Presentation on Sustainable Tourism

by UWI Sustainable Economic

Development Unit (UWI/SEDU)
to the OAS IDSD Workshop

Module I
Economic Issues in Decision Making
Trinidad and Tobago
October 27th – 31, 2003

Presented by Sharon Hutchinson &

Marlene Attzs
Content of Presentation

 Meaning and importance of growth

 The meaning and importance of development
 The role of sustainable development in Latin
America and the Caribbean
 The link between the environment and the economy
 Choices in the economy: Viewing the economy as an
economic good

Economic Indicators in Decision Making Slide 2

Economic Growth

 Economic Growth… traditionally equated

with increases in GDP/GNP
 GDP… total output for final use produced by
residents and non-residents of a country.
GDP doesn’t include deductions for
depreciation of physical capital or
depletion/degradation of natural resources

Economic Indicators in Decision Making Slide 3

Economic Growth (cont’d)

 GNP… GDP + net factor income from abroad

which is income residents receive from
abroad for factor services less payments to
non-residents who contribute to the domestic
economy.

Economic Indicators in Decision Making Slide 4

Economic Growth (cont’d)

 Hence we could speak of :

 +tive (increasing) rates of economic growth –
if GDP increased from one period to another
 -tive (decreasing) rates of economic growth -
if GDP decreased from one period to another
 Constant rates of economic growth – if GDP
remained the same from one period to
another

Economic Indicators in Decision Making Slide 5

From Economic Growth to
Economic Development

 Aristotle, “Wealth is evidently not the good

we are seeking for it is merely useful for the
sake of something else”
 ED can be thought of as beginning where EG
ends that is, at the heart of ED is the notion
of human well being… how do we use
economic performance, measured by EG, to
enhance people’s lives? To improve their
well being?

Economic Indicators in Decision Making Slide 6

Review of Economic Development

 Development … creating conditions for the

realisation of human personality

 Development.. .based on three criteria: whether

there has been a reduction in poverty,
unemployment and inequality

Economic Indicators in Decision Making Slide 7

Indicators of Development

 Adequate Educational Levels

 Freedom of Speech
 Citizenship of a country that is truly
independent (both economically and
politically)
 Others conditions – sense of security;
freedom of worship etc…

Economic Indicators in Decision Making Slide 8

Development: which way now

 The process of Economic development has

to be concerned with what people can and
cannot do e.g. whether they can live long,
escape avoidable morbidity, be well
nourished, be able to read and write and
communicate, take part in literary and
scientific pursuits etc.

Economic Indicators in Decision Making Slide 9

Other indicators of Development

 Reduction in poverty. How do we measure if

someone is poor?

 Head count ratio… proportion of population below

the poverty line

 Income gap ratio…measures the depth of poverty by

the extent of the gap between the poverty line and
average income of the poor as a proportion of the
poverty line

Economic Indicators in Decision Making Slide 10

Key definitions

 Poverty Line …. The percentage of the

population living below the specified poverty
line. * $11 a day (per person for a family of
three)—at 1994 international prices, adjusted
for purchasing power parity.

Economic Indicators in Decision Making Slide 11

Other composite measures used to
describe development

 HDI … human development index

 GDI.. Gender Development Index
 GEM … Gender Empowerment Index
 HPI.. Human Poverty Index

Economic Indicators in Decision Making Slide 12

Development Indices

 HDI… measures average achievement of a

country in basic human capabilities, health,
income distribution, education

Economic Indicators in Decision Making Slide 13

Development Indices

 GDI… measures achievements in same

capabilities as HDI but takes account of
inequalities between women and men. GDI
can be thought of as a discounted HDI

Economic Indicators in Decision Making Slide 14

Development Indices

 Gender Empowerment Measure (GEM)…

examines whether women and men are able to
actively participate in economic and political life
and take part in decision making.

Economic Indicators in Decision Making Slide 15

 Development Indices

 Human Poverty Index (HPI)…focuses on the

way the poor and deprived fare in each
community. Uses the same indicators as HDI
but combines elements of “deprivation” to
provide an aggregate judgement on the extent of
poverty.

Economic Indicators in Decision Making Slide 16

Development Indices

 HPI..
– Longevity : HPI uses the % of people expected to die
before age 40;
– Knowledge : HPI uses the rate of illiteracy
– Lack of a decent standard of living : a composite
index which includes % of people with access to
health service and safe water; % of malnourished
children <5yrs old

Economic Indicators in Decision Making Slide 17

Sustainable Development

 What do we mean by sustainable

development?

 Based on Seers’ definition of “development”

i.e. to be concerned with “…creating
conditions for the realisation of human
personality…”

Economic Indicators in Decision Making Slide 18

Sustainability of Development

 Sustainability … a characteristic of a process

or a state that can be maintained indefinitely.

 Sustainability therefore refers to a process or

a state that is not constrained by time or
space

Economic Indicators in Decision Making Slide 19

Why Sustainable Economic
Development?

 Why be concerned with sustainable

economic development?

Economic Indicators in Decision Making Slide 20

Meaning of Sustainable
Development

“Development that meets the needs of the present

generation without compromising the ability of future
generations to meet their own needs. SD is not a
fixed state of harmony but rather a process of
change in which the exploitation of resources, the
direction of investments … are made consistent with
future as well as present needs.” (UNCED, 1987,
p.8)

Economic Indicators in Decision Making Slide 21

SD vs ED

 Exploitation of resources can either be

“responsible” (and leave something for future
generations) or “irresponsible (use it up
now!!)

Economic Indicators in Decision Making Slide 22

What is Unsustainable
Development?

 Development which compromises future

development possibilities either (a) via excessive
resource depletion and waste generation or (b)
imposing too heavy a burden of environmental
degradation or cleanup © not ensuring that the rents
that accrue from current exploitation are invested so
that future generations can share

Economic Indicators in Decision Making Slide 23

 Economic Growth (GDP)
Increases in Material Output

Economic Development
Greater emphasis on social objectives
e.g. poverty, education, health,

Sustainable Economic Development

Recognising the need for environmental
Protection, inter- and intra-generational
equity.

Economic Indicators in Decision Making Slide 24

 SD and ED

 SD adds to our understanding of ED by:

– Providing an explicit recognition that development and
the environment are not mutually exclusive
– Integrating environmental concerns into traditional
development economics
– Incorporating social and environmental concerns into
economic decision-making
– Seeking to ensure the economically efficient
management of natural resources

Economic Indicators in Decision Making Slide 25

Tradeoffs among the Three Main objectives
of Sustainable Development

Economic Efficiency

Social Equity Preservation of the

Environment
Economic Indicators in Decision Making Slide 26
The Economics of Sustainable
Development

 The economic goal is: “… to maximize the

net welfare of economic activities while
maintaining or increasing the stock of
economic, ecological and sociocultural
assets over time…. and providing a safety
net to meet basic needs and protect the
poor.”(Mohan Munasinghe, 1993:16)

Economic Indicators in Decision Making Slide 27

 Figure : Interface between the economy
and the environment

The Sink Function of the

The Source Function of Environment from waste
the Environment. from production and
The Economy consumption
E.g. Minerals, Soils
and Biodiversity i.e. solid,
liquid, gaseous,
Toxic waste

Natural Events / DisastersInterface

-StormslHurricanes/Flooding
-Earthquakes
-Volcanoes
-Viruses (HIV/ AIDS,SARS)