We Measure Our Economy Too Narrowly

A British national security assessment recently did something unusual. It assessed the loss of biodiversity as a threat to national security — using the same methodology the intelligence services use to weigh military and geopolitical risks.

The conclusions are bleak. Monitored wild animal populations have declined by 73 percent since 1970. Six of nine planetary boundaries have been crossed. Every ecosystem assessed as critical is heading toward collapse - coral reefs and boreal forests possibly as early as 2030, rainforests and mangroves from 2050. The consequences spell out as crop failure, drought, migration, pandemics, armed conflict.

The most telling thing is not the content. It is who is writing. When a security agency starts doing the maths on nature, it means something has gone fundamentally wrong in how the rest of society counts. The market never priced the ecosystems. The national accounts never recorded them. The air, the water, pollination, a stable climate - all of it was treated as free, infinite, outside the calculation.

Now the reckoning comes. And it does not land with those who should have done the counting. It lands with all of us.

Sweden recognises the movement. After joining NATO, total defence is being rebuilt, and with it a word that had long been absent returns: supply preparedness. Suddenly we are doing the maths on things we took for granted - that food, energy, materials and expertise will be there, will flow, will be enough. It is the same realisation the British report carries, only from the other direction: what we treated as free and self-evident, outside the calculation, turns out to be the very foundation of our security.

This is the core of a problem that has become increasingly hard to ignore: we measure our economy too narrowly. We count GDP, market price, quarterly profit, shareholder value. What we don't count - natural capital, human health, social cohesion, the living conditions of future generations - is treated as if it did not exist. Not because it lacks value, but because the measurement system cannot see it.

And what we do not measure, we do not manage. What we do not manage, we lose.

Four Reports, One Diagnosis

In just six months, four different voices, from four entirely different directions, have arrived at the same diagnosis.

In November, the report Value Gap: Sweden - from RISE, Circle Economy and RE:Source - showed that Sweden loses around 600 billion kronor every year to a linear economy. That is 19 percent of all the value we create across six sectors studied. Value that leaks precisely because the measurement system does not see it until it is gone.

The UN expert group on Beyond GDP has delivered its final report: gross domestic product is not enough. Continuing to steer by GDP risks a future where production grows while societies sink deeper into ecological, social and political crises.

EY's megatrend report Rebalancing Capitalism argues that markets work better when prices reflect real costs - put a price on the externalities, broaden value from shareholders to all stakeholders

And in the Journal of Industrial Ecology, researchers Kirchherr and Jones go furthest: if the circular economy is taken seriously on a global scale, it will even shrink GDP, because growth and material flow are so tightly interwoven. Not as a flaw - as logic.

Four reports, four positions, the same underlying conclusion: what we count determines what we do - and we are counting wrong.

The Clock and the Cloud

Why is this so hard to change? Because measurement systems are never neutral. They shape what we see - and thereby what we value and what we sacrifice

The futurist Martin Börjesson often raises a metaphor that captures the problem: the difference between clocks and clouds. The clock is mechanical, predictable, measurable part by part. The cloud is alive, interconnected, unpredictable.

GDP treats the economy as a clock. Count every transaction, sum it up, compress the change into a single number. But the economy is a cloud. It is bound up with people's health, with ecosystems, with cultural patterns, with future generations. Damage one subsystem and others bleed. A clock cannot measure a cloud - and an economy steered by clock-numbers will systematically sacrifice whatever does not fit inside the number.

The British security report is what happens when the cloud sends the reckoning back

Food Makes It Concrete

The abstract becomes clear when you look at something close to home: food

Food production, according to the British assessment, is the single largest cause of biodiversity loss on land. At the same time, the food system is where the narrow measures do the most damage - and where a different logic is easiest to see.

When we buy food through long chains, the farmer at the end often receives only around 9 percent of the price. The consumer pays more, the producer gets less, value leaks in the intermediate links. But this is not only a question of distribution. It is also where marginal utility comes in: paying the farmer one krona more can determine whether more farmers stay in business, whether more hectares are cultivated, whether local food systems are built. Value directed to where marginal utility is highest creates new value - it does not merely move it

And the measures govern not only who gets paid, but what we choose. When sugar and chemically sprayed products are priced without their costs to health, soil and water being counted in, it becomes cheap to eat worse. When local farmers are not paid for their full contribution, it becomes expensive to eat better. The measurement system creates the incentives - and today they point the wrong way

In the Fairchain project, this became concrete. We began with an observation: the annual growth of Sweden's wild forest berries corresponds - in theory - to the annual growth of Swedish timber in economic potential. But where we have well-developed processing pathways for the timber, the berries are exported largely unprocessed. The value is captured somewhere else.

And it is not only about processing capacity. Bilberries have documented health properties - but for regulatory reasons these may not be printed on the packaging. Sugar products, whose long-term health costs are borne by society, face no comparable restriction. The asymmetry is twofold: the berries' value is visible neither in the economy nor on the label.

The question became: how can we create, deliver and capture that value in Sweden - without relying on simplistic assumptions? We compared two systems - the current one and an alternative with Swedish processing - across several sustainability dimensions at once: economic, environmental, social, regional. Radar charts side by side. Hot spots in both. The work was about sorting out three types of intervention:

• Change: value capture. The berries are exported unprocessed today - that has to change if Sweden is to share in the value.
• Preserve: the livelihood of Thai berry pickers. For them, the seasonal work has a high marginal utility that should not be swept aside.
• Optimise: who does the picking. Newly arrived or unemployed people in Sweden fall into an in-between category - geographically local, with a marginal utility from the work similar to that of the Thai pickers. Social inclusion without damaging the integrity of the value chain.

Change, preserve, optimise. Not a universal method, but a way of working: map the system, compare alternatives multidimensionally, find the hot spots, ease them. It takes the whole seriously instead of optimising a single variable.

The North - Where the Reckoning Is Clearest

The berries, the timber - the pattern is not new in northern Sweden. It is the region's economic history in miniature. The ore, the hydropower, the forest, and now increasingly the electricity: the north produces the raw value, and all too often the processing and the returns are captured somewhere else. The region carries the cloud - the encroachments on land, water and landscape - while the number that gets counted ends up in a set of accounts further south, or abroad.

Now something is happening that makes that pattern impossible to ignore. The green industrialisation - fossil-free steel, batteries, electrification - is landing in the north. And it is being framed, rightly, as more than industrial policy: as security. Domestic production capacity, material independence, shorter chains. But then the old question becomes a security question too: does the processing and the ownership stay in the region, or is the value exported out again? A country that builds its supply preparedness on industries whose value and control lie outside its borders has not built much preparedness at all.

Here, too, lies the answer to a reasonable objection. Kirchherr and Jones argue that a fully developed, global circular economy will eventually shrink GDP. That may be true - but it concerns an entirely different point from where northern Sweden stands. The region today is the exact opposite of a saturated circular economy: a half-linear system where enormous value leaks precisely because circularity and local value capture are insufficient. We are nowhere near the point where circularity begins to cost. We are in what Kirchherr himself calls the sweet spot of circularity - where increased circularity creates economic and environmental value at the same time. This applies, of course, to every region: capturing value at home must not be built on continued extraction somewhere else, because then the pressure is merely displaced geographically.

At RISE we work with both horizons. Value Gap shows what can be captured here and now, in the sweet spot. The project Policy for a Redesigned Economy explores what will be required in the longer term - for the day when the bridge needs to lead somewhere.

The Wind, the Resistance, and Who Owns It

Take the clearest example right now: wind power.

On paper the question should be settled. The technology has matured, turbines have become cheaper to build, the cost per kilowatt-hour produced has fallen. On a clock, wind is an obvious answer. And yet municipality after municipality says no. The usual interpretation is that the resistance is irrational - backward-looking, short-sighted, NIMBY.

But read the resistance as information instead. It is rarely about the price. It is about who owns, who bears the landscape and the encroachments, and who receives the returns. In the dominant model, large-scale wind is built by external companies, often fund-owned or foreign-owned. The municipality grants the land and carries the cloud - the noise, the view, the roads, the encroachment on reindeer grazing and outdoor recreation - while the value is captured in a set of accounts somewhere else entirely. It is exactly the same leakage as the berries. Cheaper turbines do not solve it, because the price was never the obstacle. The narrow calculation optimised cost per kilowatt-hour and skipped the question of whom the counting is for.

This is where energy communities come in. They do not make wind cheaper. They change who counts and who shares in it. In projects like the ones we have worked on in the Skellefteå region - in villages such as Skråmträsk and Kusfors - the starting point is the reverse: that production is owned, or co-owned, locally. Then the returns stay in the village. The marginal utility of a krona that remains in Skråmträsk is higher than the same krona paid to a distant fund. And the cloud - the landscape, the neighbourly relations, the cohesion - is weighed in by those who actually carry it. Then a yes becomes possible where a no was otherwise entirely rational.

And here the two threads of this text meet. Decentralised, locally owned and locally rooted energy is not only fairer. It is more robust. Supply preparedness is built on redundancy, proximity and capacity that do not depend on a single owner or a single long, fragile chain. Energy communities are supply preparedness from below.

This does not mean that small-scale should replace large-scale - Sweden needs the volume, and needs it fast. The point is a different one: as long as ownership and value distribution are treated as an afterthought in the calculation, the build-out will be blocked municipality by municipality. Count them in from the start, and it becomes possible.

Counting Again

What we count determines what we do.

Right now we count narrowly: short-term profit, shareholder value, GDP, quarterly results, cost per kilowatt-hour. And we get exactly the outcomes the methods optimise for - concentration, extraction, leakage, blocked build-out, and ultimately ecosystems that a security agency has to warn about.

Counting more broadly is not about adding more indicators to the same clock. It is about asking something fundamental: what value is, and whom the counting is for.

At RISE we build the business cases for circular business models. One foot in the techno-economic analysis. One foot in the rooms where the decisions are actually made - in municipalities, in industrial companies, in negotiations that do not always speak the language of research. That is where the transition happens. Not in abstract arguments about growth or circularity, but in concrete choices between reuse and new purchase, between external build-out and local ownership, between extraction and regeneration.

Value Gap measures one kind of leakage - what disappears when we choose linear over circular, around 600 billion kronor a year. Northern Sweden shows another: value that is not thrown away, but captured somewhere else. It is there in the timber that leaves the region unprocessed, in the berries exported unprocessed, in the wind farm whose returns are booked far away, in the green industry whose ownership is not yet decided.

These are two different leakages - and I do not want to turn a blind eye to either. We are redesigning the economy anyway. So they are not two problems to live with, but two we can design out.

If you sit in a municipality or a company where the transition has to be made to add up, you are the person I want to talk to. Get in touch, and we will go through what the value gap looks like in your organisation, and where the marginal utility of counting differently is greatest. It is rarely where you would expect.

What we don't count doesn't disappear. It becomes a reckoning. The only question is whether we want to see it in advance - because seeing the reckoning in time is itself a form of preparedness, isn't it?