Genuine progress indicator

Genuine progress indicator (GPI) is a metric that has been suggested to replace, or supplement, gross domestic product (GDP).

While quantifying costs and benefits of these environmental and social externalities is a difficult task, "Earthster-type databases could bring more precision and currency to GPI's metrics.

[2] GPI is an attempt to measure whether the environmental impact and social costs of economic production and consumption in a country are negative or positive factors in overall health and well-being.

GPI advocates claim that it can more reliably measure economic progress, as it distinguishes between the overall "shift in the 'value basis' of a product, adding its ecological impacts into the equation".[2]: Ch.

assess progress in an economy's welfare by comparing its gross domestic product over time — that is, by adding up the annual dollar value of all goods and services produced within a country over successive years.

have argued that an adequate measure must also take into account ecological yield and the ability of nature to provide services, and that these things are part of a more inclusive ideal of progress, which transcends the traditional focus on raw industrial production.

The need for a GPI to supplement indicators such as GDP was highlighted by analyses of uneconomic growth in the 1980s, notably that of Marilyn Waring, who studied biases in the UN System of National Accounts.

[citation needed] By the early 1990s, there was a consensus in human development theory and ecological economics that growth in money supply was actually reflective of a loss of well-being: that shortfalls in essential natural and social services were being paid for in cash and that this was expanding the economy but degrading life.

However, GDP tends to be reported as synonymous with economic progress by journalists and politicians, and the GPI seeks to correct this shorthand by providing a more encompassing measure.

[8] According to Lawn's model, the "costs" of economic activity include the following potential harmful effects:[9] Analysis by Robert Costanza also around 1995 of nature's services and their value showed that a great deal of degradation of nature's ability to clear waste, prevent erosion, pollinate crops, etc., was being done in the name of monetary profit opportunity: this was adding to GDP but causing a great deal of long term risk in the form of mudslides, reduced yields, lost species, water pollution, etc.

Such effects have been very marked in areas that suffered serious deforestation, notably Haiti, Indonesia, and some coastal mangrove regions of India and South America.

The best-known[dubious – discuss] attempts to apply the concepts of GPI to legislative decisions are probably the GPI Atlantic,[10] an index, not an indicator, invented by Ronald Colman for Atlantic Canada, who explicitly avoids aggregating the results obtained through research to a single number, alleging that it keeps decisions makers in the dark; the Alberta GPI[11] created by ecological economist Mark Anielski to measure the long-term economic, social and environmental sustainability of the province of Alberta and the "environmental and sustainable development indicators" used by the Government of Canada to measure its own progress to achieving well-being goals.

In the European Union (EU) the Metropole efforts and the London Health Observatory methods are equivalents focused mostly on urban lifestyle.

[12] For example, the GPI template uses the phrase "Carbon Dioxide Emissions Damage" whereas the state of Maryland uses "Cost of Climate Change"[13] because it also accounts for other greenhouse gases (GHG) such as methane and nitrous oxide.

As of 2014, Vermont, Maryland, Washington and Hawai'i have passed state government initiatives to consider GPI[15] in budgeting decisions, with a focus on long-term cost and benefits.

The metric would help determine the sustainability of growth and economic progress against social and environmental factors typically left out of national indicators.

The GPI was chosen as a comprehensive measure of sustainability as it has a well-accepted scientific methodology that can be adopted by other states and compared over time.

In addition, GPI has been calculated for Austria, Canada, Chile, France, Finland, Italy, the Netherlands, Scotland, and the rest of the UK.

If measured by GPI, sustainable economic welfare has actually decreased due to environmental hazards that have accumulated in the environment.

[23] Finnish economists Mika Maliranta and Niku Määttänen write that the problem of alternative development indexes is their attempt to combine things that are incommensurable.