Statistics, Knowledge and Policy

OECD World Forum on Key Indicators

Palermo, 10-13 November 2004

COMPOSITE INDICATORS OF ENVIRONMENTAL

SUSTAINABILITY
BEDŘICH MOLDAN1, TOMÁŠ HÁK, JAN KOVANDA, MIROSLAV
HAVRÁNEK, PETRA KUŠKOVÁ

Charles University Environment Center, Prague

The use of environmental indicators at the international level was pioneered by the OECD, which
published in 1974 its “Core Set of Indicators” (OECD, 1974) recommending to use them by the EU
Member States. Since than, a large number of environmental indicators are regularly published by many
intergovernmental, international and national institutions. In addition to the continuous work by OECD,
the most outstanding ones are at the global level indicators produced by UNEP (the Global
Environmental Outlook series, UNEP 2002), UNDP (annual Human Development Report, UNDP 2004),
World Bank (World Development Report series, WB 2004), and World Resources Institute (World
Development Report series, WRI 2003). At the European level, many indicator-based reports are
produced by the European Environment Agency (e.g. the so-called Dobříš Assessment Series, EEA
2003).

The concept of the environment and its protection gradually evolved from the Stockholm UN Conference
on the Human Environment in 1972 through the UN Conference on Environment and Development in
Rio de Janeiro in 1992 to the World Summit on Sustainable Development in Johannesburg in 2002.
According to the current understanding based on results of the Johannesburg Summit, the environment is
seen as one of the three pillars of sustainable development. This broader view does not restrain the
distinct role of the environment but points out its essential interconnection with the other two pillars,
namely the economic and social pillar. Therefore, it is appropriate to use the term “environmental
sustainability” that stresses both the specificity of the environment and its fundamental anchoring within
the sustainability framework.

Accordingly, there is a need for indicators that could cover the linkages between the environmental and
the other two dimensions of sustainability. The indicators that show the degree of decoupling between the
environmental pressures (such as the emissions of harmful substances) and the economic performance
(such as the GDP) are a good example of indicators capturing such linkages (OECD, 2002). Such

1
Corresponding author: U Krize 8, Prague 5, 158 00, Czech Republic; bedrich.moldan@czp.cuni.cz

http://www.oecd.org/oecdworldforum
indicators cover well some of the essential features of sustainable development but by no means cover the
issue of environmental sustainability as such for which a growing demand is noticeable.

Decision-makers as well as the general public would like to know at one glance what is the environmental
situation in a given country (or region). There is a clear request for developing a single indicator that
could serve as an overall measure of environmental sustainability. We may look for inspiration at the
other two pillars of sustainable development. In the economic sphere a commonly accepted indicator is
the Gross Domestic Product (GDP). It represents the total value of goods and services produced by
economy over a certain period of time (a month, a season, a year etc.). It is a model of a very robust
indicator very widely used. In the social sphere no such indicator exists but the Human Development
Index (HDI) is regularly calculated and published by the UN Development Program for more than ten
years. It is a composite index that measures average achievements of a country in three basic aspects of
human development: longevity, knowledge, and a decent standard of living. Longevity is measured by
life expectancy at birth; knowledge is measured by a combination of the adult literacy rate and the
combined primary, secondary, and tertiary gross enrollment ratio; and standard of living is measured by
adjusted GDP per capita. It is gaining growing respect and is more and more used and quoted (UNDP
2004).

Both the Gross Domestic Product and the Human Development Index essentially satisfy the three
essential criteria of salience, credibility and legitimacy (Cash et al., 2004; Parris and Kates, 2003).
Salience means that the indicator is interesting, useful and relevant for the user. It must show something
“that really matters”. As the user is mostly a decision-maker, there is a request for policy relevance.
However, policy implications should be obvious and unambiguous. Moreover, the indicator should be
able to serve as a benchmarking instrument, to show trends in time and set targets. Credibility deals with
the scientific validity of the indicator i.e. quality of data used for its construction, the methodology of
aggregation, and other transformations, adequacy of presentation and similar issues. The third aspect is
legitimacy which is the most difficult feature to define. It touches the perception of the indicator, its
methods of construction and the competence of the producer as seen from the point of view of a wide
range of potential users and stakeholders whose interests, values, or beliefs might be affected by the
indicator. The most important stakeholders are national governments, business sector and civil society
organizations.

Regarding the Gross Domestic Product the criterion of credibility and legitimacy is satisfied by a general
consensus that the national statistical offices or similar institutions of that type are fully competent
institutions to produce impartial and reliable information. In addition, the intergovernmental institutions
namely UN, Bretton Woods institutions, OECD, and Eurostat are supervising the national bodies. As for
salience, one objection points out that a “flow” indicator does not capture the “real wealth of nations”
(Serageldin, 1995), another to the fact that the “grey” economy is not covered. A lot of criticism is raised
by environmentalists, e.g. that the GDP does not capture the depletion of natural resources or that
evidently harmful activities or events are counted as assets (Hamilton, 1994; Cobb, Halstead and Rowe,

Page 2 of 10
1995; Meadows, 1998). However, any proposed corrections do not result in a truly substantial change of
the original approach. The important feature is that the resulting numbers are obtained in a clear and
transparent way. According to our opinion the most important feature of the GDP, which adds both to its
salience and credibility, is that the level of arbitrariness in constructing the indicator is minimal and, in
addition, is legitimized by a very broad international consensus and a standardized methodology used for
a long period of time with no substantial changes. Despite all the criticism the GDP is universally
accepted as a reliable measure of the overall economic development of a given country or other well-
defined, sub-national or supranational unit. Indeed, the Gross Domestic Product is such a powerful
indicator that it more or less directly defines the level of economic achievement.

The Human Development Index, on the other hand, is far less robust indicator regarding all three criteria
of salience, credibility, and legitimacy. All of them could be questioned. Its three components certainly
do not cover all the aspects of human development even if they arguably capture the very important if not
the most important ones. Nevertheless, the selection of the factors (and their sub-factors) is essentially
arbitrary as well as the method of calculation of the index. The UN Development Program, despite UN
being a large and respected organization, is not a universally accepted as an “arbiter” on what is and what
is not human development. Despite that the HDI serves as an acceptable benchmark for assessing human
development particularly in countries within the “middle part” of the scorecard of the world. To some
extent the history of the Human Development Index may serve as a witness that a highly aggregated
indicator, if properly designed, may serve as an overall measure of such a complex and difficult (if not
impossible) to define phenomenon like human development. It is simple, understandable, transparent and
focuses on the very basic but quantifiable prerequisites of any decent human life.

In the field of environmental sustainability several composite indicators have been proposed. We selected
six of them.

Environmental Sustainability Index (ESI) is published by the World Economic Forum (World
Economic Forum, 2002). It is a measure of the overall progress towards environmental sustainability,
developed for 142 countries. The ESI scores are based upon a set of 20 core indicators each of which
combines two to eight variables for a total of 68 underlying variables. The ESI permits cross-national
comparisons of environmental progress in a systematic and quantitative fashion. It represents a first step
towards a more analytically driven approach to environmental decision making.

3The European Union’s Joint Research Center in Ispra developed the Dashboard of Sustainability (DS)
as a software which allows presenting complex relationships between economic, social and
environmental issues in a highly communicative format aimed at decision-makers and citizens interested
in sustainable development (JRC, 2004). For the WSSD, the CGSDI (Consultative Group on Sustainable
Development Indicators) published the “From Rio to Jo’burg” Dashboard, with over 60 indicators for
more than 200 countries – a tool for elaborating assessment of 10 years since the Rio Summit).

Wellbeing index (WI) combines 36 indicators of health, population, wealth, education, communication,
freedom, peace, crime, and equity into the Human Wellbeing index, and 51 indicators of land,

Page 3 of 10
biodiversity, water quality and supply, air quality and global atmosphere, and energy and resource use
pressures into an Ecosystem Wellbeing index. The two indexes are then combined into the
Wellbeing/Stress Index (Prescott-Allen, 2001).

Ecological footprint (EF) was firstly published in 1996 by Wackernagel and Rees. The EF of a specified
population can be defined as the area of ecologically productive land needed to maintain its current
consumption patterns and absorb its wastes with the prevailing technology. People consume resources
from all over the world, so their footprint can be thought of as a sum of these areas, wherever on the
planet they are located (Wackernagel and Rees, 1996).

Living planet index (LPI) is an indicator promoted by the World Wildlife Fund. It tries to assess the
overall state of the Earth’s natural ecosystems, which includes national and global data on human
pressures on natural ecosystems arising from the consumption of natural resources and the effects of
pollution (Loh, 2002):

The Eurostat’s material flow indicators are based on economy-wide material flow analysis, which
quantifies physical exchange between the national economy, the environment and foreign economies on
the basis of total material mass flowing across the boundaries of the national economy. Material inputs
into the economy consist primarily of extracted raw materials and produced biomass that has entered the
economic system (this biomass is composed of, for example, harvested crops and wood). Material outputs
consist primarily of emissions to air and water, landfilled wastes and dissipative uses of materials (e.g.
fertilizers, pesticides and solvents). We have selected the indicator of Direct Material Consumption
(DMC) defined as a sum of all domestic extraction flows (extracted raw material, harvested biomass,
etc.) including imported and excluding exported material flows (both raw materials, biomass and semi-
manufactured/manufactured products) (Eurostat, 2001).

To illustrate these indicators and indices we present performance of the G-7 countries regarding these
indicators expressed as a rank (Tab. 1). To enable a simple comparison between the countries we have
constructed radial graphs for each country in a similar way (Fig. 1). We have drawn the ranking charts
for the Gross Domestic Product, Human Development Index, Environmental Sustainability Index,
Wellbeing Index, Ecological Footprint and Domestic Material Consumption. The rank in the Dashboard
of Sustainability is presented as the Sustainable Development Index, i.e. average of all four components
representing the four pillars (environmental, economic, social and institutional) as well as the rank only
for the environmental pillar. The Living Planet Index does not calculate the overall score for individual
countries but presents scores of its elements. We have selected the “CO 2 footprint” that is in fact the
amount of CO2 emissions per capita.

Page 4 of 10
Table 1. Ranks of the G-7 countries by the selected indices

Canada France Germany Italy Japan UK USA

DMC1 7. 4. 5. 2. 3. 1. 6.

WB2 1. 6. 2. 5. 3. 7. 4.

EWB3 1. 6. 2. 4. 7. 5. 3.

ESI4 1. 2. 4. 6. 5. 7. 3.

EF5 6. 4. 2. 1. 3. 5. 7.

EF-CO2 6 6. 1. 5. 2. 4. 3. 7.

HDI7 1. 5. 6. 7. 3. 4. 2.

DS-SDI8 3. 4. 1. 7. 5. 6. 2.

DS-SDIenv9 2. 3. 1. 6. 5. 7. 4.

GBL10 1. 3. 6. 4. 7. 5. 2.

GDP11 2. 7. 3. 5. 4. 6. 1.

Note: The lower score, the better result

1
DMC – Direct Material Consumption Indicator, 2000; Data source: Eurostat, 2002; Canada, USA, Japan –
estimation EC EVG1-CT-2002-00083 (MOSUS)
2
WB – Wellbeing Index, end of 90’ies; Data source: Prescott-Allen, 2001
3
EWB – Ecological Wellbeing Index, end of 90’ies; Data source: Prescott-Allen, 2001
4
ESI – Environmental Sustainability Index, 2002; Data source: World Economic Forum, 2002
5
EF – Ecological Footprint, 1999; Data source: Living planet report, 2002
6
EF-CO2 – CO2 Ecological Footprint, 1999; Data source: Living planet report, 2002
7
HDI – Human Development Index, 2002; Data source: Human Development Report, 2004
8
Ds-SDI – Dashboard of Sustainability, 2000; Data source: Dashboard of sustainability; UNCSD set
9
Ds-SDIenv - Dashboard of Sustainability, 2000; Data source: Dashboard of sustainability; environmental part of
UNCSD set
10
GBL – GeoBiosphere Load, end of 90’ies; own calculation by the authors
11
GDP – Gross Domestic Product, 2001; Data source: Human Development Report, 2004

If we look at the selected indicators from the point of view of the Driving Force-Pressure-State-Impact-
Response framework we may observe that the indicators ESI, DS, and WI contain some elements of all
five parameters of the framework including certain aspects of the responses. In contrast, the
environmental part of the Dashboard, EF, LPI, and DMC does not contain any elements of response.
Comparison between the first of the indicators and GDP/HDI shows a relatively high level of correlation
between them. On the other hand, the second group documents a quite different picture.

Page 5 of 10
The assessment of the selected indicators from the point of view of the three important criteria of
salience, credibility and legitimacy. Let start with the salience. We have stated that indicators of
environmental sustainability should deal with some important links between the environmental and the
other two pillars of sustainable development. From this point of view the responses may be seen as such
links. However, in our opinion, this is not the case. The proper links to be captured are those between the
physical anthropogenic activity affecting directly or indirectly the environment and the environmental
parameters. The four indicators, namely environmental part of the Dashboard, the Ecological Footprint,
the Living Planet Index, and the Direct Material Consumption are, from this point of view, better suited
for being accepted as the indicators of environmental sustainability. However, all of them are capturing
only some partial elements of the environmental parameters.

All the presented indicators have serious problems regarding the other two criteria, namely credibility and
legitimacy. Probably the most important comment is that basically in all cases the selection of the sub-
parameters of the indicators is arbitrary. The elements of all the indicators are certainly important ones
designated by excellent experts but still the selection lacks clear scientifically objective base. This
objection is particularly valid regarding the Ecological Footprint. The resulting value of the indicator is
dominated by the concept of the CO2 absorption that is questionable. In addition, the method of
aggregation is in all cases not without problems (JRC, 2002). The legitimacy of all presented indicators is
probably the main problem. However, as we have seen from the example of the Human Development
Index, the legitimacy is something that may not be obtained easily and instantly but still it is possible to
achieve gradually. We may hope that if the scientific community brings some truly salient and credible
indicator of environmental sustainability, the legitimacy may be finally earned. An encouraging example
of such process is the ongoing effort to develop an “agreed set of sustainable development indicators” by
OECD (OECD 2004) or the structural indicators used by the European Union (European Commission,
2003).

As a contribution to the international effort to develop a suitable indicator of environmental sustainability

we propose a composite indicator that we call the Geobiosphere Load Index (GBL) (Moldan et al.,
2004, under review). As our basic approach – having in mind the D-P-S-I-R framework – we have chosen
to focus on the pressures. The pressure indicators best comprehend the fundamental stresses that human
activities put on environment. The GBL index is calculated in a transparent way according to a
straightforward formula. By proposing a single index based on only three clearly defined indicators we
fulfill the first of the fundamental prerequisites: A small number of individual indicators. Formally, our
proposed GBL is resembling the UNDP’s Human Development Index based on three fundamental
components of a dignified human life: These three components are characterized by comprehensible
indicators that are then put together by a simple and transparent mathematical formula. Our index is
constructed in a similar way based on three indicators capturing – in our opinion – the most important
factors of environmental sustainability. Energy, materials and land can be regarded as the essential
components and prerequisites of nature’s services (Daily, 1997). The idea of ecosystem services is well
established and is currently developed as a fundamental concept by the ongoing Millennium Ecosystem

Page 6 of 10
Assessment Program (Alcamo et al., 2003). The provision of energy and materials basically equals the
provision of ecosystem services (such as food, fiber, energy resources, biochemicals or freshwater). Land
– in relation with other environmental media – is a prerequisite for all kinds of ecosystem services
(besides mentioned provisions services further supporting services as e.g. primary production, regulating
services as e.g. climate regulation, and cultural services as e.g. recreation).

The material component of the GeoBiosphere Load index is based on data and indicators of the economy-
wide material flow analysis (MFA). Energy flow analysis (EFA) provides conceptually similar
environmental pressure indicators as MFA does. Together with energy and material flows, land and land
(area) requirements are the third important category of resource input for economic activities. The
resulting index is constructed as an “average” of the individual indicators (sub-indexes). The result – in
the format of a rank – of our calculation of the GBL index is in Tab. 1 and Fig. 1.

The GBL certainly does not capture absolutely all environmental problems caused by human activity, e.g.
all the harmful effects of transport, dispersal of chemicals, direct influence on climate and/or on
biodiversity. However, given the high correlation between selected indicators and such phenomena like
production and consumption of chemicals (correlated with material indicators), emissions of greenhouse
gases (correlation with energy indicators) or loss of habitats (correlation with land indicators) even these
factors are captured to some extent.

Page 7 of 10
Figure 1. Performance of the G-7 countries regarding the selected indicators expressed as a rank

Canada France

DMC DMC
7 7
GDP 6 WB GDP 6 WB
5 5
4 4
GBL 3 EWB GBL 3 EWB
2 2
1 1
0 0
Ds-SDIenv ESI Ds-SDIenv ESI

Ds-SDI EF Ds-SDI EF

HDI EF-CO2 HDI EF-CO2

Germany Italy

DMC DMC
7 7
GDP 6 WB GDP 6 WB
5 5
4 4
GBL 3 EWB GBL 3 EWB
2 2
1 1
0 0
Ds-SDIenv ESI Ds-SDIenv ESI

Ds-SDI EF Ds-SDI EF

HDI EF-CO2 HDI EF-CO2

Japan UK

DMC DMC
7 7
GDP 6 WB GDP 6 WB
5 5
4 4
GBL 3 EWB GBL 3 EWB
2 2
1 1
0 0
Ds-SDIenv ESI Ds-SDIenv ESI

Ds-SDI EF Ds-SDI EF

HDI EF-CO2 HDI EF-CO2

Page 8 of 10
 USA

DMC
7
GDP 6 WB
5
4
GBL 3 EWB
2
1
0
Ds-SDIenv ESI

Ds-SDI EF

HDI EF-CO2

References:

Alcamo, J. et al. (2003): Ecosystems and Human Well-being. A framework for Assessment. Millennium
Ecosystem Assessment. Island Press. 245 pp.

Cash, D.W., Clark, W., Alcock, F., Dickson, N.M., Eckley, N., and Jaeger, J. (2004): Salience,
Credibility, Legitimacy and Boundaries: Linking Research, Assessment and Decision Making. Global
Environmental Assessment Project, Harvard University (under review) (http://www.ksg.harvard.edu/gea).
24 pp.

Cobb, C., Halstead, T. and Rowe, J. (1995): Redefining Progress - The Genuine Progress Indicator:
Summary of Data and Methodology. Redefining Progress. San Francisco.

Daily, G.C. (ed.) (1997): Nature’s Services. Societal Dependence on Natural Systems. Island Press,
Washington, DC. 392 pp.

EEA (2003): Europe's environment: the third assessment. Environmental assessment report No 10. 343
pp.

European Commission (2003): Communication from the Commission: Structural Indicators. Brussels,
16.10.2002; COM(2002) 551.

Eurostat (2001): Economy-wide Material Flow Accounts and Derived Indicators. A Methodological
Guide. 92 p.

Global Leaders of Tomorrow Environment Task Force, World Economic Forum in collaboration with
Yale Center for Environmental Law and Policy Center for International Earth Science Information
Network at Columbia University. 301 pp.

Hamilton, K. (1994): Green Adjustments to GDP. Resource Policy, 20 (3), 155-168.

JRC (2002): State-of-the-art Report on Current Methodologies and Practices for Composite Indicator
Development. Institute for the Protection and Security of the Citizen Technological and Economic Risk
Management, report by the Applied Statistics Group. 72 pp.

JRC (2004). Dashboard of Sustainability (http://esl.jrc.it/envind/dashbrds.htm).

Page 9 of 10
Loh, J. (ed.) (2002): Living Planet Report 2002. World Wildlife Fund. 39 pp.

Meadows, D. (1998): Indicators and Information Systems for Sustainable Development. A Report to the
Balaton Group, published by The Sustainability Institute. 95 pp.

Moldan, B. et al. (2004): GeoBiosphere Load: Proposal for an Index. A paper for the Assessment of
Sustainability Indicators Project undertaken by SCOPE, Paris (under review). 11 pp.

OECD (1998): Towards sustainable development. Environmental Indicators. OECD publications. 129 pp.

OECD (2002): Indicators to Measure Decoupling of Environmental Pressure from Economic Growth.
SG/SD(2002) 1/FINAL. 108 pp.

Parris, T.M. and Kates, R.W. (2003): Characterizing and Measuring Sustainable Development. Annu.
Rev. Environ. Resour. 2003. 28:13.1–13.28

Prescott-Allen, R. (2001): The Wellbeing of Nations. A country-by-Country Index of Quality of Life and
the Environment. Island Press. 341 pp.

Serageldin, I. (1995): Sustainability and the wealth of nations: preliminary draft. World Bank,
Washington, DC. 19 pp.

UNDP (2004): Human Development Report 2004. 283 pp.

UNEP (2002): Global Environment Outlook 3. 416 pp.

Wackernagel, M. and Rees, W., (1996): Our Ecological Footprint. Reducing Human Impact on the Earth.
Gabriola Island, BC, New Society Publishers.

WB (2004): World Development Report 2005: A Better Investment Climate for Everyone. 288 pp.

World Economic Forum (2002): Environmental Sustainability Index. An Initiative of the

WRI (2003): World Resources 2002-2004. Decisions for the Earth. 315 pp.

Page 10 of 10