Gross Domestic Product does not equal “sustainable growth”

Gross Domestic Product (GDP) measures the economic performance in a national economy. Therefore, it is considered to be an abstract parameter which covers economic growth and wealth insufficiently or from a monetary perspective only. Volunteering for instance is not paid and consequently not included in the GDP, since it is not counted as a part of economic growth. This means that there is no causal link between the increase of GDP and the wellbeing of a society. Changes in nature stock through environmental pollution or scarcity of resources are not included. This results in a fallacy: Environmental catastrophes such as the oil spill in California in May 2015 caused by a pipeline owned by Plains All American Pipeline, in which about 400.000 litres of oil leaked, contributed to an increase in U.S. GDP because of the money spent to repair the damage. But the incident had a far more serious impact on animals in the Pacific Ocean and affected the quality of life of people. If costs for these and other environmental damages were considered, the economic growth would stagnate numerically.

These problems motivated governments to enter into an international discourse. Participants of the G20 summit taking place from 15th to 16th November 2015 in Antalya will discuss how to promote an inclusive and sustainable growth globally. However; sustainable economic goals will not be specified. But the Turkish Government plans to plead for a stronger cooperation with low-income developing countries whose expansion of infrastructure and energy supply should be supported by industrialized countries. So this G20 summit is also crucial for the climate summit coming up in Paris (COP 21) by the end of 2015. Developing concepts to deal adequately with global warming will be at the centre of a new agreement. Also the 2030 Agenda for Sustainable Development, which was adopted at the UN summit in New York in September 2015, is important in this respect: The 17 development goals in the Agenda implement the principle of sustainability with its economic, ecological and social dimension.

The growing international discourse indicates that environmental factors are important for measuring economic growth. Therefore a variety of alternative indicators have been created. These indicators include concepts of sustainable development and wellbeing and promote different ideas of progress.

Read more in the spotlight “We Can´t Eat GDP: Global Trends on Alternative Indicators” by Lorenzo Fioramonti (pdf document).