Sub-Saharan Africa, on the contrary, stands out as the region where girls have the worst chances, particularly in the poorest sections of the population and in rural areas. Only 9% were completing lower secondary education by the end of the 2000s, a share that has been declining over time. Based on recent trends, girls from the poorest families in sub-Saharan Africa are only expected to achieve lower secondary completion in 2111.
Overall, at past rates, low-income countries would not achieve universal primary and secondary education before the end of this century. Around half of 15- to 19-year-old girls and boys are expected to complete lower secondary education in low-income countries by 2030, while only 33% of boys and 25% of girls would complete upper secondary.
While gender-specific disadvantages still remain in primary and secondary education, in tertiary education the gender gap was closed by 2015 and in some countries even started to reverse, with women outnumbering men. In two out of five OECD countries, as well as in Lithuania and the Russian Federation, one out of every two young (25–34) women has a tertiary diploma. Only in Canada, Korea, Luxembourg, the Russian Federation, and the United Kingdom do men have such high rates of tertiary education. Gender differences, however, still remain in fields of specialization, with women concentrating in the humanities and men in the scientific and technical sectors. Furthermore, the gender balance again reverses at the upper tertiary level, with more men than women obtaining a PhD. Finally, although most tertiary graduates are women, men still have better labor market outcomes in terms of both participation and earnings (United Nations, 2015b).
Natural Capital
At a social and political level, concern about climate change and environmental sustainability has continued to grow since the Stiglitz, Sen, and Fitoussi (2009) report, though real progress in addressing these issues on a meaningful scale has been slow. At the same time, there has been a shift in the thinking about capital, from no longer thinking just about quantity and volume but about quality, biodiversity, and ecosystems.
The development of the capital approach as applied to natural capital has followed four historical episodes (and corresponding measurement tools), each of them driven by environmental crises:
1. Measuring volume and price changes, driven by energy crises and depletion of natural resources.
2. Measuring local changes of environmental quality, linked to growing degradation of air, land, and water quality, and poorer waste treatment.
3. Focus on measuring global phenomena, linked to awareness of ozone layer depletion and climate change.
4. Measurement of ecosystems and planetary boundaries.
We are now in this fourth episode, moving beyond the measurement of individual stocks of natural capital and toward ecosystems. This considers the “interplay of different assets (for example, within a forest, there is an interplay between water, timber, soil, and wildlife).” This definition, provided by the System of Environmental-Economic Accounting (SEEA) discussed below, makes clear that, in order to measure environmental sustainability, more than the measurement of stock is required. Ecosystems are not a collection of different stocks but, more fundamentally, systems and, as such, they can have greater or lesser degrees of resilience. They provide a multitude of services to society (for example, a forest not only supplies timber but may also provide water retention and flood or landslide protection, air filtration, carbon sequestration, habitat for rare species, and recreation).
A capital approach, applied to nature, could, in principle, allow values in the environment to be compared to values in the economy, providing a bridge between environment and economics. However, a common measurement framework is not easily adapted to the measure of ecosystems. This section summarizes progress in measuring environmental assets since the Stiglitz, Sen, and Fitoussi report (2009); identifies areas that require work most urgently; and sets out a path toward measurement of ecosystems as a key part of natural capital.
Progress Since the 2009 Stiglitz, Sen, and Fitoussi Report
Several advances in the measurement of natural capital have taken place since 2009, some of them codified in international frameworks and recommendations. In particular, the System of Environmental-Economic Accounting—Central Framework (SEEA CF) was adopted as a statistical standard by the United Nations Statistical Commission in 2012 (United Nations et al., 2014a). It covers the first three episodes described above: measuring volume and price changes, local environmental quality, and global phenomena.
The SEEA extends national accounting to include a broader set of environmental assets, for example fish stocks. It is designed to produce comprehensive and systematic information on environmental conditions linked to the economy to help guide policy-making, to understand the drivers of environmental change, and to assist with modeling and scenario building. The SEEA CF also covers initiatives taken to measure carbon emissions embedded in a country’s imports and exports (“carbon footprints”), according to multi-country input-output tables. “Adoption of the System of Environmental-Economic Accounting” describes the progress that National Statistical Offices have made in implementing the SEEA CF.
The SEEA CF defines environmental assets as the “naturally occurring living and nonliving components of the Earth,” together constituting the biophysical environment, which provide benefits to humanity. In the SEEA CF, environmental assets are viewed as individual components (including land, mineral, and energy resources, timber and aquatic resources, and water resources) that make up the environment. For these assets, physical as well as monetary asset accounts can, in principle, be compiled to describe the opening and closing stocks as well as the changes in these assets. In practice, many conceptual and data problems limit our ability to both quantify several of these assets in physical terms and to value them in monetary terms.
A significant further development in the field of measuring environmental sustainability that has occurred since 2009 is the development of the SEEA-Experimental Ecosystem Accounting (SEEA-EEA), published in 2014 (United Nations et al., 2014b), and which corresponds to ecosystems and planetary boundaries, the fourth episode described above. The SEEA-EEA represents initial efforts to define a measurement framework for tracking changes in ecosystems and linking those changes to economic and other human activity. In this framework, an ecosystem is a dynamic complex of plant, animal, and micro-organism communities and their nonliving environment interacting as a functional unit.
Human activity influences ecosystems across the world and significantly modifies many ecosystems. Several countries have begun to set up experimental accounts that describe ecosystem assets and the flows of services from these ecosystems. Ecosystem services include provisioning (e.g., food, water), regulating (e.g., flood protection, air filtration), and cultural (e.g., recreation) services.
ADOPTION OF THE SYSTEM OF ENVIRONMENTAL-ECONOMIC ACCOUNTING
A global assessment of SEEA implementation undertaken by the UN Statistics Division in 2014 indicated that 54 countries have established a program on environmental-economic accounting as part of their national statistical program, with 15 more planning do so in the short term. Topics covered by these current and prospective accounting programs differ between countries. In a nutshell, the UN assessment shows that developed countries’ accounts tended to focus on air emissions, environmental taxes, material flows, the environmental goods and services sector, and physical energy flow accounts, while developing countries focused on water and energy. In the EU, the focus has been on physical and monetary flow accounts, while outside the EU the focus has been on natural resources accounting.
These differences in compilation practices may reflect differences in national priorities. The policy demand in developing countries may be understood as stemming from the need for better managing their endowments of natural resources and from specific security issues related to water and energy.
Natural capital accounting (NCA) considers natural capital as an important element in decision making for nationa
l development and economic growth, complementing GDP data with stock measures, particularly those of natural resources and ecosystems. The Wealth Accounting and Valuation of Ecosystem Services (WAVES) Partnership led by the World Bank and involving many UN agencies, national governments, academia, and NGOs aims to ensure that natural resources are mainstreamed into development planning and national accounts. WAVES has adopted the SEEA as the underlying statistical framework to inform policies.
As mentioned above, developing methodologies that allow valuing different systems (economic, social, and environmental), and that allow these values to be compared with one another, is important, and monetary valuations are often called upon to serve this role. However, pricing natural capital is difficult, not only conceptually but also technically. There are still no agreed methods to estimate the monetary value for many environmental assets, because the market prices of environmental assets are inadequate or nonexistent for several reasons. In a market context, economists use market prices to evaluate trade-offs, implicitly assuming that the price for a good or commodity obtained from the market reflects its marginal value for society as a whole. However, this relationship breaks down in the presence of externalities, which are large in the environmental sector, or when prices are not observed (as there are no transactions).
While accounting for nonfinancial, nonproduced assets remains a hurdle that has not yet been overcome, progress has been made on measuring land and subsoil assets (a set of issues belonging to the first historical episode in the development of the capital approach). A number of countries already produce monetary estimates for these assets. Other forms of natural capital remain, however, uncharted territory, in particular when it comes to ecosystems. A number of countries have started experiments to systematically describe ecosystem capital, and the first experimental estimates of their monetary value have been made.
Outstanding Issues and New Questions
The need to measure environmental assets and, in particular, ecosystems and planetary boundaries (episode 4 above) is now being recognized. Lots of research over the last 50 years has gone into measuring these assets and into developing valuation techniques that would allow monetary values to be estimated for them. However, the most critical measurement issues have still not been resolved.
Uncertainty remains over both how to measure quantities and conditions (of sub-soil assets, public goods, ecosystems, and their services) and how to price them. In the case of global phenomena, and in particular for ecosystems and planetary boundaries, these assets are nontraded, and so the market system will generally not provide the metrics for measuring and pricing. Reliable, widely accepted alternatives have yet to be established.
While all OECD countries establish measures of produced assets, only a handful of countries produce complete SNA balance sheets that also include the value of land and sub-soil assets: Australia, France, Korea, and the Netherlands. The value of other environmental assets is generally excluded.
More countries should apply the SEEA, and produce more timely and reliable environmental-economic indicators based on it. These could include measures of “resource productivity” (the amount of material consumed per unit of GDP) and measures of the “circular economy” (e.g., recycling rates or cyclical use rate, measuring the amount of materials that is reused in relation to total material use). These indicators do not need to be expressed in monetary units, but they should meet the same quality criteria as GDP.
It should be clear from the above discussion that the measurement of sustainability, in the narrow sense of keeping the total monetary value of the stock of natural capital constant, is plagued with uncertainties that result from a combination of challenges: difficulties to find price estimates in the absence of markets; difficulties to predict future demand; uncertainties about system behavior including lack of knowledge about the inter-dependence of different systems; and so on. A more comprehensive approach should aim to develop an information system that enhances our knowledge about all components of natural capital, including subsoil assets, land and the way it is used, and ecosystems. This is the ambition of the systems approach presented in the section of that name.
CARBON PRICING
The conceptual and data issues related to carbon pricing are relatively simple, and the underlying phenomena well understood compared to many other types of natural capital. However, even for such a relatively simple methodological approach, the following would have to be addressed.
• Carbon prices should fully reflect the social cost of emissions. This social cost is hard to predict and should not only include the costs of providing the global public good in question, but also take into account tipping points and nonlinearities in the damage from each additional unit of emissions.
• Carbon prices should incorporate time discounting appropriately. The discount rates applied should reflect both an element of “pure time discounting” (i.e., how much consumption tomorrow is valued by a person relative to consumption today) and an assessment of how much better off future generations will be relative to the current one. Deciding on this second element of the discount rate is not straightforward, but has a large impact on carbon pricing.
• Distributional effects complicate pricing carbon emissions. The effects of climate change will fall disproportionately on certain social groups and places, so the most appropriate carbon prices should reflect the degree of “aversion to inequality” of the community.
• Finally, the price of carbon emissions should take into account cross-border externalities, i.e., the effects of emissions in one country on other countries, as well as risks and resilience.
Toward a Systems Approach to Inform Policy
In the capital approach, the different forms of capital (human, social, natural, economic) are considered separately. This implicitly assumes their independence and, therefore, substitutability. Since we know, however, that they are not truly independent, a more adequate measurement approach would call for a further step, going beyond independently measured balance sheet items. To properly describe phenomena that are shaped by the interaction between complex systems (be they social, economic, or ecological), a more macroscopic approach is needed. In practice, the ambition to build balance sheets cannot be achieved for some assets, in particular when assets are difficult to value in monetary terms, either because of noneconomic benefits that flow from the asset or because the valuation of an asset is complicated or involves uncertainty (as in the case of sub-soil assets that have not yet been discovered). Further, certain government activities provide benefits to society as a whole (they may be public goods or the provision of commodities generating large externalities), whose value may bear little relation to the cost of the assets providing these services (unlike private sector activities, where in equilibrium, marginal benefits should equal marginal costs).
Another limitation of this approach is that deciding whether a particular situation is sustainable is difficult in the presence of risk and uncertainty. Whether a given situation is sustainable depends on the risk posed by that situation, implying that some evaluation is needed of whether that level of risk is acceptable. Apart from the fact that people are more loss averse than risk averse (i.e., they will take considerable risks if they don’t expect to lose much), estimating the level of risk itself is difficult, and in the case of uncertainties it is impossible. People may have different preferences regarding risk and the best way of dealing with uncertainties, and those preferences may differ across generations, making it difficult to ascertain whether a particular development (as described by successive balance sheets) is sustainable or not. The global nature of sustainability adds a further layer of difficulty (with issues related to causalities, property rights, etc.) and complexity regarding attempts to measure the different stocks of capitals.
Most likely, the “holy grail” of a society-wide balance sheet, incorporating all types of capital and permitting the different sectors to “talk” to each other by assigning monetary
values (under the assumption of “weak” sustainability) will never be fully achieved. Or it will be achieved only at the price of heroic assumptions. Setting shadow prices entails evaluating the future, which is a daunting task falling outside the remit of official statistics (Fleurbaey and Blanchet, 2013). Further, these estimations and assumptions would have such a large influence on the conclusions of the exercise that the exercise itself would likely be neither successful nor helpful as a contribution to a democratic debate on the societal choices related to sustainable development.
To better understand the complexity of our world, we should look at it from a systems perspective (Walshe, 2014; Borio, 2009; Fiksel, 2006; and Costanza et al., 1997) and examine how these systems—the ecological-social-economic-political systems—cope with changes and shocks. This broadens the notion of sustainability with the dimension of a given system’s ability to cope with future, known and unknown, disturbances. This should ensure that the system remains sustainable, or at least that it has the ability to restore its sustainability after a temporarily unsustainable period.
The two main dimensions of shocks and of slow-burn processes (such as demographic changes) that determine how the system could respond to them (hence their resilience) are intensity and persistence. The interaction of these two dimensions determines the system’s ability to sustain a resilient behavior; in turn, such ability can be classified as “absorptive capacity,” “adaptive capacity,” and “transformative capacity.” Each of the three can then be linked to different types of interventions aimed at enhancing the system’s resilient behavior,5 as described in Figure 9.2.
For Good Measure Page 42