Something significant happened in New York City on September 25, 2015. The UN formally adopted the Sustainable Development Goals (SDGs).1 These global targets, agreed to by all UN member states, embody an essential recognition that we live in a finite and interconnected world where we must integrate prosperity, equity, and sustainability.
Under the new guidelines, economic ‘growth’ must be inclusive and sustainable and is only one of 17 goals. In addition, there is explicit recognition that: “We are committed to developing broader measures of progress to complement gross domestic product (GDP).”1
The SDGs thus echo the growing recognition that single-minded emphasis on GDP growth that has dominated national policy since World War II is no longer appropriate.2,3 GDP is merely an aggregate measure of marketed economic activity. Some of that activity is not what we want more of (i.e. the costs of crime, pollution, and inequality) nor is it sustainable and inclusive. It is like a company trying to maximize gross revenues with no accounting of costs.
By some estimates, when these costs are accounted for, there has been no real, net growth in the global economy for decades. Even though GDP has been expanding consistently since 1945, with only the occasional downturn, since the 1980s, this growth has been “un-economic” because it hasn’t taken into account the costs of inequality, environmental damage, and other factors that affect welfare.4 The real economy—all the things that support human well-being—is much larger than the market economy as estimated by GDP. The GDP was never designed as a measure of overall societal well-being—the real economy—and its continued misuse for that purpose needs to stop.4 By broadening the range of national policy goals to include all the elements of the real economy, the SDGs will contribute substantially to real progress.
The real economy includes our natural capital assets—all of the gifts from nature that we do not have to produce—and the immensely valuable but nonmarketed ecosystem services those assets provide. These services, including climate control, water supply, storm protection, pollination, recreation, and many more, have been estimated to contribute significantly more to human well-being than all the world’s GDP combined.5 But our cavalier overlooking of these contributions has led to massive depletion of these assets. Since 1997, we have lost globally at least US$20 trillion per year in nonmarketed ecosystem services,6 larger than the GDP of the USA.
We have also overlooked the contributions of social capital—all of our formal and informal networks, institutions, and cultures—to supporting human well-being. Many countries have become much more unequal since 1980. This rising inequality has resulted in worsening social problems, worsening ability to build and maintain social capital, and lower overall quality of life.7 Most of the gains in GDP over the last several decades have gone to the top one percent of income earners, while the 99 percent have seen stagnant real incomes in the context of deteriorating social and natural assets.
Perhaps the most compelling dissonance is how we talk about and deal with climate disruption. The climate is one of our key natural assets, and SDG goal 13 states: “Take urgent action to combat climate change and its impacts.” Yet investing in maintaining a stable climate is too often misperceived as a hindrance to economic growth, rather than the protection of an asset that underlies the operation of the entire human enterprise. Climate disruption needs to be included as a cost against GDP growth that is at least as important as the loss or gain of factories, roads, and houses.
Likewise, the depletion of social capital caused by rising inequality needs to be counted against any gains in GDP.
One indicator that accounts for changes in social and natural capital is the Genuine Progress Indicator (GPI). The GPI adjusts personal consumption by income distribution, adds nonmarketed services like volunteer and household work, and subtracts the costs of natural capital depletion like air and water pollution. Globally, GPI per capita has not improved since 1978, even though GDP per capita has more than doubled.5 We have been experiencing ‘un-economic growth’ globally for almost 40 years.
Two states in the US—Maryland and Vermont—have adopted the GPI to help guide policy and several other states are considering the same.8 It is time for the rest of the world to wake up to the reality of our uneconomic growth policies and practices and move to build a real economy that provides sustainable, equitable prosperity for all. The SDG process is an important and long overdue move in this direction.
Going forward, world leaders armed with the SDGs can discuss how to improve real economic performance and genuine sustainable development rather than merely increases in environmentally disruptive, inequitably distributed marketed goods and services.8 The future of our planet depends on it.
