Measuring Sustainable Economic Development Indicators with Fuzzy Sets: The Sustainable Development Index

Abstract

Abstract Sustainable economic development means different things to different stakeholders. It encompasses economic, social, political and environmental issues. Therefore, it is very difficult to measure and monitor. There has been marginal success in developing indicators that capture sustainable economic development from the perspective of the host community. This paper develops a Sustainable Development Index (SDI) that captures the social, economic, political and environmental impact of oil and gas activities on the host community. Using a fuzzy logic model, fuzzified host community dimension indices are developed for indicators such as Life, Education, Economics, Environment, Political Participation, Social Participation (access to jobs, water, electricity, telephones, internet etc), and Gender Equality. The fuzzified outputs are then aggregated and defuzzified into a Sustainable Development Index for the host community. Using the above method, the annual SDI of a host community can be measured over the project lifetime. For a given year, the SDI of different host communities can also be measured and compared. The paper concludes that a Sustainable Development Impact Assessment (SDIA) study should be carried out before beginning any oil and gas project. This study should be done in addition to the Environmental Impact Assessment (EIA) study. The SDIA study would establish a baseline SDI for the host community and enable oil and gas companies to monitor the sustainable economic development of the host community during the project lifetime. Oil and gas projects that do not increase the SDI of the host community during their life cycle should be rejected.