Measuring sustainable development incorporating population and technological change tested with Philippine data

Measuring sustainability is not without considerable difficulties, yet this obstacle should not deter progress in tis fie4ld. In this study, one form that economic indicator of sustainability can take was developed. This form addresses the limitation of current economic sustainability indicators by allowing the interaction of natural capital with population and technology. Derived from weak sustainability implemented in the Solow growth model, the indicator incorporates the idea that the total capital stock, composed of man-made and natural capital substitutable for each other, must be non-decreasing through time in depreciation, population growth and technological advancement. The indicator was named as the Sound Investment (SI) indicator. The indicator was tested in the Philippines using economic data on man-made and natural capital from 1988-1993. Its sustainability outcomes were then compared with a current economic indicator of sustainability, the Genuine Savings (GS) indicator. The results show that in contrast to GS, SI advocates a level of investment that matches population increase and technical advancement on top of depreciation for total capital, which is the only criterion that GS purports to guarantee a sustainable level of income. As such, SI exhibited a downward pull on the sustainability evaluation of GS, rendering unsustainable what GS deemed sustainable. Thus, SI implies that for a country's growth and development to be sustainable, the investment on man-made capital, at the very least, should match not only the combined depreciation of both man-made and capital, but also the increase in man-made and natural capital stock needed to maintain a growing population that utilizes advancing technology. This is so because higher population and technological growth rate require higher levels of investment for sustainability.