Ecological Economics 33 (2000) 135 – 149 ANALYSIS A framework for the economic evaluation and selection of sustainability indicators in agriculture David J. Pannell *, Nicole A. Glenn Agricultural and Resource Economics, Uniersity of Western Australia, Nedlands 6907, Australia Received 20 April 1998; received in revised form 9 September 1999; accepted 4 October 1999 Abstract In recent years, the concept of ‘sustainability indicators’ has become prominent in agricultural science. The idea is that particular characteristics of resources are monitored and recorded, with the intention that this information serves as an aid for decision making by farmers and/or policy makers. A great many sustainability indicators have been proposed by agricultural scientists. However, there is no guidance currently available as to which of the possible sustainability indicators provide information of economic value. In this paper we present a conceptual framework for the economic valuation and prioritisation of sustainability indicators. The framework is based on Bayesian decision theory, particularly its use to calculate the value of information under conditions of uncertainty. We present an illustrative numerical example. Based on this example and the theoretical framework, we identify a number of important insights about the practical use of sustainability indicators. © 2000 Elsevier Science B.V. All rights reserved. Keywords: Sustainability indicators; Economic valuation; Bayesian decision theory; Management decisions www.elsevier.com/locate/ecolecon 1. Introduction The concept of sustainability apparently has great appeal with regard to environmental and resource management, yet its applicability in prac- tical decision making is hampered by the ambigu- ity of its meaning, and the multiplicity of definitions that have been proposed (Pannell and Schilizzi, 1999). The idea of sustainability indica- tors seems to have grown out of a recognition that sustainability cannot be condensed to a single simple definition. Its multifaceted nature can be dealt with by monitoring a range of indicators of different types. Hence, in recent years terms such as ‘sustainability indicators’ and ‘environmental indicators’ have increasingly been used (e.g. Lefroy and Hobbs, 1992; Standing Committee on Agriculture and Resource Management, 1993; Mannipieri, 1994; Oades and Walters, 1994; * Corresponding author. Fax: +61-8-98928496. E-mail address: david.pannell@uwa.edu.au (D.J. Pannell) 0921-8009/00/$ - see front matter © 2000 Elsevier Science B.V. All rights reserved. PII:S0921-8009(99)00134-2