2. Literature Review

2.1 Environmental Sustainability

Determining the appropriate methodology for arriving at meaningful
environmental indices is a debated research question (Ebert and Welsch,
2004; Zhou et al., 2006). It has generally been observed that using a
composite environmental index summarizes the environment condition
of a region or country or state,¹⁰ and is more meaningful than individual
indicators (Rogers et al., 1997; Adriaanse et al., 1995; Adriaanse, 1993,
Esty et al, 2005; WWF, 2002; CBD, undated; Jones et al., 2002; RIVM/
UNEP, undated). However the methodology and selection Ofvariables
for construction Ofenvironmental indexvary considerably across these
studies.

In Table 1, we Iookatthe relationships between Environmental
Performance Index (EPI), HDI and Per Capita GDP for a few select
economies. The Environmental Performance Index (EPI) data is taken
from the recent study by Esty et al. (2006), which constructs the index
for 133 countries. The study is based on a compilation of 32 indicators
classified into 6 environmental groups. HDI Scores and Ranks are taken
from latest Human Development Report 2006, which ranks 177 countries
on the basis of their HDI Score. It is observed from the table that the
countries having higher HDI scores (e.g. New Zealand) are generally

¹⁰ It is argued that environmental degradation or pollution level cannot by merely
measured by actual emissions of certain hazardous materials; but other factors
influencing its spread and intensity also need to be considered (Kathuria, 2002,2004).
characterised by higher values of EPI as well. However, exceptions
also exist-for instance Malaysia, despite having a medium HDI score,
is characterized by a high EPL The Per Capita GDP (in PPP USD) for the
two countries is found to be higher in comparison with the remaining
countries. On the other hand, the South Asian countries with medium
HDI performance (e.g. India, Pakistan) have also performed moderately
on the EPI front. The countries further down the HDI list (e.g. Niger)
are ranked lower in the EPI list as well. It has been observed that the
relationships between (1) HDI score and EPI score and (2) Per Capita
GDP and EPI Score of the South East and South Asian countries show
a non-linear pattern (Mukherjee and Chakraborty, 2007).

Table 1: Environmental Performance Index, Human Development
Index and Per Capita GDP - A Cross Country View

Note: Figures in parentheses show the corresponding ranks

Source: Esty et al (2006), UNDP's HDR (2006) and World Bank (2004)

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