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Janez Potočnik

European Commissioner for Environment

Measuring green growth and natural capital - the importance of statistics in environment policy

Plenary session of the Eurostat Conference

Brussels, 10 March 2011

Ladies and Gentlemen, Mr President, fellow speakers

First, I would like to thank Eurostat for bringing together today all the major statistical players.

I'm an economist by training with a background in macroeconomic analysis - macroeconomic modelling based on social accounting matrices. For quite some time I was director of the Institute for Macroeconomic Analyses in Slovenia and our job was to provide government and other stakeholders with analyses of the economic trends and estimates for the future. The quality of our work was directly dependent on the quality of the work of Statistical Office of the Republic of Slovenia. For some years I was also a member of a kind of a statistical advisory board and if I have learned anything at that time it was the fact that statistical work is extremely hard and by definition undervalued by society. I do not want to start a discussion about that today, it would merit its own conference, but I just want you to understand that I highly appreciate the work done by statisticians and that I am also certainly very interested in the today's subject!

Let me start with the obvious. I know that by now I don't have to introduce the Europe 2020 strategy. What I want to emphasize is its importance for not just short, but also long term prosperity of Europe and Europeans. This comes out most strongly through a clear environmental dimension and a new paradigm for green growth.

The Strategy and the recently launched 'Flagship Initiative' on a Resource-efficient Europe set out a framework, which defines the quality of growth. Our objective is to ensure that resource-efficient thinking finds its way into all policies, like a reflex. This is not just about new green sectors, promising though they are for future growth. It is about the way we will steer businesses, investors and consumers – all economic operators - towards the systemic and cultural changes necessary to achieve green and competitive economy.

I am absolutely convinced that we will never get to desired long term results if we are not able to demonstrate our progress. And to do that, we have to be able to measure it. And not everything is measurable. The main objective that I see for 2050 – that the entire human population lives a decent life on the planet that can support it for as far in the future we can think of – is difficult to express statistically. But breaking this objective into measurable milestones, charting pathways and being clever and consistent about the indicators that can demonstrate the progress towards it - this must be possible.

As you know, Europe 2020 defined EU targets which will be monitored in a new governance cycle by headline indicators, and flagship initiatives which will be monitored by indicators currently being developed by the Commission services.

Collective efforts under the heading of "Resource efficient Europe" will be a key to the EU's sustainable future and transition to green economy. We are already intensively working, and we will continue in the next few months, on a roadmap for a "Resource efficient Europe" which should also address indicators and targets to monitor progress in resource efficiency, in the broadest sense of the word.

We want to work on this in a very open and inclusive way, so I am looking forward to contributions and ideas from all sides, I would hope many of you present today will be helping.

Let me now switch to some questions, related to the substance which is important for our future cooperation.

To achieve the truly inclusive and sustainable growth that Europe 2020 proposes, we need social and environmental statistics and indicators at the same level as economic statistics, concerning scope, details and timeliness.

This is particularly true given the value and the level of dependency – both in business and in the wider world – on natural resources, including eco-system services.

It is clear that all data needs are not being met. This is because either they do not cover all relevant and emerging issues (such as biodiversity) or because they are too often 2 or 3 years past their 'sell-by' dates. I am aware of the fact that collecting and producing data needs time, but we should also be aware that policy makers need fresh and relevant information.

We should therefore look for additional sources of information. We have to open our doors to research institutes, business organisations, space agencies and think tanks. We believe that the European Statistical System should intensify a dialogue with data sources outside the statistical community.

I know that in the context of the recent financial crisis resources in the National Statistical Institutes have been reduced. I also know that, social and environmental data are not considered as essential as economic and financial data. But this has to change. Statistics – including those that are less 'traditional' - are an investment in the knowledge base, they are not an administrative burden. And good statistics are much, much cheaper than wrong decisions. This gives credence to Mr. Radermacher's statement last year that in the medium to long term there should be as many resources devoted to environmental and social accounting as classical national accounting.

So, what do we need?

We need to develop indicators to monitor progress on green growth, on green public procurement and on eco-innovation. We also need a common understanding on how to measure harmful environmental subsidies. Some early information does exist on this I know, but more progress is needed.

We need to better measure our natural capital, its eco-system services, in physical terms and – as agreed in Nagoya at the conference of the parties of the convention of biodiversity by more than 190 nations – in monetary terms.

There is a clear mismatch with our expectations here. We expect companies to set up very detailed asset accounts so that we can see if they are at risk of collapse, or making good money. Yet we run our economies without any means to account for our natural capital and man-made wealth. If we had this we would have a very valuable knowledge base for policy making, to help reach the sustainable growth objectives of Europe 2020 and also beyond.

And to get the prices right for natural resources and environmental services we need to know about extent of the existing externalities – both positive and negative.

I know statisticians think twice before embarking on the business of valuation or monetisation of environmental damages and eco-system services. However, as the Stern report and UN Report on The Economics of Ecosystems and Biodiversity (TEEB) have both shown, this is vital information for policy making.

And, let me be straightforward, if the statistical offices would not be the right source for this vital information we need to discuss who is.

By focusing on measuring green growth and resource efficiency we maintain our objectives: better prosperity, quality of life and well-being for our citizens while preserving the natural capital of our planet.

And this measurement is a key part of the Commission's beyond 'GDP agenda' which I have the pleasure of coordinating together with my fellow Commissioner Olli Rehn.

Detailed data and headline figures are vital, both for designing and assessing policies, and for political debate and communication. Indices and small 'dashboards' are very useful when we need to assess complex issues like environmental pressures on our environment, resource use and biodiversity.

GDP is without any doubt an important indicator of our activity. But we currently have no accepted comprehensive overall figure for the environment in the concept of GDP, inflation and unemployment rates. As somebody nicely put it using a bit of sense and simplicity: We are travellers knowing how fast we go… but we do not know exactly where we go and how much fuel we still have. We are trying to change this. And under the beyond GDP process, we are developing a composite index on environmental pressures and a Sustainable Development Scoreboard.

Ladies and Gentlemen

According to the UNEP data in the 20th Century the population on the planet increased 4 times, economic output 40 times, water consumption 9 times, fish catch 35 times, use of fossil fuels 16 times and co2 emissions 17 times.

The biggest challenge we are facing this century is essentially this: how can we live and prosper together on this planet – within the constraints of what one earth can provide? How, by the year 2050, do we ensure continued economic growth, eradicate poverty and feed 9 billion people without continuing and worsening current patterns of environmental degradation and resource depletion? We are more interconnected, more interdependent and world is getting truly multi-polar. We are more fragile than ever and sustainability is a global megatrend nobody can really afford to ignore. Conclusion is simple: we can not continue like that any more and we need to change our consumption and production patterns. But how do we move away from our usual business – and how do we do it quickly enough?

I think my main message today is that you have truly important mission. You create necessary ingredients for responsible policy making and you make these changes possible. So, we need your help. We need your recalibrated compass!

Through international organisations such as the OECD and World Bank, which are fostering the measurement of societal progress, and through important new initiatives in Member States, we are steadily progressing towards a goal of developing indicators that identify the relationship between growth, prosperity and quality of life. The further we reach, the faster we will be able to move towards achieving these objectives.

For my part, I am always prepared to cooperate in any way that I can with Eurostat and the European Statistical System, with the European Environment Agency and the Joint Research Centre, with business and civil society organisations, with environmental and space agencies. Because the goal – a regular monitoring and responsible steering of the system in the direction of green growth, resource efficiency and societal progress beyond GDP – is well worth pursuing.

Thank you for your attention!

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