16 March 2011

From the GDP to Norway's Index of Nature

A number of indexes have been suggested—some written about on this blog—to replace the GDP as a measure of societal well-being. The GDP is not a measure of a nation's health, after all—only of its national income—yet it continues to be used in the more general sense as a gauge of how well a society is doing. More meaningful, and less dangerous, indexes include the Genuine Progress Indicator (GPI) and the Canadian Index of Wellbeing (CIW). Now, Norway has come up with a yardstick to measure the health of the natural environment—the Norwegian Nature Index.

Based on 309 indicators covering nine major habitats, the index was designed "to provide an overview of the state and development of biodiversity in the major ecosystems in Norway." According to Vivian Pharis, director of the Alberta Wilderness Association, the Nature Index "will help Norway to halt deforestation, complete its parks system, protect fresh and marine waters and to build a model for global biodiversity monitoring." The latter is of particular importance in a world facing the worst rate of species extinction since the dinosaurs vanished 65 million years ago.

The index will not be a yardstick for the overall health of a society, of course, but it will measure a critical aspect of that health—the state of  the environment—and as such make a valuable complement to indexes such as the GPI and the CIW. It could be a first step toward officially placing a value on "free" services such as insect pollination and forest growth that make a huge contribution to the economy.

A recent UN report, The Economics of Ecosystems and Biodiversity, estimated that damage to natural capital from wetlands to coral reefs totals $2-4.5-trillion every year, losses not included in GDPs. Norway plans to follow up the UN report with a review of the value of services provided by nature in Norway. The work could lead to a radical shift in the way we view economics. Ultimately, of course, our entire economy depends on nature directly or indirectly.

Although various countries use bioindicators to assess nature, few have attempted to aggregate their indicators into a single index as Norway has done. Bravo to the Norwegians.

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