Sustainable National Income

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THE SNI, AN INDICATOR FOR ENVIRONMENTAL SUSTAINABILITY

Central to the sustainable national income (SNI) is the concept of environmental function. Environmental functions are defined as the possible uses of our non-human made physical surroundings, on which humanity is entirely dependent in all its doings, whether they be producing, consuming, breathing or recreating. When use of one function is at the expense of another or the same function or threatens to be so in the future, there is competition of functions. As an illustration, once water pollutant thresholds have been exceeded, use of the function ‘dumping ground for waste’ may come to compete with the function ‘drinking water’. Competing functions are by definition scarce and consequently economic goods. Today most of the functions of our physical surroundings, which once were free goods, have become scarce goods.

The sustainable national income (SNI) in a certain year is defined as the maximum attainable production level whereby, with the available technology in the year of calculation, vital environmental functions remain available ‘for ever’. The production level in the same year that is registered in the standard national income (NI) does not meet this condition. Environmental functions and their preservation after all fall outside the NI. The NI is therefore always higher than the SNI. The difference gives information about the distance between the present production level and the production level in a sustainable situation. If the distance decreases then we are on the road to environmental sustainability, the part of the production that is based on unsustainable use of the environment decreases. If the distance increases then we are drifting further away from sustainability.

With the present technology, population size as well as production and consumption patterns, the sustainable situation governments say they strive for cannot be reached. Given the distance to be bridged, achieving environmental sustainability will require a fairly long period. Besides many environmental measures have a time lag, sometimes of a few decades. The length of the period of the transition path to a sustainable situation is only limited by the condition that vital environmental functions must not be irreparably damaged. In view of the threat that this may happen it seems urgent to wait no longer with a change of course in the direction of sustainability. On account of the precautionary principle no technological progress during the transition period is anticipated. This is measured afterwards on the basis of the development of the distance (écart) between the SNI and the NI in the course of time.

The work on the estimate of an SNI started in the mid-1960’s. The first rough estimate of an ‘SNI’ for the world by Tinbergen and Hueting in 1991 arrived at 50 percent of the world production level: the sustainable world incomeJ.Tinbergen, R. Hueting, GNP and market prices: wrong signals for sustainable economic success that mask environmental destruction. In: R. Goodland et al. (editors), Environmentally Sustainable Economic Development: Building on Brundtland, Ch 4: 51-57, UNESCO, Paris, 1991. Also published in: R. Goodland et al. (eds.), Population, Technology and Lifestyle: The Transition to Sustainability, Ch. 4: 52-62, Island Press, Washington, D.C., 1992. Also published in: Environmentally Sustainable Economic Development: Building on Brundtland. R. Goodland et al. (eds.) Environment Working Paper 46, The World Bank, Washington, D.C., 1991.. A much more advanced estimate for The Netherlands was made in 2001 by a collaboration of the National Institute for Public Health and Environment (RIVM), Statistics Netherlands (CBS) and the Institute for Environmental Studies (IVM). The estimate arrived at around 50 percent of the production level, c.q. the national income of The NetherlandsH.Verbruggen, R.Dellink, R.Gerlagh, M.Hofkes, H.M.A. Jansen, 2001. Alternative calculations of a sustainable national income for the Netherlands according to Hueting. In: E.C. van Ierland, J. van der Straaten, H.R.J. Vollebergh, editors, Economic Growth and Valuation of the Environment, A Debate, Edward Elgar, Cheltenham UK p 275-312.. This corresponds with the production level of the beginning of the 1970’s. As the population was smaller at that time, the consumption per person was substantially higher than 50 percent of the present level. In accordance with the principles of the SNI it is assumed that all countries in the world simultaneously switch over to environmental sustainability and that the costs thereof are comparable with those of The Netherlands. In the period 1990-2000 the distance between de NI and SNI increased with approximately 10 billion eurosNetherlands Environmental Assessment Agency, Environmental Balance 2006, p 21.

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Reviews

Interestingly, neoclassical economics finds opposition from ecological economics, while that opposition would be less needed due to Hueting's more neoclassical analysis of the environment. The neoclassical SNI has different results than e.g. Robert Costanza et al. (1997), "The value of the world's ecosystem services and natural capital", Nature 387:253-260. For a critical review of the method used by Robert Costanza et al. see: R. Hueting, L. Reijnders, B. de Boer, J. Lambooy, H. Jansen (1998), The concept of environmental function and its valuation, Ecological Economics, 25, p 31-35.

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