Frontier Issues in Ecological Economics
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Frontier Issues in Ecological Economics

Philip Lawn

Ecological economics formally emerged in the late 1980s in response to the failure of mainstream economic paradigms to deal adequately with the interdependence of social, economic and ecological systems. Frontier Issues in Ecological Economics focuses on a range of cutting-edge issues in the field of ecological economics and outlines plausible measures to achieve a more sustainable, just, and efficient world for all.
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Chapter 7: An Assessment of Various Measures of Sustainable Economic Welfare

Philip Lawn


INTRODUCTION Ecological economists have long believed that the continued growth of macroeconomic systems is both ecologically unsustainable and existentially undesirable. Consistent with this belief, ecological economists have put forward a ‘threshold hypothesis’ – the notion that when macroeconomic systems expand beyond a certain size, the additional benefits of growth are exceeded by the attendant costs (Max-Neef, 1995). In order to support their belief, ecological economists have developed a number of indexes to measure and compare the benefits and costs of growth. The first of them, the Index of Sustainable Economic Welfare (ISEW), was originally calculated for the USA by Daly and Cobb (1989). It has since been calculated for the UK, most western European and Scandinavian countries, Canada, Australia, Chile, Japan and Thailand. Over this time, many of the methods used to calculate the index have been revised. As pointed out in Chapter 6, the ISEW has also been given a variety of different names – for example, a Genuine Progress Indicator or GPI (Redefining Progress, 1995) and a Sustainable Net Benefit Index or SNBI (Lawn and Sanders, 1999; Lawn, 2000). While there has been a variation in the disparity between GDP and the chosen index calculated for different countries, the trend movement in the ISEW, GPI and SNBI is very consistent. That is, up to a point, the growth of macroeconomic systems seems to be beneficial to human well-being. Beyond this point, growth appears to have a detrimental impact. On the surface at least,...

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