2.5.46 Focussing solely on output and income does not capture the region’s ambitions for sustainable development as it excludes a number of important social and environmental indicators relating to quality of life and the natural environment. The Regional Index of Sustainable Economic Well-being (R-ISEW) is a composite measure of well-being, developed by the New Economics Foundation and commissioned collectively by the English RDAs. In this measure, income and GVA are adjusted to take into account environmental and social factors, resulting in an index for the overall well-being of residents. The measure also encapsulates data on the use of natural resources and, therefore, gives an indication of the sustainability of economic activity in the region. The outcome is a single figure that includes a monetised assessment of social and environmental issues, giving a broad indicator of progress towards a sustainable economy. For more details on the methodology seeRegional Index for Sustainable Economic Well-being 2009.
2.5.47 In all regions, R-ISEW per head is lower than GVA per head, highlighting that there are negative impacts associated with economic growth (externalities) that the GVA measure does not pick up. Figure 2.5.13 shows the relationship between GVA per head and R-ISEW per head for the South West and England over time. This chart shows that while the South West is lagging the English average in terms of GVA per head, it has remained consistently above the English average for R-ISEW per head.
2.5.48 South West England ranks second highest of the English regions on R-ISEW per head, behind London (which over took it for the first time in 2007). In 2008, regional R-ISEW per head was £14,454, 19% above the England average of £12,111. The region’s strength in this composite measure comes from good performance on environmental factors (such as long-term environmental damage, resource depletion and air & water pollution). The R-ISEW approach is based on production in a region rather than consumption, meaning that the South West's good position partly reflects its lack of ‘dirty’ industries.
2.5.49 Over the last ten years, R-ISEW per head has grown substantially across the country. In the South West, however, growth has been variable and R-ISEW per head actually fell slightly between 2003 and 2006, before rising in 2007 and then falling again in 2008. The region’s failure to improve its R-ISEW in recent years can be attributed to a number of factors: net capital growth switched to negative territory in 2005 and has remained there since; commuting costs have grown marginally; income inequality costs increased by 20% between 2002 and 2007, compared to a 2% increase in the neighbouring South East and a 5% fall in London; and resource depletion costs have been increasing at a faster rate than in other regions. All these factors have contributed to a weakening of performance. In addition, and for reasons which are unclear, the South West has the highest rate of divorce in England, performing particularly badly on this indicator in 2007.
Figure 2.5.13 R-ISEW per head compared with GVA per head (2008/9 prices)
