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Chase growth at our peril

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Neil McInroy has been blogging about the need for local authorities to drive environmentally sustainable economic development. And so say all of us.

As Neil says, we need to start rethinking how we do local economics. And here's an example of how.

Those of us with a grounding in sustainable development will happily talk about how we need a new understanding of what we mean by 'prosperity' - and it's clear that the pursuit of growth (seen by nearly all until recently as the key indicator of prosperity) is a root cause of the peril our civilization is in.

So let's think about gross domestic product (GDP) and the measure that's used on a regional basis, gross value added (GVA).

In the Government's own words, this "measures the contribution to the economy of each individual producer, industry or sector in the United Kingdom". A perfectly good measure of economic activity and, therefore, indicator of growth.

Growth as sign of success

The problem is that regional strategies are being written under the auspices of a Review of Sub-National Economic Development and Regeneration (SNR) that majors on economic growth as measured by GVA as a sign of success.

Low carbon - or 'sustainable' - regional strategies are, rightly, all the rage. But, if we are even halfway serious about the emissions reduction in the Climate Change Act, we have to recognise that chasing growth is a thing of the past.

And that surely can't be done if strategy is driven by current metrics.

Why?

Because a RTA (road traffic accident) looks like it is good for the economy - all that power consumed, all those jobs maintained.

Because not adapting to the impacts of climate change is good for growth in GVA terms - the buildings are too hot, so the aircon is whacked up and the cost of the energy consumed contributes to growth.

Because improvements in our environmental capital (the planet's ability to sustain us by, for example, resisting soil erosion) do not count as positives in the way we currently measure our success, never mind improvements in social capital or wellbeing.

So many perverse incentives, so little time. You don't have to be an economist or climate scientist to realise that we need new metrics to reflect a new understanding of prosperity, no longer measured by growth in the classic sense.

Warren's other blogs:
Recycling stockpiles Whisper it, the downturn's not all bad

Warren Hatter is Founder of Ripple PRD. His LGC blog is twinned with his Ripple Effect blog .

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