Constructing Aggregate Environmental-Economic Indicators: A Comparison of 12 OECD Countries

The application of aggregate indicators in environmental-economic research has received littleattention so far. An important reason is the incompleteness of environmental data. This articlepresents a systematic approach to construct indicators of environment and economy on a macrolevel. It includes a distinction into the following categories: the volume of economic activities as anindicator of potential environmental pressure; actual environmental pressure; environmentalquality; and environmental policy. In each category aggregate indicators are calculated for 12OECD countries. Subsequently, the correlation between these indicators is examined. Significantcorrelation is found between the economic activity indicators (or 'potential' environmentalpressure), actual environmental pressure and environmental quality, whereas a very weakcorrelation exists with these indicators and two types of aggregate indicators of environmentalpolicy. Due to some arbitrary choices, which are inevitable, the results are to be judged withcaution. Several suggestions are offered to improve the calculation and comparison of aggregateindicators.