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Sustainable Development

The Western Cape Government has long recognised that growth at all costs is PROVINCIAL OUTLOOK NATIONAL OUTLOOK GLOBAL OUTLOOK GAP HOUSING INVESTOR NARRATIVE SPOT THE OPPORTUNITY PORTFOLIO INSIGHTS KHULISA NEWSLETTER ELECTRIC VEHICLES ENERGY SECURITY LOOKING AT GDP
unsustainable and that externalities must be internalised. It recognises that dirty coal
energy is only more cost effective in the short-term and that eventually the cost of
dirty air will have to be paid through higher healthcare costs, poor tourism growth,
negatively impacting future levels of competitiveness and other payment mechanisms.

The province’s strategy to develop the province as the region with the lowest carbon
footprint is underpinned by internalising externalities. It makes a moral argument
against borrowing from future generations by promoting and developing strategies
and policies for sustainable growth.

Other countries and cities are also developing a dual approach to development and
growth. The Nobel laureate and previous chief economist of the World Bank, Joseph
Stiglitz, at the request of then French president, Nicolas Sarkozy, chaired the commission
to address the shortcomings of GDP and to propose a different approach to measure
economic health of an economy. The proposal puts forward many issues currently being
explored by the OECD, which aims to include activities that contribute to the overall
well-being and discount economic activities that take away from overall wellbeing in
a national dashboard.

Others are promoting the Genuine Progress Indictor that compensates for pollution,
externalities social ills such as, alcohol abuse and social costs. The current method of
calculating economic prosperity is ever so slightly odd in that both pollution generating
activities and their respective clean-up activities both contribute positively to GDP,
resulting in double counting. Surely, an activity that erodes wellbeing such as pollution,
must be reflected as such, vis-à-vis, the indicator must capture the costs and benefits
and not only benefits of economic activity.

QUARTERLY ECONOMIC BULLETIN 2016 15