Indicators and Information Systems for Sustainable Development

This paper grew out of a five-day workshop on sustainable development indicators attended by a small subset of the two hundred members of the Balaton Group. The Balaton Group, founded in 1981, is an international network of scholars and activists who work on sustainable  development in their own countries and regions. We come to our work from a cross-disciplinary, whole-systems perspective. Individually and jointly we have been thinking about and testing indicators of sustainable development in local, national, or international contexts for many years.

The workshop was held at the National Institute for Public Health and Environmental Protection (RIVM) in Bilthoven, the Netherlands, April 13–17, 1996.

The Balaton Group

This workshop introduced a new vision of the kinds of information and indicators we would need to guide ourselves toward a sustainable world — whether on the level of a community, a nation, or the whole planet. This document is the result of the review of the workshop conclusions. 

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The nature of indicators, the importance of indicators

Indicators are natural, everywhere, part of everyone’s life. Indicators arise from values (we measure what we care about), and they create values (we care about what we measure). When indicators are poorly chosen, they can cause serious malfunc-tions. Indicators are often poorly chosen. The choice and use of indicators are processes full of pitfalls. The choice of indicators is a critical determinant of the behavior of a system.

Indicators, models, cultures, worldviews

Indicators are partial reflections of reality, based on uncertain and im-perfect models. We need many indicators because we have many different purposes — but there may be over-arching purposes that transcend nations and cultures, and therefore there may be overarching indicators. We need many indicators because  we have many worldviews — but indicators may help narrow the differences between worldviews. Indicators need not be purely objective, and in fact few of them are. Despite their difficulties and un-certainties, we can’t manage without indicators. The search for indicators is evolutionary. The necessary process is one of learning.

Why indicators of sustainable development?

Development and sustainability are old problems; now they come together on a global scale and in an urgent time frame. Sustainability indicators must be more than environmental indicators; they must be about time and/or thresholds. Development indicators should be more than growth indicators; they should be about efficiency, sufficiency, equity, and quality of life.

The challenge of coming up with good indicators

It’s easy enough to list the characteristics of ideal indicators. It’s not so easy to find indicators that actually meet these ideal characteristics. Most of us already have indicators in the backs of our minds, “beloved indicators” that reflect issues of great concern to us. It’s important to get them out on the table. Indicators can take many forms. They don’t have to be numbers. They can be signs, symbols, pictures, colours. What is needed to inform sustainable development is not just indicators, but a coherent information system from which indicators can be derived.

Suggestions for indicator process and linkage

Hierarchy: coherence up and down the information system

The information system should be organized into hierarchies of increasing scale and decreasing specificity. Information from the hierarchy at all levels should be available to people at all levels. Information should also come from all levels. The public can be important contributors to, as well as users of information and indicators.

The selection process: experts and citizens together

The process of indicator development is as important as the indicators selected. The indicator selection process works best with a combination of expert and grassroots participation. But integrating expert and non-expert opinion has its costs and must be done with care.

Systems: making indicators dynamic

Systems insights can help in the design of indicators that identify critical linkages, dynamic tendencies, and leverage points for action. Distinguish between stocks and flows. Stocks are indicators of the state of a system and its response time. Flows may be leading indicators of change. Exponential growth rates (the strengths of vicious or virtuous cycles) are sensitive points to monitor in systems. The ratio of change rate to response rate is a critical — and usually critically missing — indicator of the degree to which a system can be controlled. Watch for unbalanced or missing control loops. An important indicator of the resilience of a system is the redundancy of its controlling negative feed-back loops. Nonlinearities in systems (turning points, thresholds) are key points for the placement of indicators. A primary indicator of the long-term viability of a system is its evolutionary potential. Wherever possible, indicators should be reported as time graphs rather than static numbers. Indicators should be combined with formal dynamic modeling.

A suggested framework for sustainable development indicators

The “Daly Triangle,” which relates natural wealth to ultimate human purpose through technology, economy, politics, and ethics, provides a simple integrating framework. Sustainable development is a call to expand the economic calculus to include the top (development) and the bottom (sustainability) of the triangle. The three most basic aggregate measures of sustainable development are the sufficiency with which ultimate ends are realized for all people, the efficiency with which ultimate means are translated into ultimate ends, and the sustainability of use of ultimate means. Extending the definition of capital to natural, human, and social capital could provide an easily understood base for calculating and integrating the Daly triangle.

Natural capital (ultimate means)

Natural capital consists of the stocks and flows in nature from which the human economy takes its materials and energy (sources) and to which we throw those materials and energy when we are done with them (sinks). The human economy uses many kinds of throughput streams, each associated with natural capital on both the source and sink end of the flow. Natural capital is being used unsustainably if sources are declining or sinks are increasing. Indicators should highlight limiting natural capital stocks. Natural capital should be monitored at whatever geographic level makes sense. We need to allow estimates in our indicators for life support systems that we do not yet understand.

Built capital (intermediate means)

Built capital is human-built, long-lasting physical capacity — factories, tools, machines — that produces economic output. The nature and amount of built capital determines the standing demand for human capital (labor and skills) and for throughput from natural capital (materials and energy). That fraction of built capital that produces more built capital (investment) determines the rate of economic growth. Sustainability on the level of built capital means investing at least as fast as capital depreciates. Across levels it means keeping the throughput needs of built capital appropriate to the sustainable yields and absorptive capacities of natural capital and keeping la-bor and management needs appropriate to the sustainable use of hu-man capital. There are many categories of built capital. A useful indicator would reflect the proper balance among categories to permit the most productive use of all forms of capital.

Human capital (intermediate means/ends)

The base of human capital is the population, including its age and gender structure. Along with numbers, ages, and genders, human capital can be measured by attributes such as health and education. Human capital is in one sense an intermediate means, in another sense an intermediate end. Population with its attributes, like built capital, is an indicator of the necessary throughputs and potential outputs of a society. The universal resource available to all human beings, and the currency of most value to them, is time. Time accounting may be key to human capital accounting.

Social capital (intermediate ends)

Social capital is a stock of attributes (knowledge, trust, efficiency, honesty) that inheres not to a single individual, but to the human collectivity. Just as time is a key currency for human capital, information may be a key currency for social capital. Another possible measure of social capital would be density or frequency or intensity of human relationships. The “forbidden numeraire,” whose stocks, flows, and distribution could lend itself to indicators, is power. Social capital can be a highleverage transformative factor in the process of channeling ultimate means into ultimate ends. Rough indicators of social capital are better than nothing.

Wellbeing (ultimate ends)

The most important indicator, without which the others make no sense, is an indicator of ultimate ends. Indicators of ultimate ends may not be numerical or precise, but they are findable and usable.

Integration (translating ultimate means into ultimate ends)

The central indicators of sustainable development will integrate the whole Daly triangle. The information system from which these central indicators can be derived will measure capital stocks at every level and the flows that increase, decrease, and connect those stocks. There are systematic schemes for assessing the total viability of a system. These schemes can serve as checklists for sustainable development indicators.

Implementing, monitoring, testing, evaluating, and improving indicators

Indicators don’t guarantee results. But results are impossible without proper indicators. And proper indicators, in themselves, can produce results. Indicator measurement can be a costly, bureaucratic process. But it can also be relatively simple. There may be clever ways to measure indicators that don’t even require numbers or disturbing the system in any way. The process of finding, implementing, and improving sustainable development indicators will not be done right at first. Nevertheless it is urgent to begin.