He GDP per capita It is the most widely used indicator in comparisons of economic performance between countries and is appropriate and useful to compare the evolution of performance of an economy over time, since it synthesizes the value of the flows exchanged in the market on the income, expenditure and activity side.
According to BBVA Researchit is “an incomplete indicator of the economic well-being of a society, since it should include, in addition to consumption, equity in its distribution, the availability of leisure time and the life expectancy of the population.. Furthermore, as it is an average concept, GDP per capita does not capture the effect that income distribution has on aggregate well-being. Besidesthe GDP either incorporates the damage generated by CO2 emissionsnecessary to reach high levels of consumption.
BBVA Research has estimated in its latest report ‘Well-being and social cost of carbon’, a measure of the economic well-being of society, also including the cost of carbon emitted to meet the consumption made. The cost to society of the issues, and therefore the price that would have to be established to internalize it, is subject to uncertainty since it depends on the present value of future damage from climate change, which in turn depends on alternative climate scenarios.
Internalize the social cost of carbon issued in the last decade would reduce well-being in the OECD countries on average by approximately 2% according to a reference climate scenario. The differences between countries are significant depending mainly on whether the use of emissions per consumption unit is more or less intensive. In addition, the average correction would increase by 0.6 percentage points if emissions consumed rather than produced are considered, since most developed countries are net importers of carbon from emerging economies.
“Between 2010 and 2019 the social welfare of the Spanish economy was on average 81% of what the United States registered in 2019”, points out BBVA Research. Spain is below the largest economies in the European Union, such as France and Germany (99%), Italy (88%) and also quite far from countries such as Belgium, Switzerland, the United Kingdom, Sweden, Iceland or Finland.
However, Spain is positioned above from Portugal, Greece, Ireland or the Czech Republic and exhibits considerably higher well-being than that of South American countries such as Colombia and Chile. Likewise, the performance of Spain in life expectancy and free time. However, the same is not true of the inequalitywhere Spain is in a worse position than northern European countries such as Norway, Sweden or Iceland.
The consideration in the measure of social welfare of the social cost of carbon improves the relative position of the Spanish economy given its lower intensity of use of CO2 emissions per unit of consumption and also because it has a lower level of GDP per capita. By going beyond GDP, Spain’s gap with countries like the United States is halved when this comparison is made in terms of social welfare. In this sense, the report points out that Spain is above the average (76%) in relation to the net welfarecorrected for the damage of CO2 emissionsof the 36 countries that make up the sample, occupying the 19th place, just behind Japan and above Ireland. However, there is still a significant gap to close with respect to the more advanced OECD countries.
Consult more responsible information in the Co-responsible publications and in the BBVA Case Study in the 2023 Stewardship Yearbook.
