Benchmarking Sustainable Development: A Synthetic Meta-Index Approach Laurens Cherchye (Catholic University of Leuven, Belgium) Timo Kuosmanen (Wageningen.

• Slide 1

Benchmarking Sustainable Development: A Synthetic Meta-Index Approach Laurens Cherchye (Catholic University of Leuven, Belgium) Timo Kuosmanen (Wageningen University, The Netherlands) WIDER International Conference on Inequality, Poverty and Human Well-being, Helsinki, 30-31 May 2003 Slide 2 What is Sustainable Development? The Brundlant Commission Report (1987) gives the standard definition SD="Meeting the needs of the present without compromising the ability of future generations to meet their own needs Aspects of SD: Economic, Social/Political, Environmental Slide 3 Environmental Sustainability Index 2002 An Initiative of the Global Leaders for Tomorrow Environment Task Force, World Economic Forum Slide 4 From WEF (2002): Strengths of ESI + Measures Environmental Sustainability + Permits cross-country comparisons + Method is transparent, reproducible + Enhances capacity to benchmark performance, guide policy, deepen understanding Weaknesses - Assumes particular set of weights (!) - Suffers from gaps in available data - Lacks time series data which limits ability to identify policy drivers Slide 5 Data Envelopment Analysis (DEA) weighting Slide 6 Related studies Zaim, Fre, Grosskopf (2001) Soc. Ind. Res. DEA based achievement and improvement indexes Mahlberg & Obersteiner (2001), IIASA report Re-measuring HDI by DEA Slide 7 Points of departure Broader scope of SD that accounts for economic, social-political, and environmental aspects Meta-level approach (index of indices) Emphasis on developing a weighting mechanism which neither specifies weights a priori nor allows for any weights that show the country in positive light (weight-restricted DEA). Slide 8 Weight-restricted DEA Slide 9 DEA-based SD index: definition Slide 10 3 types of weight restrictions: Relative weight between 2 SD indicators (h,i) for a given country j Relative weight between SD categories (k,l) for a given country j Relative weight of the given indicator i between 2 countries (j,k) Slide 11 Components of our meta-index: Slide 12 Weights Slide 13 MISD rankings, High-income countries (>$9266/cap.) Slide 14 MISD rankings, Upper-middle-income countries Slide 15 MISD rankings, Lower-middle-income countries Slide 16 MISD rankings, Low-income countries Slide 17 MISD versus GDP/capita r = 0.315 Slide 18 Conclusions DEA appears a promising tool for weighting multiple dimensions of SD to identify benchmarks. Normative judgement on min/max bounds for weights seems less controversial than choice of any specific set of weights. Weight flexibility can be restricted across SD outputs, but also across output categories and countries. Slide 19 Challenges for future research Constructing a superior SD index directly from measures and indicators, rather than using aggregated indices. Dynamic index: Measuring a rate of change in the stock variables, instead of mixing up stocks and flows. A Malmquist index approach. Slide 20 Full paper available Download in pdf form from my homepage: http://www.sls.wau.nl/enr/staff/kuosmanen/ Or send e-mail to: [email protected]