I. Replace GDP Growth with Sustainability as the Nation’s Foremost Economic Policy Objective
The current emphasis of U.S. economic policy is to grow Gross Domestic Product as fast as possible through deregulation, globalization, and consumerism. Growth in GDP, however, is a very poor indicator of economic welfare since it counts all monetary transactions in an economy as good and is blind to the fact that greater and greater circulation of dollars through the economy may, in fact, be a sign of deteriorating economic welfare if those dollars are being spent on harmful activities that undermine the sustainability of our economic system in the long run, if those dollars represent conspicuous consumption of the wealthy rather than spending by those least well off, and if that spending is largely financed by borrowing.
Needless to say, the economic crisis and the converging catastrophes of peak oil, climate change, resource depletion, and debt signal the death knell for policies based on GDP growth. From day one, the Obama Administration needs to articulate a compelling new vision of sustainable development as the nation’s foremost economic policy objective. Beginning with the first Economic Report of the President (January 2010), the Administration should scuttle the GDP growth paradigm and instead report the extent to which the nation is rebuilding capital in all its forms and promoting other aspects of sustainability such as diversity, resiliency, equity, human well being, and living within our means.
II: Establish a U.S. Sustainable Development Commission and Strategy
In 1993, shortly after the Earth Summit, President Clinton created the President’s Council on Sustainable Development to advise him and develop “bold, new approaches to achieve our economic, environmental, and equity goals.” Though the Council disappeared at the end of his term, it was an important first step. The Obama Administration can do much better. A U.S. Sustainable Development Commission should be established as an independent body or a federal agency under the Department of Commerce with power to review and help shape federal budgets, legislative proposals, tax policies, subsidies, trade agreements and other instruments of economic policy and evaluate their contribution or lack thereof towards sustainable development.
Its initial charge should be to develop a U.S. Sustainable Development Strategy for the United States complete with measurable targets, evaluate and recommend changes to key environmental, economic, and social policies and programs, and engage U.S. citizens at all levels of government in developing innovative ways to simultaneously advance economic, environmental, and social well being. Depending upon its early success, it can gradually be granted additional regulatory authority.
There are dozens of models to consider. The United Kingdom’s Sustainable Development Commission (SDC) is one. SDC is an independent body touted as “the Government’s independent watchdog on sustainable development,” reporting directly to the Prime Minister and the First Ministers of Scotland and Wales and the First Minister and Deputy First Minister of Northern Ireland. The SDC’s 18 commissioners are drawn from a mix of academic, scientific, business and NGO backgrounds. Through advocacy, advice and appraisal, SDC helps put sustainable development at the heart of Government policy by producing “evidence-based public reports on contentious environmental, social and economic issues such as nuclear power,” advises key Ministers, policy-makers and stakeholders across government, responds openly and independently to Government policy initiatives, facilitates debates on controversial subjects and undertakes watchdog appraisals of Government's progress.
One of SDC’s highest visibility projects is the Comprehensive Spending Review, which looks at all government spending, across every department through the lens of sustainable development. For example, the Review is evaluating government-funded buildings, such as schools and hospitals, to determine whether or not they are being built to high sustainability standards which will pay off in the long run. The Review is also investigating key questions such as whether or not sustainability is advanced by subsidizing nuclear power or expansion of airports at the expense of more benign alternatives. The Review will be submitted to the Prime Minister’s Cabinet and is expected to have a major influence on spending for many years to come. U.S. spending would benefit from similar scrutiny.
III: Develop and Apply Appropriate Indicators
Abandoning policies based on GDP growth, globalization, and consumerism will require a new set of indicators for measuring economic progress. The importance of meaningful indicators cannot be understated. According to the World Bank, economic indicators serve three basic functions: (1) they provide a measure of the wealth of economies, reflecting welfare of their residents and prospects for future growth; (2) they provide guidance in shaping development policies, and (3) they inform citizens on how their economies are managed so that they can make appropriate political choices and thereby exert control over their governments. Fortunately, sustainability indicators capable of serving these functions abound. The Obama Administration need not reinvent the wheel. Rather, the Administration should participate fully in the international and national level sustainability indicators processes that are now underway.
Last year, the European Parliament launched its international “Beyond GDP” initiative designed to supplement or replace GDP as the most common measure of economic progress. Also last year, the Organization for Economic Cooperation and Development launched its Measuring Progress of Societies project to develop indicators that more directly relate to human well being. In the United States, the State of the USA Project has similar goals. All of these processes are likely to yield a sufficient set of replacement indicators to guide the Obama Administration’s economic agenda.
A few headline indicators should be chosen soon—ones that have already been vetted scientifically and put into use by public agencies, non-profits, and researchers. Recently, RP staff made the case for a Program on Genuine Progress Accounts to meet this need in Europe. Since 1998 we have been advocating for the GPI in the United States and Canada. We believe that the GPI is the most rigorous, most vetted, and most relevant for policy analysis purposes. There are many others to consider, and the Obama Administration should move quickly and decisively to direct the U.S. statistical agencies such as the Bureau of Economic Analysis to begin reporting at least a handful of sustainability indicators on a regular basis now while a more complete set is being developed as the Administration participates in the various international and national level processes already underway.
IV: Integrate Sustainability Analysis into Policy Decisions
A critical step the Obama Administration can take immediately to demonstrate its commitment to sustainable development is to make sustainability analysis part of the decision making process for federal policies, programs, and projects. Sustainability analysis is, by definition, long term, comprehensive, and cognizant of all significant costs and benefits regardless of which segments of society enjoy or incur or enjoy them. Sustainability analysis helps identify actions that create net benefits to society—i.e. build natural, social, economic, and built capital in the long run—and those that represent a net loss.
At least on the books, the federal government is already required to consider environmental, economic, and social impacts broadly from a sustainable development perspective. For example, the Office of Management and Budget (OMB) recognizes that “programs with positive net present value increase social resources and are generally preferred” and that “programs with negative net present value should generally be avoided.” To make this determination, OMB requires a formal benefit-cost test systematically quantifying the desirability of government projects or policies when it is important to take a long view of future effects and a broad view of possible side-effects. Guidelines for federal infrastructure projects contain similar requirements, as do statutes, rules, and regulations applicable to specific agencies. The problem is that the quality and scope of such analyses are often laughably, rigged to justify almost any decision the incumbent administration would like to make. Worse, citizens’ ability to enforce existing laws is encumbered by onerous requirements and a judiciary reluctant to second guess agency expertise.
The key point, however, is that meaningful analysis of whether or not a policy contributes to national well being—from a sustainability perspective—does not require any new authority. It can be implemented on day one of the new Administration. Currently, the Obama Administration is proposing a $1 trillion economic stimulus package consisting of an initial tax cut and a massive infusion of funds for roads, bridges, water systems, school repair, spreading broadband access, promoting health-care information technology, improving energy efficiency in buildings, renewable energy projects, and assisting struggling state and local governments. With each of these, there are sustainable development benefits and costs to consider. For example, investing in roads may help put people back to work in the short term, but new roads in unsuitable areas also have the potential to cause urban sprawl, increase our dependence on foreign oil, and destroy farmlands, forests, and wetlands. The first step to insure that economic stimulus programs are carried out in a manner that enhances social well being is to enforce existing laws and make sure such programs are evaluated objectively, fairly, and scientifically from the standpoint of sustainable development.
V: Immediately Implement the Obvious
Perhaps the most important first step for the new Administration and its allies in Congress is to take action now on a few high visibility issues where the homework has already been done. Provide reliable health care coverage to all Americans, insured or not. Renegotiate trade agreements to address environmental and labor concerns and relocalize manufacturing, food and energy sectors where it makes sense to do so. Implement a national Climate Asset Plan. Green the U.S. auto industry to achieve the world’s highest fuel efficiency standards. Pull disastrous subsidies for commercial exploitation of public lands. Halt plans for mountaintop removal, offshore drilling, new coal fired plants, and other fossil fuel developments. Redirect a significant portion of the military budget to advance social well being instead of war. Of course, there will be heated debates over what policies to implement first, but by taking a few bold steps now and articulating the sustainable development rationale behind them the Administration can demonstrate its commitment to the world community, inspire Americans to get involved, and make immediate and lasting steps toward sustainability.
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