Critical environmental indicators: performance indices and … · 2017. 2. 15. · The primary goal of development planning is to improve the quality of life of human populations

Ecological Modelling 130 (2000) 47–58

Critical environmental indicators: performance indices andassessment models for sustainable rural development

planning�

Gerhardus Schultink *Department of Resource De6elopment, 320 Natural Resources, Michigan State Uni6ersity, East Lansing, MI 48824-1222, USA

Abstract

Sustainable development planning must be based on environmental and biophysical baseline indices that effectivelydefine comparative development potential and environmental constraints. As such, indices must define the compara-tive advantage of the natural resource base and measure the fundamental capacity to sustain production rates ofnatural resource goods and services used to create societal well being. Complex biophysical and socioeconomiccharacteristics affect the identification and selection of sustainable development strategies. When derived fromeffective baseline indicators, indices may be used to define the spatial and temporal distribution of economically viableproduction opportunities and may be expressed in derived indices that realistically describe basic productionopportunities and guide the selection of feasible, long-term development strategies. Specifically, representative indicesare critical in the identification of development goals and realistic objectives and can be used to evaluate, select andimplement sustainable development strategies and plans. It is stressed that the relevancy and effectiveness of publicpolicies depend on the identification of representative evaluation models and baseline indices to define developmentstrategies that are both environmentally sustainable and economically viable. In this context, the role of baselineindicators that define natural resource production capacities is discussed. This includes potential resource uses,derived benefits and their economic and environmental impacts. Key thematic indicators are suggested that may beespecially useful in identifying development alternatives and impacts. This suggested that clearly defined environmen-tal pollution limits or impact standards be used to define public risk tolerance limits and carrying capacity constraints.It is argued that these measures may be more effective in directing policy choices than economic valuation of nonmarket goods and services that represent environmental externalities associated with resource exploitation optionsand economic development strategies. To this end, examples of thematic indicators and derived indices are introducedthat may prove effective in resource assessment, economic evaluation and strategic development planning. © 2000Elsevier Science B.V. All rights reserved.

Keywords: Resource production capacity; Environmental quality; Environmental indicators; Public policy; Impact assessment;Economic development planning

www.elsevier.com/locate/ecolmodel

� Paper presented at the Second International Workshop on Environmental Indicators and Indices, 10–14 July 1998, Austria.* Corresponding author. Tel.: +1-517-3531903; fax: +1-517-3538994.E-mail address: [email protected] (G. Schultink).

0304-3800/00/$ - see front matter © 2000 Elsevier Science B.V. All rights reserved.

PII: S 0304 -3800 (00 )00212 -X

G. Schultink / Ecological Modelling 130 (2000) 47–5848

1. Introduction

The primary goal of development planning is toimprove the quality of life of human populationsby means of a systematic evaluation, selection andimplementation of sustainable development alter-natives that reflect both environmental constraintsand opportunities. Here, sustainable developmentrefers to the promotion of development policiesand plans with carefully defined objectives thataim to achieve a sustainable flow of goods andservices that enhance quality of life. More pre-cisely, sustainable development must ensure thatpublic policies are based on the selection of devel-opment alternatives, which are both ecologicallysustainable and economically viable. As such, sus-tainable development addresses the developmentand management of environmental resources toensure or enhance the long-term productive ca-pacity of the resource base with the goal to im-prove long-term societal wealth and well being(Schultink, 1992).

A primary challenge in this public policy for-mulation process is to balance environmental pro-ductive capacity (e.g. sustainable production ratesbased on certain input regimes and managementpractices) and the derived supply of natural re-source goods and services with demographic de-mand, thereby ensuring that sustainableproduction capacities are not exceeded. A goodexample of this approach is the FAO study of thecapacity of land in the developing world to sup-port potential populations (Higgins et al., 1982).

In a policy analysis context, determining supplymeans a systematic assessment of the resourceproduction capacities by location and over time.To be effective, the information resulting fromthis assessment must be expressed in spatiallyreferenced quantitative indicators that directlyreflect resource production outputs (complexgoods and services). To be realistic, productionscenarios must represent input scenarios and man-agement regimes that do not degrade the long-term production capacity or the environmentalquality (including the genetic diversity) of thenatural resource base. Social demand needs to berelated to the sustainable supply of natural re-source goods and services: specifically, the re-

source capacity to affect quality of life — creatinga better place to live, a location capable, produc-tive and efficient in meeting complex humanneeds. Fundamentally, quality of life must reflectthe comprehensive continuum of human needs:primary- food, clothing and shelter; secondary-educational opportunities, health needs and envi-ronmental risks; and tertiary- environmental qual-ity and amenity resources and associatedrecreational opportunities.

For the same reasons, sustainable planningshould include systematic production capacity as-sessment as an integrated component in the hi-erarchical process of public policy formulationand development planning (Fig. 1).

A great number of factors affect natural re-sources production capacity, economic supply anddemographic demand. Some of the basic factorsare identified later (Fig. 2). The challenge, there-fore, is to define production capacity in the formof relevant productivity and supply indicators,which, in turn, may be used to represent sustain-able production scenarios to meet final consumerdemand.

2. Measuring natural resource production capacity

Any systematic attempt to address sustainabledevelopment planning should include baselineperformance indicators and representative pro-ductivity indices. In rural areas, this means defin-ing the productivity of the renewable landresource base and its derived uses, such as repre-sented by the products and services from theagricultural, forestry and tourism sectors, as wellas outputs (ecological functions and derived socialvalues) from natural ecosystems. Realistically, thisshould reflect both sustainable resource produc-tion capacity and economic feasibility. In ruralsector planning, this may include the followingassessment phases:� assessment of basic agroecological production

capacity on a crop or commodity-specific basis;� assessment of sustainable productivity levels

using adjustment for locally relevant produc-tion opportunities and input constraints (e.g.irrigation, fertilization, technology, capital);and

G. Schultink / Ecological Modelling 130 (2000) 47–58 49

� economic viability of production options (inputcosts and product prices).

This relationship is further identified in Fig. 3.An example of assessing basic productivity and

its long-term sustainability in the form of relevantindicators can be provided in the form of cropproductivity or farming systems analysis. For in-

stance, in agroecological production capacity as-sessment, the genetic potential of crops grownunder specific water supply (deficit) conditions ispredicted. The agroecological parameters that pri-marily affect this biophysical production functionare soil type (texture), climate (rainfall, tempera-ture, relative humidity, solar radiation, windspeed) and local topography (slope gradient and

Fig. 1.

Fig. 2.


Fig. 3.

aspect). This initial estimate of crop productivitydoes not assume limitations with regard to farmmanagement practices — nutrient deficits, salinityimpacts or mulching — or land degradation con-siderations. This basic relationship is identified bythe crop yield response formula as theoreticallydetailed or in adapted computer-based crop yieldmodels (Doorenbos and Kassam, 1979; Schultinket al., 1987; Schultink, 1987a,b) as:�

1−ya

ym

�=ky

�1−

ETa

ETm

�where ya is the actual harvested crop yield, ym themaximum harvested crop yield, ky the geneticallydetermined yield response factor, ETa the actualevapotranspiration and ETm is the maximumevapotranspiration.

The crop yield response factor is based onextensive field trials covering a variety of soils andgrowing conditions and reflects high yielding vari-eties well adapted to local agroecologicalconditions.

Assessment of sustainable productivity levelsincludes yield adjustment for locally relevant pro-duction opportunities and input constraints (e.g.

irrigation, fertilization, technology and capital).In essence, this includes a compilation of:� additional biophysical factors indirectly affect-

ing crop moisture availability, such as soildepth/texture, organic content, net irrigationapplication, rooting depth, water infiltrationrate based on slope/textural classes and cropnutrient availability;

� socioeconomic conditions that affect the farminput level and long-term effectiveness of man-agement practices (e.g. fertilizer and pesticideinputs, cropping intensity, labor or capital con-straints, profit margins, land degradation),which affect sustainable productivity; and

� off-farm impacts such as environmental exter-nalities resulting from soil erosion, fertilizerimpacts, pesticide applications, or general im-pacts on water quality and availability andimpacts on biodiversity, ecosystem integrity, orstability.

This resource productivity assessment must befurther expanded into a socioeconomic evaluationof needs and suitability. Here, need addresses thesocial demand resulting from expressed social ex-


pectations related to the quality of life and associ-ated availability and price or goods and services,while suitability reflects the economic viability ofproduction opportunities, such as land-use typesor farming systems.

The use of the comprehensive and relevantindicators already suggested must be incorporatedinto the larger decision-support framework forpolicy analysis and rural development planning.In essence, this transforms the reductionistic ap-proach in the developing world — reducing prob-lem-solving to a segmentation of the problem byusing descriptive indicators — to a holistic orsystems approach. A holistic approach uses com-posite indicators of social preferences and perfor-mance and can, therefore, accommodate a varietyof personal assumptions, opinions and group de-sires, accounting for public policy trade-offs in-volving complex costs, benefits and risk.

A key requirement in this process is that envi-ronmentally referenced indicators, reflecting eco-nomic productivity opportunities and environ-mental impacts, by agroecological zones, water-sheds or major ecosystems, must be directly re-lated to political or administrative regions for thecomparative analysis of relevant socioeconomicimpacts and as the basis for strategic planningand implementation.

As pointed out earlier, this relationship (Fig. 4)among indicators is reflected in the hierarchy of

planning and management and may also be illus-trated by the following analytical sequence ofsingle-issue resource management to comprehen-sive planning. The key challenge, then, is to definespecific management objectives at each level thatoperationalize private and public developmentgoals. This involves seeking complimentarity ofsocio-economic and environmental goals that arespecifically identified as indicators representingneeds and opportunity, as well as measures ofperformance and impact. For example, in sustain-able land management, this would involve indica-tors that measure land degradation trends andquality and denote intervention needs and devel-opment opportunities, representing various land-use types as natural or managed productionecosystems. Fundamentally, use capacity isreflected in land quality indicators representing apotential sustainable use condition of the land-scape on a comparative basis and is expressed atthe local, regional or national scale. Given aspecific level of scale, land capacity or quality mayinclude indicators of nutrient and water balance,crop and forest yield trends, unrealized produc-tion potential based on certain land-use type andmanagement intensity, natural grassland (range)carrying capacity, land cover and biological diver-sity and various indicators of environmentalquality.

Fig. 4.


Fig. 5.

3. Environmental information, indices, indicatorsand public policy

One of the most significant challenges in devel-opment planning is to derive information eco-nomically and ensure that it is thematically,spatially and temporally relevant in supportingpolicy analysis and decision-making. Beyond thetraditional data quality standards of precision andaccuracy, it is important to identify the minimum

information content necessary to meet decision-support objectives, at a given point in time. Itmay be argued that any redundant informationconstitutes inefficient use of human and capitalresources.

In the process of compiling information, a dis-tinction has to be made with regard to the se-quence and characteristics of basic data captureand analysis and the use and distribution of rele-vant information. This process sequence is illus-


trated in Fig. 5. It is especially important todifferentiate among the various information com-pilation steps, namely:� the use of relevant, descriptive qualitative and

quantitative problem indicators in the problemidentification stage;

� problem-oriented fact finding involving the useof primary and secondary data sets compiled ina spatially referenced information system (geo-graphical information system), linked with ana-lytical performance assessment models, such asagronomic productivity and socioeconomic im-pact assessment models;

� the compilation of single indicators or com-posite prescriptive indices that identify potentialsolutions and alternative problem-solving ap-proaches; and

� the selection of planning and implementationalternatives based on composite performanceindices that reflect planning impacts, intendedpublic policy consequences and the aggregateimpact on the quality of life over time, bylocation and populations affected.

The formulation of the latter two categories —involving the identification of potential solutions,the selection of preferred alternatives and coursesof implementation — must be addressed effectivelyby the compiled information. To this end, consid-eration should be given to the formulation of anational spatial data infrastructure (NSDI) thatmay be viewed as a network of spatial datainfrastructures (SDIs) linked to address specificapplications. The primary purpose of a SDI is toprovided improved access to spatial data (reflectingtime, cost, quality, relevancy and standardizationissues) and support NSDI policy analysis needs ona economic sector or issue basis (e.g. environmentalimpact analysis, rural development planning,transportation planning or agricultural or tourismsector analysis). This involves the identification ofcritical qualitative and quantitative indicators andderived indices, as viewed from the perspective ofthe various national or regional agencies withassociated mandates in economic development andenvironmental protection.

Composite indices designed to meet decisionsupport requirements may reflect traditional eco-

nomic measures of economic efficiency and alsomeasures of public risk of the impact of humanactivities or development actions on the environ-ment. Rather then viewing risk solely as a physicalhealth factor, it is suggested that risk in policyformulation reflects the broader view of humanwell being or quality of life. More recently, the issueof social equity in involuntary environmental riskexposure has received increased attention.

Elements that may be included into this assess-ment are water and air pollution, environmentaldisease vectors and their controls, occupationalhealth, food safety and traffic safety. A modifiedrisk equation (Schultink, 1992) can be used in thisprocess to assess the composite indicator of envi-ronmental risk as:

Rn= %n

i=1

rn×pn×6n− tn

where r is the expected value of the magnitude ordegree of risk (expressed as social cost), p theexposure probability (expressed as frequency orprobability of occurrence (%); this factor may beweighted for large impact areas where significantspatial decay of impacts is anticipated), 6 thevulnerability of the target population (e.g. age andweight factors), t the potential risk reduction factor(e.g. prevention or mitigation policies) and n is thenumber of risk variables involved.

Risk assessment must be viewed as a distinctlydifferent component in public policy studies thanrisk management. The former is a scientific assess-ment of potential health risk that may result fromdevelopment impacts on the environment, whilethe latter addresses concerted public policy effortsto reduce risk through education, regulation andmitigation. Risk management uses the scientificresults of risk assessment as expressed in compar-ative indices, while assessing the implications usingeconomic, social and legal considerations to formu-late policy decisions and regulatory interventions.

4. Emerging environmental policy perspectives andanalytical needs

Globally, environmental quality and publichealth risk associated with the impacts of public


policy on the broader notion of quality of life,are receiving increased attention. In the US andCanada and within the European Union (EU),most important policy initiatives address deterio-rating air and water quality, restoration ofecosystems functions and nature preservationneeds.

In the EU, legislation has already achieveda considerable degree of harmony, but significantdifferences remain among member states as totheir economic ability and political willingness tocreate an effective environmental policy agendafor the late 1990s and beyond. Principally, socioe-conomic disparities, differences in settlement den-sities and environmental quality concerns are thecore of the problem. The higher-income regionsof northern Europe are critically reviewing theagricultural sector in transition. Reduced grossnational product shares of the agricultural sector,environmental nutrient loadings by traditionalfarming systems and bio-industry and a shiftin societal land-use perspectives are all causingdramatic changes in land-use policies. Implica-tions of recent environmental policy perspectivesreflect new economic opportunities while explic-itly recognizing the social cost of environmentalexternalities associated with current land-use dis-tribution and practices. This includes: (a) land-use conversions from traditional agricultural toseasonal recreational and environmentally com-patible uses through ecosystem restoration torealize new economic potentials; and (b) changingpolicy priorities of a leisure society concernedwith environmental quality impacts within thebroader context of public risk and quality oflife.

In the US and Canada, environmental policyemphasis is primarily directed toward the pre-vention of water and air pollution, rather thentoward a proactive, comprehensive regulationof land-use impacts on environmental quality.Here, as in many other industrialized nations,significant land-use impacts are caused by uncon-trolled regional growth patterns, agricultural landconversion and urban sprawl, urban decay andindustrial pollution and public policies permittingunsustainable use of natural resources.

The challenge, then is to evolve an integratedsystems approach to natural resource evaluationand impact assessment that fosters the develop-ment of a decision support system that is effectivein making informed public policy choices. Such apolicy analysis system, as outlined later (Fig. 6),consists of three major functional components,comprising diagnostic, prescriptive and perfor-mance indicators and their derived resulting in-dices. It includes: (1) a comprehensive resourceevaluation system; (2) a land-use evaluation sys-tem; and (3) a public policy analysis system.

Public interests largely reflect the long-term en-vironmental stewardship principle that includespublic interests in resource conservation and envi-ronmental quality. Private interests largely reflectmore short-term economic interests that are di-rectly affected by ownership rights, laws and reg-ulations. In this regard, the goal of publicland-use policy is to formulate multi-jurisdic-tional, resource policy systems that include theinstitutional controls and capacity to:� identify the comparative advantage of resource

use opportunities (e.g. resource endowment,use capacity and use efficiencies) in the contextof environmental constraints (e.g. carrying ca-pacity and resource depletion rates) — theresource evaluation framework;

� evolve guidelines and decision-support systemsto evaluate public and private-sector benefits(e.g. benefit/cost, benefit/risk) of land-use alter-natives and associated environmental impacts— the policy analysis framework; and

� development implementation and evaluationthrough effective development strategies, land-use plans, laws and regulations and perfor-mance monitoring — the policyimplementation framework.

In general, public development policy attemptsto guide the identification and selection of ‘bestresource use’ options reflecting both public land-use alternatives and the aggregate socioeconomicand environmental impacts of private land-usechoices. It aims to mobilize the production ofgoods and services as resource outputs to meetsocietal needs and to improve resource productiv-ity, input and management efficiency, while at-


tempting to optimize product distribution andavailability.

In this context, environmental assessment is asystematic process of fact finding, interpretationand identification of development alternatives andassociated impacts. This process is by natureholistic and multidisciplinary, reflecting the bestfundamental understanding of the structure anddynamics of ecosystems and the linkages among acomplex set of biotic and abiotic factors.

Sustainable development fundamentally reflectsthis understanding and, therefore, the perceivedopportunities and environmental limits thatprovide guidelines for improved decision-making,environmental management and developmentplanning. This understanding is never absolute,lacking essential knowledge about complex eco-logical relationships, complicated by spatial andtemporal inaccuracies, affected by adaptive im-pacts and policy changes and influenced bychanging valuations of public benefits, costs andrisks.

To effectively challenge this decision-makingcomplexity, a systems approach to economic de-velopment and environmental assessment is sug-gested. The approach should be:� issue-oriented to improve our ability to identify

the qualitative and quantitative dimensions ofthe problem(s);

� diagnostic in its analytical approach to identi-fying potential solutions that are sustainableand economically viable; and

� focused on problem-solving by providing theminimum information needed to make in-formed decisions.

5. Economic development and environmentalmanagement: a synthesis of models and indicators

Improving quality of life requires that economicdevelopment and environmental management ob-jectives are combined and operationalized into a

Fig. 6.


comprehensive public policy evaluation frame-work. As Adam Smith recognized more then 220years ago (Smith, 1977), fundamental differencesin labor availability and resource endowment ac-count for differences in the creation of wealth bynations. In the early 1990s, three major capitalcomponents were identified as fundamental in thecreation of wealth: produced assets, natural capi-tal and human resources (World Bank, 1995; Ser-ageldin, 1996). The relative importance of naturalcapital is more important in less developed na-tions or world regions. For instance, while in theUS and Canada and western Europe natural cap-ital accounts for only a 2–5% share of nationalwealth per capita, it accounts for as much 16–21% in south Asia and west Africa (World Bank,1997). Therefore, in order to evolve sustainabledevelopment policies, the identification of eco-nomic development potential must include indicesof comparative resource endowment, resourceproduction capacity and environmental con-straints to productivity and economic efficiency.

Resource capacity and environmental con-straints can often be identified using biophysicalspatial indices describing physical productionfunctions, while economic development focusesprimarily on aspects of socioeconomic feasibilityand social benefits derived, including productionefficiencies and measures of economic returns.This two-fold policy framework of environmentalimpact and economic development implies thatrelevant models and spatial indicators should beidentified which may be used to identify publicneeds and economic opportunities.

After the identification of resource productioncapacities and sustainability constraints, the pri-mary emphasis of development policy is on theeconomics of land evaluation — defining eco-nomic viability in the form of comparative socioe-conomic indicators that are environmentally andspatially referenced. In this process, the perfor-mance characteristics of the single production en-tity (single enterprise) or of the aggregate level(farming system stratum, administrative district,or region based on a current or alternative mix ofland-use options) are compared. Dominant analy-sis tools at the single production unit levelinclude:

� land rent analysis: single land-use unit or theaggregate (net surplus of revenues);

� enterprise budget analysis: net farm income,includes variable and fixed cost;

� partial budgeting: single or aggregate, assessesimpact of single or multiple (partial) variables;

� general benefit/cost analysis using present val-ues; and

� gross margin analysis: assessment of a givenfarming system’s gross margin: output ($US)minus variable cost.

Representative samples of the single enterpriseresults (farming system or land-use types) can beaggregated using to various levels, includingagroecological zone, watershed or political/ad-ministrative district by using updated land-usemaps.

At the sectoral or regional level, emphasis maybe placed on comparing the aggregate impact ofdevelopment strategies such as import substitu-tion or productivity enhancement. Examples in-clude the following.� Linear programming. The aggregate (regional

or agroecological) assessment of the productiv-ity optimum for a certain crop mix subject toinput constraints. Here, a predefined objectivefunction is used to maximize (e.g. income orprofit) or minimize (e.g. cost of production)subject to resource availability, production in-puts and other constraints. The solution isaggregate in nature but may be used to identifythe distribution of specific land-use alternativesbased on land suitability rankings. This analy-sis is useful in developing nations because ofthe limited data requirements.

� Input/output analysis. The aggregate assessmentof the regional or national impact of develop-ment strategies on employment and incomedistribution using intersectoral linkages drivenby demand or supply considerations and inter-sectoral income and employment multipliers.Input/output analysis constitutes a systematicmethod of analyzing interrelationships betweensectors in the economy. The method focuses onthe tracing of the amount of product requiredof each sector to meet the demand of finalusers. Because each sector is linked to every


Fig. 7.

other sector in the economy, it is possible toquantify the direct and indirect effects of meet-ing this final demand. Effects include incomeand employment multipliers permitting theevaluation of impacts resulting from develop-ment options (e.g. sector investments, eco-nomic diversification, value-added initiatives inprocessing).

Since the 1960s, increasing attempts have beenmade to include environmental considerationsinto the economic analysis of natural resources,specifically to incorporate development or projectexternalities in the form of social costs (disec-onomies) and social benefits (opportunity costs).This poses the challenge to ‘value’ resource loss(e.g. contingent value) or qualify alternative trade-offs for locations and countries in different devel-opment stages. It may be questioned how realisticand practical this effort is in deriving informationfor decision-making beyond the project context. Itcan be argued that in a broader public policycontext, it may be more effective to set clearlydefined environmental pollution limits and accept-able comprehensive impacts (e.g. resource impact,watershed, or environmental quality indicators).

These limiting indicators can then be used todefine exploitation limitations and carrying capac-ity constraints to define economic developmentstrategies that are environmentally sustainableand economically viable.

This notion is not unlike the thematic andsystemic indicator approach identified by variouspractitioners. For instance, the US agency forinternational development (USAID) compiled aset of indicators for various program objectives toevaluate the environmental performance of devel-opment programs (USAID, 1995, 1996). Indicatorsets have also been developed in Canada, theNetherlands and the Nordic countries. The con-ceptual framework advanced by the OECD ad-dresses the Pressure–State–Response linkages.This approach (Fig. 7) could be used as an inter-national comparative framework to assess: (a)issue-based indicators of change or stress (‘bio-physical system state’, e.g. urban air quality emis-sions); (b) related impacts of human activities(measured by pressure indicators, e.g. statusVOC, NOx or SOx concentrations); and (c) result-ing policy responses (e.g. transportation alterna-tives, fuel taxes, subsidies).


Although the level of aggregation differs, allapproaches address policy themes such as trans-portation planning, energy use and environmen-tal quality issues. Examples of thematicallyaggregated indicators include single and com-posite indicators for climate change, ozone-layerdepletion, eutrophication, acidification, toxiccontamination and dispersion, urban environ-mental quality, biodiversity, cultural and naturallandscapes, waste disposal, forest resources,fisheries resources, disturbance of local environ-ments, sectoral indicators, human health andwell being and resource sustainability. Spatial ag-gregation of indicators can be accomplishedstarting at the local administrative district forsocioeconomic indicators, while biophysical indi-cators may be aggregated at the managementunit (e.g. watershed or ecosystem) level, bothrepresentative of the ‘system status’ of the targets(spatial units) of policy formulation.

Systemic indicators are primarily designed asdiagnostic tools, i.e. to derive a composite mea-sure of a system’s status and express its degree ofvitality or stress. Examples include indicatorsand trends for wealth and savings, material flowsand energy or nutrient balances.

These indicator approaches offer the mostpromising tools in policy analysis and decisionsupport. They can be used to quantify trendsand spatial impacts of public policies, while re-ducing the subjective element in public policyformulation by identification of objective diag-nostic standards and measurable goals and objec-tives.

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Critical environmental indicators: performance indices and … · 2017. 2. 15. · The primary goal of development planning is to improve the quality of life of human populations