We are what we measure.   It's time to measure what we want to be.

What is an indicator of sustainability?

An indicator is something that helps you understand where you are, which way you are going and how far you are from where you want to be. A good indicator alerts you to a problem before it gets too bad and helps you recognize what needs to be done to fix the problem. Indicators of a sustainable community point to areas where the links between the economy, environment and society are weak. They allow you to see where the problem areas are and help show the way to fix those problems.
Indicators of sustainability are different from traditional indicators of economic, social, and environmental progress. Traditional indicators -- such as stockholder profits, asthma rates, and water quality -- measure changes in one part of a community as if they were entirely independent of the other parts. Sustainability indicators reflect the reality that the three different segments are very tightly interconnected, as shown in the figure below:
  Web of interactions
  Communities are a web of interactions among the environment, the economy and society.

As this figure illustrates, the natural resource base provides the materials for production on which jobs and stockholder profits depend. Jobs affect the poverty rate and the poverty rate is related to crime. Air quality, water quality and materials used for production have an effect on health. They may also have an effect on stockholder profits: if a process requires clean water as an input, cleaning up poor quality water prior to processing is an extra expense, which reduces profits. Likewise, health problems, whether due to general air quality problems or exposure to toxic materials, have an effect on worker productivity and contribute to the rising costs of health insurance.
Sustainability requires this type of integrated view of the world -- it requires multidimensional indicators that show the links among a community's economy, environment, and society. For example, the Gross Domestic Product (GDP), a well-publicized traditional indicator, measures the amount of money being spent in a country. It is generally reported as a measure of the country's economic well-being: the more money being spent, the higher the GDP and the better the overall economic well-being is assumed to be. However, because GDP reflects only the amount of economic activity, regardless of the effect of that activity on the community's social and environmental health, GDP can go up when overall community health goes down. For example, when there is a ten-car pileup on the highway, the GDP goes up because of the money spent on medical fees and repair costs. On the other hand, if ten people decide not to buy cars and instead walk to work, their health and wealth may increase but the GDP goes down.

  Trying to run a complex society on a single indicator like the Gross National product is like trying to fly a 747 with only one gauge on the instrument panel ... imagine if your doctor, when giving you a checkup, did no more than check your blood pressure." Hazel Henderson, Paradigms of Progress 

In contrast, a comparable sustainability indicator is the Index of Sustainable Economic Welfare. In order to get a more complete picture of what is economic progress, the ISEW subtracts from the GDP corrections for harmful bases or consequences of economic activity and adds to the GDP corrections for significant activities such as unpaid domestic labor. For instance, the ISEW accounts for air pollution by estimating the cost of damage per ton of five key air pollutants. It accounts for depletion of resources by estimating the cost to replace a barrel of oil equivalent with the same amount of energy from a renewable source. It estimates the cost of climate change due to greenhouse gas emissions per ton of emissions. The cost of ozone depletion is also calculated per ton of ozone depleting substance produced. Additionally, adjustments are made to reflect concern about unequal income distribution. The correction for unpaid domestic labor is based on the average domestic pay rate. Some health expenses are considered as not contributing to welfare, as well as some education expenses. (See Indicator Spotlight for more on the ISEW as a sustainability indicator.)
Like the GDP, the ISEW bundles together in one index tremendous amounts of information, but the key difference is that the information takes into account the links between environment, economy and society.
Indicators of sustainable community are useful to different communities for different reasons. For a healthy, vibrant community, indicators help monitor that health so that negative trends are caught and dealt with before they become a problem. For communities with economic, social, or environmental problems, indicators can point the way to a better future. For all communities, indicators can generate discussion among people with different backgrounds and viewpoints, and, in the process, help create a shared vision of what the community should be.