The obsession with measuring economic growth

Last month Nicolas Sarkozy breathed new life into the ongoing debate as to whether Gross Domestic Product (GDP), which measures financial growth, is an accurate measurement of a country's state of health, the argument being that GDP ignores other factors vital to the well-being of its population (http://www.theecologist.org/blogs_and_comments/bloggers/jonathon_porritt/325244/sarkozy_deserves_applause_for_his_stance_on_growth.html). Sarkozy endorsed the recommendations of a report he commissioned by Nobel prize-winners Joseph Stiglitz and Amartya Sen. The report criticises the use of GDP statistics as a measure of societal well-being, pointing out that GDP statistics were introduced to measure market economic activity and not well-being. Earlier this year, the UK Sustainable Development Commission's Report Prosperity Without Growth (which was not well received by the Treasury) took a similar line when it highlighted the fact that the current economic crisis provides an opportunity to consider economic models which are not predicated solely on economic/financial growth.

Nobel Prize in Economics 2009

I'm very pleased about the recent award of the Nobel Prize to Elinor Ostrom and Oliver Williamson. It was significant and celebratory that Ostrom was the first woman to win the prize, but also, from my perspective, it was significant that the prize was awarded due to research into the critical concept of governance.

Professor Ostrom, who teaches at Indiana University, was awarded the prize "for her analysis of economic governance." Her work had demonstrated how common property could be successfully managed by groups using it. In the 1960s, Hardin set the dominant framework by outlining how common property resources, using the example of a village 'community' green, would become degraded over time due to non existent, vague or competing pressures amongst reseource users who have an aim of profit or welfare maximisation. Hardins 'Tragedy of the Commons' outlined the fate of many common property resources that suffer from a lack of a regulatory regime - a case being the degradation of high seas fisheries. Ostrom's research outlined how this is not necessarily the case - that many examples exist of communities and resource users coming together in the absence of regulatory regimes to manage common property resources such as fresh water, fisheries and forests.

Governance is a critical concept that is relevant for natural resource management, climate change, and conservation. It deals with the relations between traditional government, civil society and market orientated actors, and looks at the role, evolution and effectivness of social institutions. Fundamentally governance is about inter-relations and interactions across differnet scales - local, national and international. In relation to natural resources, it relates to resolving conflicts, building collective responsibility and ultimately achieving sustainable and responsible management. As outlined in Ostrom's research, and evident in many areas such as community based resource management, co-management, and market based instruments - understanding the evolution, effectiveness and impacts of new forms of governance is important to resolving many environmental issues.

This award could not come at a better time.

The Tip of a Fast-disappearing Iceberg?: Implications of the opening up of the Northern Sea Route

In September 2009 two ice-strengthened heavy lift vessels of Germany’s Beluga Group – the MV Beluga Fraternity and the MV Beluga Foresight – successfully completed their transit through the Northern Sea Route, known in former times as the Northeast Passage. This event was excitedly billed (by Beluga) as a “world premier voyage” representing the first true commercial transit of this long-sought Arctic waterway. Are global shipping patterns set to be transformed as Arctic routes open up?

Beluga certainly seems to think so as it has announced plans for more (up to six) and larger vessels to use the same route in the summer of 2010. After all, the lure of using Arctic sea lanes is readily understood – using the Northern Sea Route represents a distance saving of almost 40 per cent on the a transit between northern Europe and northeast Asia as compared with the traditional routes using either the Suez or Panama canals. This translates to significant potential savings in terms of transit time and fuel costs (and therefore harmful emissions).

Shorter but better?
A slightly closer look at the pioneering voyages of the German ships does, however, suggest that global shipping patterns are unlikely to be transformed quite yet. In particular, it is noticeable that the two vessels concerned are relatively small being 12,750 dead-weight-ton (dwt) vessels. In contrast “Suezmax” class ships plying more traditional routes between Asia and Europe exceed 200,000dwt. This implies that the vessel the size of one of the Beluga ships would have to make at least 15 return transits of the Northern Sea Route in order to deliver the same volume of cargo as one voyage using a larger vessel by way of the Suez Canal – rather undermining the pure distance savings involved in using the Arctic route. Indeed, the size of vessels operating in the Northern Sea Route is limited by both draft (12.5m) and beam (30m) restrictions dictated by the shallow nature of some of the straits between the Siberian mainland and Arctic islands and the need to follow in the wake of icebreakers respectively.

The ships will comeWhile there are good reasons to conclude that Beluga’s first commercial transit of the Northern Sea Route will lead to a radical realignment in global shipping patterns in the short term, this is by no means the end of the story. As the Arctic region continues to warm and sea ice cover thins and retreats, the summer sailing season (currently around 6-8 weeks) will extend, passage will become more reliable and less prone to unpredictable delays while the significant potential savings involved in terms of transit time and distance will remain seductive. The passage of the Beluga vessels through the Northern Sea Route highlights the fact that navigation in the Arctic is very much on the increase and that interest in inter-oceanic transit routes via the Arctic is burgeoning. This, in turn, suggests that, despite considerable recent progress, greater efforts will be required on the part of the Arctic littoral states to manage and govern these developments and, in particular, enhance their surveillance, enforcement and search and rescue capabilities to protect and preserve the remote, environmentally fragile but increasingly used Arctic marine spaces involved.