Indicators are quantitative measures that are supposed to reflect how close we are to achieving set goals. They are used to analyse and compare performance of businesses, sectors or economies across countries and to determine policy priorities. The use of indicators in policymaking is very tricky. On the one hand, the indicator should provide a basis to control a complex system, but on the other hand, few well-intended but poorly selected indicators may not be able to capture the relevant parts of the system.
Strong indicators or indicator sets adequately reflect the system to be controlled in order to effectively reach the goals and avoid problem shifts. To make indicators meaningful they have to be linked to ecological, economic, or political goals. It is mandatory that there is a strong correlation between indicators and goals. Indicators should be reliable and robust. If an indicator is determined on a regular basis then it can serve to control the goal-orientation of measures. However, indicators alone do not provide information about the system itself. They rather deliver a result but not the reason for it.
A careful selection of indicators or indicator sets is therefore of uttermost importance for transforming the socio-economic metabolism in a desired direction. If the system of the socio-economic metabolism is not reflected well in the indicator set, there is a risk that policies based on indicators have unintended side effects that impede rather than facilitate the overall goals. A substantial amount of indicators is available.
Please note: The following text is taken from the existing MinFuture reports "A systems approach for the monitoring of the physical economy" and "Concise description of application fields for different MFA approaches and indicators". Please click on the afore-mentioned links to access and read the full publications.
Key principles of indicators
Existing indicators relevant to raw material can be characterised by various criteria. The leftmost box in Figure 13 below includes a list of diverse criteria that may find use during characterisation (e.g. Units, Life Cycle stage). Based on these criteria, indicators can be grouped in different evaluation groups, which reflect their objective, like “material flow and stocks indicators among other groups as illustrated in the middle box of Figure 13. Each of the evaluation group includes a list of indicators. The rightmost box of Figure 13 shows some of the indicators included in ‘Material flow and stock indicators’, such as ‘EU share of global production’, ‘Export restriction’, ‘spatial distribution of material flows’, etc.
Figure 13: Characterisation and evaluation of indicators
Indicators should be used to complement consistent monitoring of the socio-economic metabolism. Therefore, the following conditions should be respected.
- Indicators are needed to represent both the goal and the means to achieve goals. In general, there is a trend for a service-oriented economy and indicators should reflect this shift from owning to using. For example, people are not interested in having natural gas to heat their house, but they are interested in having a warm house. Consequently, materials are not in focus but the service these materials provide.
- There is a need to differentiate between goals (e.g. increase resource efficiency, reduce environmental impact) and the means to reach that goal (i.e. increase recycling, use renewable energy).
Indicators should primarily provide information if goals are achieved and secondarily, how they will be achieved. Different stakeholders should be able to understand the definition of the indicators and loopholes must be closed, so that indicators should not me be misused.
- Individual indicators can be defined using MFA.
- Data availability is important.
Quantitative physical indicators need to be complemented by a set of different indicators, used for different purposes to provide a holistic approach, for example environmental, financial, social indicators.
- A set of indicators is needed. Reliance on a single indicator should be avoided.
- The selection of the indicators can be adjusted to the properties of the system.
Recommendations for the use of indicators
A poorly chosen set of indicators may lead to a situation where industry makes large efforts to reach the targets, but this has detrimental side effects on other parts of the system. It is important to complement indicators with consistent monitoring of the socio-economic metabolism. The following recommendations are made regarding the use of indicators.
- MFA can be used to understand the reasons behind certain regions being able to reach their targets/objectives easily, while others face difficulties.
- MFA scenarios can be used to test the usefulness and the effectiveness of different indicators / indicator sets. These scenarios help to identify potential synergies and goal conflicts between individual indicators.
- Indicators need to be based on a system. To create an indicator you need to have a good system understanding.
- Capturing systemic change with indicators solely is challenging.
Indicators are extremely important, but their scope can be limited. Indicators on raw materials are used to define problems, to formulate policies, and to implement policies. The aim of the policies informed by raw materials indicators is always to change certain aspects of the socio-economic metabolism. Since the different parts of the socio-economic metabolism are all linked with each other, we can also say that the aim is to transform the socio-economic metabolism in a desired direction. This is a not a trivial task, because (i) the socio-economic metabolism is highly complex (dynamic, multi-layer, international supply chains); (ii) the socio-economic metabolism is still poorly understood; (iii) indicators provide a simplified picture of the socio-economic metabolism; (iv) the desired direction is often not clearly defined; and (v) there are many, often diverging, interests of different stakeholders.
In conclusion, it is important not to rely entirely on indicators. It is not possible to represent the systemic nature of material cycles with indicators only. Policy and decision makers need to have an understanding of the system in focus prior to proposing targets and setting measures. A more complete description of indicators is included in the MinFuture report "Concise description of application fields for different MFA approaches and indicators" (Villalba et.al, 2018).
- Indicators need to be based on a system.
- Indicators stand for quantitative measures that aim to reflect the status of complex systems.
- Quantitative physical indicators need to be complemented - a set of different indicators for different purposes should be used together.
- Indicators should provide a basis to control a complex system.
- Indicators should primarily provide information if goals are achieved and secondly, how they will be achieved.
The intention of this conference "Monitoring the physical economy requires putting raw material data in a system context" was to present, reflect on and refine key recommendations from the MinFuture project on a monitoring system for the physical economy.
The presentations held and recommendations made will soon be available via this website.
This report aims to address existing challenges by developing a methodological framework for the monitoring of the physical economy that facilitates the users in reflecting more systematically about the problems mentioned above and in developing more effective strategies for addressing them. The framework proposed is based on Material Flow Analysis (MFA), a tool widely used for tracking materials and energy in the economy.
In order to develop strategies as well as to define and reach goals concerning raw materials management, maps are needed to help navigate existing knowledge and data.
The purpose of this workshop was to further develop the roadmap for monitoring the physical economy. During the spring of 2018, the MinFuture project has held several commodity specific workshops to test the developed framework and to identify commodity specific trends, opportunities and challenges that can inform the MinFuture roadmap. Workshops has been held on aluminium, cobalt, neodymium, platinum, phosphorus and construction aggregates, and stakeholders from different parts of the supply chain has contributed to it.
MinFuture is a collaborative project funded by the Horizon 2020 framework, aiming to identify, integrate, and develop expertise for global material flow analysis and scenario modelling.