The biocapacity adjusted economic growth. Developing a new indicator

Abstract

The environment may constrain economic growth potential. In other words, economic growth cannot be pursued in spite of ecological limits any longer. Here we present an economic growth indicator adjusted by taking into account the current tendency of national economies to overcome the availability of natural resources and ecological dynamics. We combine two indicators: 1) the Output Gap, a measure of production capacity of the economy based on the difference between actual and potential GDP, as a per cent of potential GDP; 2) the difference between the Ecological Footprint and the Biocapacity of a country, systemic indicators representing the extent to which a country operates within or beyond ecological limits. That combination gives rise to the Biocapacity Adjusted Economic Growth indicator which enables a categorization of countries based on assessment of growth patterns in line or not with sustainability principles.

Keywords

• Ecological Footprint
• Output Gap
• Risk
• Sustainability
• OECD