Choices, Capabilities and Sustainability

Second Conference on Measuring Human Development March 4 th -5 th 2012

Jean-Paul Fitoussi and Khalid Malik

Sustaining Human Development

“Human beings are born with certain potential capabilities. The purpose of development is to create an environment in which all people can expand their capabilities, and opportunities can be enlarged for both present and future generations”. HDR (1994) “Human development involves equal rights applied to all”. Anand and Sen (2000) “Sustainable freedom” implies preserving human’s capabilities today without “comprising those of future generations”. Sen (2009)

Source: HDRO calculations

The Challenge

Sustainability: Traditional discussion

• Consumption and capital based • • Weak Sustainability - natural capital and physical capital substitutable - maintain levels of total capital - Example: Adjusted net savings Strong Sustainability - Beyond a certain level, loss of natural capital irreplaceable - Example: planetary boundaries, applicable to different forms of natural capital

Capabilities and Choices

• K: Stock of capabilities in a society - Individual capabilities - Social competencies • Ch: Choices afforded by the stock of K • Ch=f E (K) The stock of capabilities (individual and social) implies a certain set of choices available to individuals.

E- environmental conditions, influence f

Capabilities, Choices and Sustainability

• Sustainability: choices made today should not, in the net, deplete the stock of capabilities that will determine the availability of choices for future generations. • Stock of capabilities, K, must evolve in a way that Ch 1 ≥Ch 0 The set of choices available at the end of the time period is at least as large as the set of choices at the beginning of the period.

Comprehensive view of sustainability

Capabilities approach implies a ‘strong’ and comprehensive view of sustainability - choices of current and future generations are included - social, economic and environmental dimensions are included - requiring each dimension to be individually sustainable Examples: - HDR 2013: Rise in fertility rates in some Sub-Saharan associated with cuts in education during structural adjustment programs of the 1980s.

- Recent trends of rising inequality damage the social fiber, reducing social competencies and thereby threatening social sustainability.

- Current austerity programs erode education and health capabilities, threatening economic and social sustainability.

Assets

“A Balance Sheet”

Liabilities Tangible Assets

Public assets, private assets, an educated population, natural resources

Intangible Assets

Social competencies such as the degree of social cohesion, social inclusion, belief in democracy and democratic institutions

Public Debts Private Debts

• • Even if austerity policies meet their goal of debt sustainability, the situation cannot be called sustainable Balance sheet is being impacted negatively

Critical Thresholds for Sustainable Human Development

• Tipping points: Capability stock and therefore choices available to future generations fall below critical thresholds.

• Examples include high levels of inequality precipitating social unrest.

- Local thresholds can vary and differ from global thresholds.

• Environmental ‘tipping points’: Risk of crossing thresholds that will trigger abrupt environmental change in continental or planetary scale systems - Local and planetary ‘boundaries’

“What we measure affects what we do” ( Stiglitz-Sen-Fitoussi report 2010)

• Measuring changes in critical capability stocks: - education (ΔE), health (ΔH) and command over resources (ΔI) and others.

• Measure of E, state of the environment - Planetary boundaries apply • Defining and minding social, economic and environmental ‘tipping points’.

Tension between Rights and ‘global’ responsibility

• Rights approach: universality, equal or “fair” use of the environment - Every person has the right to achieve higher human development within the limits imposed by the sustainability of our planet • Larger countries have greater responsibility, since they have a potentially larger impact on global sustainability

Incorporating environment thresholds

• • Partial approach “Discounting” Human Development rankings to reflect environmental sustainability 140 120 100 80 60 40 20 0 United States China Russian Federation Number of position lost Japan Rank HDI Source: HDRO calculations Germany Rank SHDI European Union

Alternative approaches

• Why not just adjust the income dimension of the HDI?

– • Command over resources is not the only channel in which unsustainable behavior today affects future choices e.g. education, health, inequality, resources availability , conflict • Why not add an environmental dimension to the HDI?

– Environment is not a capability, but it can affect them • Why not combine the HDI with existing measures of sustainability?

– • e.g. Ecological Footprint, Environmental Performance Index, Adjusted Net Savings Valid and useful measures but our aim is to focus explicitly on people and their choices both present and in the future