Document Text (Pages 61-70) Back to Document

Measuring Sustainability in the Russian Arctic: An Interdisciplinary Study

by Votrin, Valery, PhD


Page 61

about the indicator set by mail. The Ministry of Regional Development of the Russian Federation
expressed its interest in the indicator framework.
Between 25 November 2004 and 25 November 2005, the website received about 15,000
hits. This stresses the widespread interest of the general public in Russia in the sustainability
issues. Eight completed questionnaires from the members of the wider society were received
and ten experts in the fields as diverse as budgetary issues, climatology, economics, energy,
environmental protection, forestry, northern wildlife resources management, public health, social
science, and statistics have given their opinions. Comments from five Russian experts with
respect to the regional indicator sets have been also taken into account. Thus, a total of 23
participants have been identified, collectively covering a wide cross-section of society.
As a result of the comments given, the set was reduced to 30 core indicators. Their
methodology sheets with detailed description are given in Section 3.4.

3.4 Methodology Sheets
The methodology sheets adopted from UNCSD (2003) and IAEA (2005) (energy use)
provide basic description, the units in which the indicators are measured, relevance to
sustainable development, linkages to other indicators, measuring methods, data availability, and
in some cases limitations. The units specified for the indicators represent recommended units
based on data availability.

Gross regional product per head

Brief Definition

Units
Agenda 21

GRP per head is obtained by dividing annual GRP at current
market prices by the region’s population.
Roubles
Chapter 2: International Cooperation to Accelerate
Sustainable Development in Developing Countries and
Domestic Policies

Policy relevance
(a) Purpose: The indicator is a basic economic growth indicator measuring the level and extent
of total economic output and reflecting changes in total production of goods and services.
(b) Relevance to Sustainable Development: Growth in the production of goods and services
is a basic determinant of how the economy fares. By allocating total production to each unit of
population, the extent to which the rate of individual output contributes to the development
process can be measured. It indicates the pace of per head income growth and also the rate
that resources are used up. As a single composite indicator of economic growth, it is a most
powerful summary indicator of the economic state of development in its many aspects. It does
54


Page 62

not directly measure sustainable development but it is a very important measure for the
economic and developmental aspects of sustainable development, including people’s
consumption patterns and the use of renewable resources.
(c) Linkages to Other Indicators: As a highly aggregated composite measure, this indicator
has close links with some more disaggregated indicators, e.g. other GRP related indicators,
poverty rate, population growth, HDI, etc.
Methodological description
(a) Underlying Definitions and Concepts: GRP can be defined as the sum of final uses of
goods and services (except intermediate consumption) measured in purchasers’ prices, less the
value of imports of goods and services.
(b) Measuring Methods: The current price estimates of GRP are adjusted to GRP at constant
prices with the use of price deflators. Population estimates enable the conversion of total GRP
to per head levels, while exchange rates and other conversion factors are used to arrive at
values based on a common unit of currency.
(c) Limitations of the Indicator: One of the most cited limitations of GRP is that it does not
account for the social and environmental costs of production, and is therefore not a good
measure of the level of overall well-being. GRP is also not considered a good measure of
sustainable consumption because it does not allow for the capital used up in the production
process. A basic limitation lies in the conversion of GRP into a common denomination as a
result of current misalignments in exchange rates versus the comparator currency (US dollar),
which is especially true for Russia as the economy in transition whose market exchange rates
produce unrealistic levels of GRP, making any meaningful intercountry interpretation difficult.

(d) Availability and Sources of Data: The principal data elements are regularly available from
national statistical yearbooks published by Rosstat on a historical basis.

Rate of renewal of fixed assets

Brief Definition

Units
Agenda 21

The share of new fixed assets versus existing fixed assets by
the year’s end.
% per year
Chapter 2: International Cooperation to Accelerate
Sustainable Development in Developing Countries and
Domestic Policies

55


Page 63

Policy relevance
(a) Purpose: The indicator estimates rates of replacement of old buildings and equipment with
new ones, reflecting the infusion of requisite capital to finance the development process.
(b) Relevance to Sustainable Development: This indicator deals with the processes and
patterns of economic activities. It is an important element of the sustainable development
process in developing countries, aimed at increasing their partnership in the global economy. It
reflects an important financial component aimed at accelerating the pace of development and
indicates the region’s investment potential.
(c) Linkages to Other Indicators: This indicator is primarily linked with other economic
measures such as GRP per head.
Methodological description
(a) Underlying Definitions and Concepts: A fixed asset is defined as a long-term tangible
piece of property that a firm owns and uses in the production of its income and is not expected
to be consumed or converted into cash any sooner than at least one year's time. Examples are
buildings, real estate, equipment, and furniture.
(b) Measuring Methods: This indicator is calculated as follows:

RRFA = The cost of new fixed assets /The cost of fixed assets by the year’s end

(c) Limitations of the Indicator and Availability of Data: Access to the data on the indicator is
limited. Data are not published in statistical yearbooks and can only be obtained from Rosstat
on the payment basis.

Unemployment Rate

Brief Definition The ratio of unemployed people to the labour force.
Units %
Agenda 21 Chapter 3: Combating Poverty.

Policy relevance
(a) Purpose: The unemployment rate measures the part of the labour force which, during the
survey reference period, was (i) neither at work nor temporarily absent from work; (ii) available
for work; or (iii) seeking work.
(b) Relevance to Sustainable Development: Unemployment is useful and relevant to
measuring sustainable development, especially if uniformly measured over time, and
considered with other socio-economic indicators. It is one of the main reasons for poverty in rich
56


Page 64

and medium income countries and among persons with high education in low-income countries.
It is common, however, to find people working full-time but remaining poor due to the particular
social conditions and type of industrial relations prevalent in their country, industry, or
occupation.
(c) Linkages to Other Indicators: This indicator is linked to other socio-economic indicators
such as poverty measures and HDI.
Methodological description
(a) Underlying Definitions and Concepts: The current economically active population or
labour force has two components: the employed and the unemployed population. The employed
comprise all persons above the age specified for measuring the labour force, who were in the
following categories:
paid employment: (i) at work: persons who, during the survey reference period,

performed some work (at least one hour) for wage or salary, in cash or in kind; (ii)
with a job but not at work: persons who, having already worked in their present job,
were temporarily not at work during the reference period but had a formal attachment
to their job;
self-employment: (i) at work: persons who, during the survey reference period,

performed some work (at least one hour) for profit or family gain, in cash or in kind;
(ii) with an enterprise but not at work: persons with an enterprise, which may be a
business enterprise, a farm or a service undertaking, who were temporarily not at
work during the reference period for some specific reason.
The unemployed comprise all persons above the age specified for measuring the labour force,
who during the survey reference period were at the same time: (i) not in paid employment or
self-employment, not even for an hour; (ii) available for work; and (iii) seeking work.
(b) Measuring Methods: Sources are normally grouped into two broad categories: (i)
population censuses and household sample surveys; and (ii) various types of administrative
records such as employment exchange registers, unemployment insurance records or social
security files. Estimates can in practice be made most reliably on the basis of data collected
through household surveys and population censuses.
(c) Limitations of the Indicator: The informal sector and the agricultural sector are not
captured by this indicator.
(d) Availability and Sources of Data: Data on unemployment are broadly available from
Rosstat although there are often severe problems with data quality.

57


Page 65

Energy use per unit of gross regional product

Brief Definition

Units

Agenda 21

Ratio of total primary energy supply, total final consumption
and electricity use to GRP
Energy: tonnes of oil equivalent (toe) per million roubles
Electricity: thousand kilowatt-hours (kWh) per million roubles
Chapter 4: Consumption and production patterns

Policy relevance
(a) Purpose: This indicator reflects the trends in overall energy use relative to GRP, indicating
the general relationship of energy use to economic development.
(b) Relevance to Sustainable Development: Energy is essential for economic and social
development. However, energy use affects resource availability and the environment. In
particular, fossil fuel use is a major cause of air pollution and climate change. Improving energy
efficiency and decoupling economic development from energy use are important sustainable
development objectives.
(c) Linkages to Other Indicators: The ratio of energy use to GRP is an aggregate energy
intensity indicator and is linked to indicators for air pollution emissions and climate change.
Methodological description
(a) Underlying Definitions and Concepts: The ratio of energy use to GRP is also called
“aggregate energy intensity” or “economy-wide energy intensity”. The ratio of energy use to
GRP indicates the total energy being used to support economic and social activity. It represents
an aggregate of energy use resulting from a wide range of production and consumption
activities. In specific economic sectors and sub-sectors, the ratio of energy use to output or
activity is the “energy intensity” (if the output is measured in economic units) or the “specific
energy requirement” (if the output is measured in physical units such as tonnes or passengerkilometres).
(b) Measuring Methods: This indicator is calculated as the ratio of energy use to economic
output. Total primary energy supply and total final consumption are measured in toe; electricity
use is measured in kWh. GRP could be measured in US dollars, converted from the real
national currency at purchasing power parity (PPP) for the base year to which the national
currency was deflated.
(c) Limitations of the Indicator: The ratio of aggregate energy use to GRP is not an ideal
indicator of energy efficiency, sustainability of energy use or technological development. The
aggregate ratio depends on the energy intensities of sectors or activities, but also on factors
such as climate, geography and the structure of the economy. Compared with countries with

58


Page 66

moderate climates, Russia, a country with a relatively cold climate, consumes considerably
more energy per capita due to demand for space heating. Moreover, as the economy that
depend mainly on raw-material industries Russia uses larger quantities of energy per unit of
manufacturing output compared with countries that import processed materials owing to the
high energy intensity of raw-material processing. Given the large number of factors that affect
energy use, the ratio of total energy use to GDP or GRP should not be used alone as an
indicator of energy efficiency or sustainability for policy-making purposes.
(d) Availability and Sources of Data: Ministry of Energy maintains the most comprehensive
sets of energy balances and energy accounts. The energy data for the Russian regions for
2000-2001 were published in Ministry of Energy (2003) and in Mastepanov (2004).

Expenditure on research and development (R&D) as a percentage of gross
regional product

Brief Definition Total domestic investment on scientific research and
experimental development expressed as a percentage of
GRP.
Units %
Agenda 21 Chapter 35: Science for Sustainable Development.

Policy relevance
(a) Purpose: This ratio provides an indication of the financial resources devoted to R&D in
terms of their share of GRP.
(b) Relevance to Sustainable Development: Scientists are improving their understanding on
policy-relevant issues such as climate change, growth in resource consumption rates,
demographic trends, and environmental degradation. Changes in these and other areas need to
be taken into account in devising long-term strategies for development. Scientific knowledge
should be applied to assess current conditions and future prospects in relation to sustainable
development. Adequate R&D funding that is commensurate with economic growth and national
income is necessary for ensuring sustainable development.
(c) Linkages to Other Indicators: This indicator is most closely linked to HDI and GRP per
head.
Methodological description
(a) Underlying Definitions and Concepts: Total domestic expenditure on R&D activities is
defined as all investments made for this purpose in the course of a reference year in institutions
and facilities established in the region.

59


Page 67

(b) Measuring Methods: The indicator is calculated by dividing total domestic expenditures on
R&D by GRP and expressed as a percentage, that is

Total domestic expenditure on R&D x 100 / GDP

Both data on R&D expenditure and GRP can be expressed in current values and in the national
currency.
(c) Limitations of the Indicator: The indicator does not show the proportion of investments on
research which contributes to sustainable development.
(d) Availability and Sources of Data: Historical data on R&D investments are available from
Rosstat.

Gini index

Brief Definition

Units

Agenda 21

A summary measure of the extent to which the actual
distribution of income, consumption expenditure or a related
variable differs from a hypothetical distribution in which each
person receives an identical share.
A dimensionless index scaled to vary from a minimum of zero
to a maximum of one, zero representing no inequality and one
representing the maximum possible degree of inequality.
Chapter 3: Combating Poverty.
Policy relevance
(a) Purpose: The Gini Index provides a measure of income or resource inequality within a
population. It is the most popular measure of income inequality.
(b) Relevance to Sustainable Development: This indicator is particularly relevant to the equity
component of sustainable development. Income or resource distribution has direct
consequences on the poverty rate of a region. Statistical averages can mask the diversity within
any country or region. Therefore, from a sustainable development perspective, it is informative
to examine income and wealth distribution throughout a population. A region can, for example,
have a high per head GRP figure, but its income distribution so skewed that the majority of
people are poor. This indicator is useful both to measure changes in income inequality over time
and for international comparisons.
(c) Linkages to Other Indicators: This indicator is linked to several other sustainable
development measures, including poverty indicators, GRP per head and population dynamics.

60


Page 68

Methodological description
(a) Underlying Definitions and Concepts: The Gini Index measures the area between the
Lorenz Curve and a hypothetical line of absolute equality, expressed as a percentage of the
maximum area under the line of perfect equality (see Figure 3.3). The Gini Index is defined as
one half of the average value of the absolute differences between all possible pairs of
«incomes».
(b) Measuring Methods: The Lorenz Curve plots the cumulative percentages of total income
received (on the vertical axis) against the cumulative percentage of recipients, starting with the
poorest individual or household.

Figure 3.3. The Lorenz Curve and Gini Index of Income

Source: UNCSD, 2003
Distributional data are available in grouped form such as the income share of the lowest decile
of households where households are ranked by income per person.
(c) Limitations of the Indicator: While the indicator (in common with most other measures of
inequality) captures information on the pattern of relative levels of well-being in the population, it
is independent of any considerations of absolute living standards. So there is nothing to
guarantee that a lower Gini Index of income entails higher social welfare in any agreed sense,
since the mean income may have also fallen. The Gini Index is at best a partial indicator and
should be accompanied with other measures to complete the picture of how levels of economic
welfare are evolving in a society.
(d) Availability and Sources of Data: The most important source of data on living standards is
household surveys. The results of these surveys can be obtained from Rosstat via statistical
yearbooks.

61


Page 69

Population living below poverty line

Brief Definition A measure of the number of persons/households classified as
living below the nationally defined poverty line given as a
fraction of the total population in a region.
Units %
Agenda 21 Chapter 3: Combating Poverty.
Policy relevance
(a) Purpose: The purpose of the indicator is to show the extent to which poverty affects
communities, limiting investment and increasing short-term resource management leading to
degradation. It indicates the need for the establishment of alternative income-generating
projects and food security systems.
(b) Relevance to Sustainable Development: This indicator is relevant to policy decisions
related to education, health, land tenure, and decentralisation of resource management.
Sustainable development depends on supporting a diversified economy and re-investing locally
the revenues of goods and services produced.
(c) Linkages to Other Indicators: The indicator is better interpreted if paired with other socioeconomic
indicators such as Gini Index, GRP per head, unemployment rate, and HDI.
Methodological description
(a) Underlying Definitions and Concepts: Russia’s approach to the problem of poverty is
based on the absolute poverty concept, using certain elements of the relative approach. The
absolute poverty concept is based on determining the minimum subsistence level. The minimum
subsistence level is usually stable and does not depend on time. The minimum nutritional needs
of people are practically similar in different countries and depend little on climatic conditions.
The calculations of the cost of the minimum standard of living are based on the Methodological
Recommendations for Calculating the Minimum Standard of Living in the Regions of the
Russian Federation.
(b) Measuring Methods In Russia, the minimum standard of living is calculated on the basis of
a normative statistical method, i.e. the minimum consumer basket includes a list of food
products providing the required amount of calories accounting for dietary requirements plus
expenditures on commodities, services, taxes and the obligatory payments that comprise a
certain per cent of the food basket and correspond in their expenditure structure to the low
income family budget. The cost of the minimum standard of living is the sum of the cost of the
food basket, plus the corresponding cost of commodities and services, plus the amount of
taxes:

62


Page 70

where
Ñ(min)i = Cfi + Cgi + Csi + Cti,

Cfi is the cost of the food basket of the i-th gender/age group of the population.
Cgi is the cost of consumption of non-food products by the i-th gender/ age population group.
Csi is the cost of payable services used by the i-th gender/age population group (Ovcharova et
al, 1999).
(c) Limitations of the Indicator: The concept of a poverty line can be misleading. Poverty is
measured in terms of income. However, populations may be income-poor given lack of access
to markets or monetised economies, but wealthy in terms of livestock. Determining a universal
minimum subsistence level is impossible since different people have different lifestyles. In
addition, the poverty line measurement is insensitive to the distribution of income below the
poverty line.
(d) Availability and Sources of Data: Relevant national data are available from Rosstat.

Population growth

Brief Definition

Units
Agenda 21

The average annual rate of change of population size during a
certain period per 1000 inhabitants.
% per year
Chapter 5: Demographic Dynamics and Sustainability.
Policy relevance
(a) Purpose: The population growth rate measures how fast the size of the population is
changing.
(b) Relevance to Sustainable/Unsustainable Development: Agenda 21 identifies population
growth as one of the crucial elements affecting long-term sustainability. Population growth
represents a fundamental indicator for national decision makers. Its significance must be
analysed in relation to other factors affecting sustainability. However, rapid population growth
can place strain on a region’s capacity for handling a wide range of issues of economic, social,
and environmental significance, particularly when rapid population growth occurs in conjunction
with poverty and lack of access to resources, or unsustainable patterns of production and
consumption, or in ecologically vulnerable zones.
(c) Linkages to Other Indicators: There are close linkages between this indicator and other
social and environmental indicators, as well as all indicators expressed in per head terms (e.g.
GRP per head). Population growth usually has implications for indicators related to education,
infrastructure, employment, and the environment.

63

© 2009 OpenThesis.org. All Rights Reserved.