Hidden linkages between resources and economy: A “Beyond-GDP” approach using alternative welfare indicators

• Published in: Ecological economics 2020-03, Vol.169, p.106508, Article 106508
• Main Authors: Kalimeris, Panos, Bithas, Kostas, Richardson, Clive, Nijkamp, Peter
• Format: Article
• Language: English
• Subjects: (de)growth; Beyond GDP; Decoupling; Dematerialization; GPI; HDI; ISEW; Material flow analysis (MFA); Material intensity (MI); Sustainability; Welfare measurement
• ISSN: 0921-8009; 1873-6106
• DOI: 10.1016/j.ecolecon.2019.106508

•Natural resources used per unit of non-GDP-based indexes are generally increasing for the global economy.•Similar results are provided for certain developed and developing economies.•Welfare, as evaluated by non-GDP alternatives, has increased at a far lower rate than that suggested by GDP growth.•The actual growth in welfare has been fueled by a substantially increased use of resources. Taking GDP as the standard economic indicator for economic welfare, recent Resources-Economy studies indicate the “dematerialization” of the economy, the so-called decoupling effect. This conclusion seems to alleviate concerns over resource scarcity and limits to growth, and feeds optimism for green growth and sustainability prospects. However, the validity of GDP as the sole and unambiguous measure of the ultimate outcome of the economy has been severely disputed. There is nowadays increasing interest in broader welfare measurements that capture more aspects of economic output and hence constitute better approximations of well-being. The present paper provides an overview of the above discussion and sets out to explore the relevance of three alternative welfare indicators – the Human Development Index (HDI), the Index of Sustainable Economic Welfare (ISEW) and the Genuine Progress Indicator (GPI) – as a basis for evaluating the dependency of welfare and its major engine, the economy, on natural resources. Increasing welfare appears to require a disproportionate use of resources. Strong and increasing dependency on resources at the global level and in giant countries such as China and India may have serious implications for current sustainability policies and the United Nations Sustainable Development Goals.