Interior of Hellisheidi Geothermal Plant, Iceland, courtesy martin_vmorris under Creative Commons License
The Organization for Economic Co-operation and Development, or OECD, maintains the "Better Life Index," an interactive tool that enables a user to compare well-being among the 34 OECD member countries, as well as OECD partners Russia and Brazil. The index consists of 11 indicators that seek in aggregate to measure the well-being of societies. By offering up this index, the OECD aims "to involve citizens" in the debate over what constitutes well-being, and "to empower [citizens] to become more informed and engaged in the policy-making process that shapes all our lives."
One of the inarguable components of well-being is the environment in which we live. For its "Environment" topic, the OECD uses two primary criteria to rank its members: water quality and air pollution. Water quality is defined as the "percentage of people reporting to be satisfied with the quality of local water." Air pollution is defined as the "average concentration of particulate matter (PM10) in cities with populations larger than 100,000, measured in micrograms per cubic meter." You may be familiar with particulate matter measurements, as they have been commonly cited in the recent spate of news stories on China's industrial pollution and air quality woes. The World Health Organization denotes 20 micrograms of tiny particulate matter as an annual suggested inhalation limit per person.
Perhaps the idea of ranking countries under the topic of "environment" using only two primary indicators appears more than a bit narrow. But the criteria selected by the OECD are measurable outcomes of a country's environmental policies. The extent of carbon emissions, the preservation or degradation of ecological systems, the appropriate treatment of waste, and the prevalence or dearth or sustainable practices will all sooner or later affect a given society's air and drinking water. Thus, these two metrics are not only an appropriate measure of overall well-being, but they also reflect the amount of care and stewardship a society takes in its interactions with the surrounding natural environment -- this is central to the idea of being "environmentally friendly."
The 5 countries that top the list
According to the OECD, the five countries with the highest scores in the "Environment" topic in the Better Life Index are as follows:
2. United Kingdom
Each of these countries displays high scores in both controlling air pollution and improving water quality. For example, Iceland's PM10 levels of 15.9 micrograms per cubic meter are much lower than the OECD average of 20.9, and 97% of Icelanders surveyed report being satisfied with water quality, versus the overall OECD average of 84%.
Is there a correlation between wealth and environmentally friendly countries?
It's difficult not to notice that the leaders in the OECD's "Environment" topic are all European countries with highly developed economies, known for their wealth on a population-adjusted basis. According to the International Monetary Fund, each of these countries ranks in the top 20 nations worldwide in per capita gross domestic product, except for the U.K., which holds the 21st spot.
What's the relationship between wealth and a country's environmental friendliness? It's difficult to say. One could argue that wealthier countries have more resources to expend on environmental programs and policies which assist in improving quantifiable scientific metrics such as PM10 levels. Sweden and Norway, for example, possess the capital to build innumerable waste incineration plants, and thus, both are net importers of garbage and are paid to receive trash from other European countries such as Italy.
Yet smart policy plays a role as well. Organic waste landfills, common here in the U.S., have been outlawed in Sweden since 2005. In converting to waste incineration, the country has seen a precipitous drop in methane gas released from organic waste landfills. In addition, Sweden now powers about 250,000 homes from the energy created by waste incinceration. Policy also works in Great Britain, where clean water is a significant government priority. The U.K. reports 99.9% compliance with national standards derived from the European Union's "Drinking Water Directive." Its water quality survey results, in which 97% of survey respondents claimed to be satisfied with water quality, is the highest reported rate in the 36-member OECD survey group.
Mindset is also paramount
Bikes by University Hospital of Copenhagen. Image by Kristian Mollenborg under Creative Commons License.
In Denmark's capital city of Copenhagen, which holds the ambition to become the first carbon-neutral capital in the world, bikes outnumber people. It's noteworthy that a majority of national parliament members commute to their policymaking chambers in Christiansborg Palace via bicycle.While some may see in the bike-mad Danes a cultural stereotype, the country essentially forgoes the congestion, particulate pollution, and carbon emissions associated with heavy automobile traffic. Here, mindset is as important, if not more so, than wealth or policy.
For an example of a country that doesn't belong to the prestigious OECD group, and which combines both policy and mindset for its environmental bona fides, look no further than Costa Rica. According to Yale University's respected biennial "Environmental Performance Index," when indicators such as ecosystem effects, biodiversity, and habitat to are added to air quality and water quality, Costa Rica ranks fifth in the world. This tiny country, which the IMF pegs as 77th globally in per capita GDP, derives more than 90% of its energy needs from renewable energy and has designated more than 20% of its area to national parks or reserves. After witnessing deforestation for decades in the early 20th century, the country is now more than 50% forested.
Lessons for both established and developing countries
Are there any guiding principles that the richest industrialized countries such as the U.S., which ranks 16th out of 36 countries in the OECD survey, can draw from this data? It's likely the lessons are not markedly different from those that the poorest countries can derive: Over the long term, the combination of smart policy and a determined mindset may count as much as wealth in a country's journey to become environmentally friendly. Also, as the OECD implies, the concept of a healthy natural environment is unalterably linked to our own well-being.
Would you like investment advice from The Motley Fool?
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.