This online module was developed by UNB Sustainability, with assistance from the Office of Experiential Education to introduce key concepts in understanding economic sustainability.

In Sustainability 101, we learned that sustainability is development that meets today’s needs without compromising the needs of the future. We also learned that there are three main areas of sustainability, including economic sustainability, social sustainability, and environmental sustainability.

In this module, we’ll be taking a closer look at economic sustainability.

Economic sustainability is development that makes secure sources of livelihood available to everyone and ensures that global communities remain intact.

Economic sustainability is about using resources responsibly, ensuring that everyone has opportunities to obtain what they need while making sure that there will continue to be resources available to future generations. Key considerations include improving efficiency, reducing waste, and improving equity in access to sources of livelihood, which includes good jobs, access to goods and services, and the ability for individuals to make a good life for themselves and their families.

To understand economic sustainability, it is important to understand what we mean when we talk about the economy.

The economy is the system of production, distribution, and consumption of goods and services. The economy can be studied and discussed at different scales, from the global economy to the economy of specific countries, provinces, cities or towns, or even individual household economies. Indeed, the ultimate economic actor is you yourself, and the decisions you make every day. The important things to remember when we talk about economies are that they are systems that change over time and that they include many different parts and aspects of human society.

In Resource & Waste Management 101, we learned that Canada follows a linear economy, in which any given resource is converted into a product and then disposed of when it is no longer useful or wanted. We can compare this to a circular economy, which attempts to eliminate the waste and disposal stage of a linear economy by repairing, reusing, repurposing, or recycling products and resources. A circular economy focuses on improving efficiency and reducing environmental impacts. We’ll take a closer look at circular economies later in this module.

The category of linear vs. circular economy only really covers how goods and services are produced and consumed. Other categories of economy are used to describe distribution. Free-market economies follow a traditional economic model that suggests that the trade and distribution of goods and services can essentially control itself based on supply and demand. When there is a large demand for a specific product, prices will go up until supply can be increased, at which point prices will go back down. When there is low demand for a product, prices will also be low.

The opposite of a free-market economy is a planned economy, in which supply and pricing of goods are controlled by the government or other regulatory bodies. This control might exist for several reasons:

1. The first is to ensure that certain products remain affordable for everyone (such as food basics)
2. Second, to keep prices steady so jobs within a specific sector are protected (such as in agriculture)
3. A third reason is to protect industries from being out-competed by other countries with lower costs of living or fewer regulations. Usually this is done by adding tariffs or taxes to products being imported from other countries. Another example of protected industries are public healthcare and education. While these services can be offered privately, many governments fund and control them in order to ensure they remain accessible to all.

Most countries, including Canada, take a mixed-market economy approach, which uses a free-market economy approach while also allowing for some government intervention and regulation.

There are many other types of economy as well, such as economies based on sharing resources and goods, economies based on re-distributing wealth through gifting to increase respect and status, and so on. We’ll look a bit closer at some of these types of economies later in this module.

We’ll also take a look at how economic sustainability has been integrated into each of the 17 United Nations Sustainable Development Goals and a look at economic sustainability here in New Brunswick.

Most economies base how well they are doing on the concept of economic growth. Economic growth is the increase in the production of economic goods and services from one time period to another (year-over-year or each quarter, for example). Economic growth is typically measured using GDP, or the Gross Domestic Product.

GDP is the measure of annual economic activity accepted and used around the world. It is a measure of how much value was created by spending on goods and services within a country during a year. It can be calculated a number of different ways, through expenditures or incomes, but is one way of measuring the income of an economy. It is often reported as either a total in millions (or billions or even trillions) of dollars or as a per capita amount, providing an estimate of how much income is generated per person within a country.

GDP can be compared between years or business quarters to get the rate of economic growth.

Since all that GDP measures is a monetary value of how much money was made within a country, there are a lot of things that it does not capture about a country, such as quality of life of the people living in it, or how well income is distributed across the population.

For example, if a country of 100 people had a GDP of $100 million dollars, it could also be reported as $1 million per capita. The way we measure our GDP per capita and our GDP as a whole would make no distinction between each person having an equal share of the GDP (i.e., $1 million each) or 1 person having $99 million with the other 99 each with a $10,000 share. Of course, economists would raise concerns about the latter scenario, but the data would be the same in either case.

There are many other factors that GDP doesn’t take into account, such as sustainability, environmental degradation, social development, and so on. Other measures have been suggested as ways of assessing how well economies are doing that would consider a much wider definition of economic health. Some of these include:

The Human Development Index (HDI)

Developed by the United Nations (UN), the HDI considers three dimensions of human development: a long and healthy life (measured by life expectancy), education (measured by mean number of years of schooling for adults and expected years of schooling for children entering school age), and a decent standard of living (measured using gross national income per capita). Gross national income is calculated as the total income of a country, including both GDP and income earned by a country’s residents from foreign sources./p>

While HDI includes more measures of human well-being, it suffers from many of the same weaknesses as GDP, since it also doesn’t consider how wealth is distributed or the sustainability of an economy.

The Better Life Index (BLI)

Developed by the Organization for Economic Co-operation and Development (OECD), the BLI is an interactive measure of well-being, based on 11 topic areas, including: housing, income, jobs, community, education, environment, civic engagement, health, life satisfaction, safety, and work-life balance. Each topic area is assessed based on 4 separate measures within that topic.

BLI is interactive in that the way it is reported allows you to decide whether certain topic areas should be worth more than others. BLI is reported for all 38 countries that are members of the OECD.

While BLI is a very in-depth tool, it does not provide easily reportable numbers and the measures it is based on are generally reported as means or averages, so disparities in wealth distribution or access to education, jobs, healthcare and other contributors to well-being are still hidden.

The Gross National Happiness Index (GNH)

The GNH has been developed by the country of Bhutan. The GNH considers 33 indicators across 9 domains, which include: living standards, education, health, environment, community vitality, time-use, psychological well-being, good governance, and cultural resilience and promotion.

The GNH strives to account for equitable living standards, environmental conservation, and preservation and promotion of cultural identity. Despite this, the GNH has been criticized as a measurement tool, as most of Bhutan’s population lives in poverty and the focus on Bhutan’s Buddhist cultural identity has been identified as a potential issue from a human rights perspective.