordhaus is supposedly working on an nonmarket accounting project that had been under BEA auspices but was, regrettably, nixed by the incoming Bush adminstration.

But I think that once you start trying to monetize everything, you get too cute. Better, like Nordhaus does, to stick mostly to things that are easily quantified like air quality indicators, track them in satellite acocunts, and build from there.

You could also keep separate accounts of so and so many acres of hardwood, for instance, and then to try to calculate some number that represents "natural capital depreciation."

And then when you get into counting volunteer hours and so on it becomes really questionable. Monetizing "ecosystem services" is another example. You could even go completely overboard like the Redefining Progress crowd.

Nevertheless, it's interesting material and it ought to make sense. Something is obviously lost when Indonesia loses all of its best topsoil; Indonesia's GDP may well be up if you but is it really better off in the long run?

IFC has a similar dilemma when it justifies an investment, because it's got to produce an acceptable return on financial capital while also producing positive economic benefits. So an economic accounting method is used that strips out non-market distortions, such as tariff protections. and tries to capture some positive externalities. Not sure where they are with the environmental and social dimensions. Trying to quantify job growth or downstream production utilization is hard enough.

Is one of the problems with green accounting, how do you avoid a certain circularity, incorporating valuation of environ externalities in the first environmental analysis, when you haven't been able to value the externalities because they themselves are further subject to non-monetizable externalities, etc...? Or am I being obtuse? That contingent valuation stuff alk pointed will obviously not get anyone terribly far.

It's become a major theme of IFC -- getting banks and corps to sign up to sustainability standards. Included in the concept is corp gov/corp citizenship as well. (BTW -- They really need to update the sustainability part of the web site -- it's only about 4 years old in both content and technology! Yikes!)

This group, SustainAbility, has been doing lots in this area for some time, and IFC has worked with them on doing some of the case studies, etc. to make "the business case for sustainability."

I've always looked at sustainability for a business as a risk management issue, but the big "development marketing" objective is to be able to point to direct bottom line contributions. I've been concerned about overselling the idea, and losing credibility in the long-run, but politically, adding to profits is more sexy than reducing risk.

The SustainAbility publication I linked to is a recent report done at the instigation of the UN that says the corporate world has to get involved in the policy and NGO world, not just focus on their specific projects. It's about time that the policy dimension started being incorporated into the corporate responsibility debates.

Is one of the problems with green accounting, how do you avoid a certain circularity, incorporating valuation of environ externalities in the first environmental analysis, when you haven't been able to value the externalities because they themselves are further subject to non-monetizable externalities, etc...?

Can you give me an example? I'm not sure what you mean here.