The following criteria have been suggested for selecting appropriate indicators (ABARE 2005)

1. Indicators should be related to identifiable policies or actions.
2. Indicators should be directly related to the impacts of agriculture on outcomes.
3.  Influences of factors other than agriculture on the indicator should be minimal.
4.  Indicators should be unambiguous, clearly indicating movement toward (or away) from desirable outcomes.
5.  Indicators should be able to be interpreted in context of appropriate scales and coverage.
6.  Indicators should not be difficult or costly to measure using data of appropriate quality, availability and reliability.
7.  Indicators should be sensitive to measuring change across appropriate time dimensions and should be able to monitor change across locations and industries.

8.     Indicators should be amenable to predicting outcomes.

The following features of the Signposts framework ensure that the criteria are addressed when selecting indicators:

• The selection of indicators is preceded by the identification of a contribution to sustainable development (a component) and the desired outcome for that component within the context of the component tree structure. In other words, a desired outcome is identified and then an indicator is sought to measure performance with respect to that desired outcome, not the other way round.
• Stocks ‘belonging’ to the industry are distinguished from stocks held beyond the industry. With respect to stocks belonging to the industry, the contribution of the industry can be measured in terms of the value of the stock. With respect to stocks held beyond the industry, the contribution of the industry is measured in terms of flows to and from the stock as a result of industry activities.
• Contributions and hence desired outcomes and the corresponding indicators are defined within the context of the overall structure which determines the appropriate scales and coverage. For example, a ‘health’ component appears twice in the Stage 2 component tree, once under human assets held by the industry and once under contributions to human systems extending beyond the industry. In the first case, the desired outcome would be stated in terms of the state of health of industry players related to their ability to carry out their role in the industry. The indicator would be some measure of the general health of this particular subset of the population irrespective of how they happened to have achieved it. Age might be used as a surrogate. For the second case, the desired outcome would be stated in terms of industry minimising its negative impacts on the health of individuals. An indicator might be in terms of agricultural accidents. Agricultural accidents would include, for example, drowning in farm dams irrespective of whether the victim was regarded as an industry player.

The ‘ideal’ indicator will rarely be available either in theory or practice, but the use of a framework defined by components and desired outcomes rather than by indicators reduces the risk of having inappropriate or misleading indicators.