Cost-shifting Versus “Full” Accountability: Dealing with Cross-time and Cross-boundary Issues in the ISEW and GPI. An application to Belgium

Jonas Van der Slycken and Brent Bleys

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: Scholars have long had difficulties when dealing with cross-time and cross-boundary issues in the ISEW and GPI. To date there are, for instance, different views on how to account for impacts of climate change that are shifted in time and space. This paper addresses the complexity involved by calculating two types of welfare measures with distinct time and boundary views for Belgium. Experiential welfare looks at what is currently experienced within domestic borders, whereas the benefits and costs of present activities also include the impacts that are shifted in time and space. The former only registers present ecological costs within borders and does not include capital changes, while the latter includes capital changes and ecological cost-shifting. Both welfare indicators improved from 1995 to 2018. Yet, social costs and ecological cost-shifting increased while aggregate welfare improved. Therefore, we suggest to account for ecological cost-shifting, but also to look beyond the aggregate welfare level and adopt a disaggregated and dashboard-like approach to evaluate economic performance in detail and to successfully debunk GDP and its growth. In future studies, a careful reflection on welfare measures’ design and use is needed in order to stimulate their policy-guiding and transformative potential.

Keywords: Index of Sustainable Economic Welfare (ISEW); Genuine Progress Indicator (GPI); cost-shifting; Fisherian income; Hicksian income; beyond GDP (search for similar items in EconPapers)
JEL-codes: J08 J23 J24 J64 J68 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2020-08
New Economics Papers: this item is included in nep-eec and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:20/1003

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