New Methodology to Measure Sustainability Transition – János Áder at the Word Science Forum

In 2018, two American economists were awarded the Nobel Prize in Economics.
One of them – William Nordhaus – pointed out when accepting the award: If the negative externalities caused by economic activity are not taken into account (“priced at 0”), we will pay a very high price at the societal level.
Let me add to Nordhaus’s words: If you include the negative externalities caused by economic activity (i.e. water pollution, land degradation, biodiversity loss, deforestation, overfishing of the oceans, and unfortunately I could continue the long list.) are not included (“priced at 0”), we will pay a very high price for them at the societal level.
Ladies and Gentlemen,
In many parts of the world there is a debate on how we can use a more accurate indicator to measure development, instead of the GDP that is generally accepted today. Renowned economists, universities and research institutes from New York to Tokyo, research groups in the UN, the EU, the OECD, the World Bank, are working on a monitoring system beyond GDP.
The United Nations has set the goal of developing an integrated measurement tool in this year’s Summit of the Future outcome document, and the European Union in its Strategic Foresight Report 2023.
Why? Because GDP measures many important things, but not what is relevant to human life, well-being and sustainability.

Ladies and Gentlemen!
In 2015, the UN General Assembly adopted the 17 Sustainable Development Goals (SDGs) and 169 sub-Goals. A separate presentation could be given on how we are doing on time. According to the New York assessment in September, instead of 15 years we would need more than 60 years to achieve the targets at the current pace.
But back to GDP.
The UN uses 248 indicators to measure each target and sub-target separately. Over the past nearly 10 years, it has become clear that while this gives us important details, the picture does not add up.
It’s like seeing only a fragment of an impressionist painting.
Is it beautiful?
Expressive?
Do we recognize it?
One needs to be a dedicated Van Gogh fan to recognize this painting from the image fragments.
We lack a tool, a methodology to know exactly where we stand, where we are heading and in order to make decisions that affect our lives and well-being as a whole. A methodology that can support a sustainability-integrated approach to national decision-making based on facts and data. A methodology that can incorporate national and regional specificities, that takes into account risk factors, development priorities and opportunities.
In other words, it is both flexible and standardised. It is scientifically sound but also serves pragmatic decision preparation.
In preparation for the World Science Forum, we have been reflecting on how we can contribute to thinking beyond GDP. Especially as we have several researchers and institutes working on this issue.
We came to the conclusion that if three workshops in Hungary cannot work together, if the people working here cannot integrate their knowledge, how can we expect institutes around the world to do so?
We have worked – excellent researchers have worked – for almost a year to present this proposal to you today.
How is it different from the others?
a) it uses fewer indicators (roughly 80)
b) it is integrated
c) it can be adapted to each country, taking into account its specificities.
We propose a combined use of three methodologies, integrated in themselves, to interpret the sustainability pivot.
If you look, here you can see the different elements, the eighty indicators. Perhaps there will be more detailed explanations about these in other presentations later. Together, these three indicators can be used to measure the quantity and quality of factors of production and provide a realistic picture of the broader state of well-being.
What does the first one – sGDP – mean?
Its purpose is to make visible the social and economic costs that have hitherto been invisible in GDP, and which often have a negative sign. It shows the economic output that would be generated if the product and labour market, the financial sector, the balance of financing capacity and the conservation of ecological resources were maintained, while ensuring a fair distribution of the goods and services produced.
This calculation measures the deviation of current processes from the equilibrium level and corrects the value of GDP by the deviation.

What does the second one, the Sustainable Performance Indicator mean?
This indicator tracks the specificities of natural resource management that are not reflected in GDP measures.
What is the Wellbeing Beyond GDP Indicator?
It interprets and makes comparable the sustainability turnaround in each country at the level of social well-being.
Each indicator provides relevant knowledge for economic and policy makers on the directions of intervention.
The details will be presented by Gábor Bartus, Secretary General of the National Council for Sustainable Development. Although I have heard, he wasn’t given too much time to speak, but let us hope he will be able to complement my words sufficiently.
The proposed method can be used to show the extent to which GDP is produced in a sustainable or unsustainable way and provide additional information for necessary interventions, thus enabling more effective policy making. It also allows standardisation of the measurement of the sustainability turnaround while recognising differences between countries’ specificities. And by comparing countries over time, it helps to build a picture that reflects the stages of development.
To sum up:
a) it provides a more complete picture
b) it provides a better understanding of socio-economic-environmental processes
(c) it facilitates decision-making and
d) reduces risks

This method illustrates that it is not only economic issues that we need to talk about.
It shows the so-called externalities, the negative effects of our economic activity. This method helps to remove the “blind spots” of GDP.
Ladies and Gentlemen,
Last week at a water conference, I quoted Franklin Benjamin, one of the founding fathers of the US, who said in the 18th century: “When the well is dry, then we know the true value of water.”
Continuing Benjamin Franklin’s thought, what are these indicators suitable for?
They are useful for knowing how much water is left in the well. To find out that the way we use water is causing the well to run dry. This in turn makes farming, staying in place, in short, life impossible.
We have worked to give decision-makers around the world a way to prevent wells from running dry.
I wish you all a successful conference.