The world needs new economic indicators to drive policies that spur equitable growth in wellbeing while reducing our use of natural resources. The global Beyond GDP movement was formed to vet and demonstrate such indicators, and CSE plays an important role in this by advancing the science and practice of the Genuine Progress Indicator (GPI). Gross Domestic Product (GDP) was never designed as an aggregate measure of economic wellbeing, but it has served that role since the end of World War II. GDP sends the wrong economic signals to decision makers – in particular, it grows rapidly when wealth is concentrated in a very few hands, when natural resources are squandered, and when society becomes less safe, overcrowded, polluted, and prone to disasters.
The GPI was created as an alternative measure that, like GDP, is monetized and thus able to be used in forecasting, policy analysis, benefit-cost analysis and the like. The GPI is designed to incorporate many of the costs and benefits overlooked by GDP but which have a significant bearing on the economic wellbeing of nations, states, and cities. In terms of benefits, these include the benefits households receive from the consumption of goods and services as well as the goods and services governments and non-profits supply. It also includes the benefits we receive from quality schools, educated communities, modernized infrastructure, protected natural areas, and social capital – goodwill in our communities, neighbors helping neighbors, and volunteering.
With respect to costs, the GPI incorporates the environmental costs of pollution and climate change as well as the social costs of inequality, homelessness, debt and family breakdown. While the GPI cannot and should not be expected to account for all economic costs and benefits of economic activity, it goes far beyond GDP, has been vetted for over 20 years, and is now one of the leading Beyond GDP indicators being considered for more widespread adoption. CSE’s Genuine Progress program consists of three main lines of work
GPI accounts for nations, states, and cities
Publishing replicable GPI accounts is a complex process involving the compilation or modeling of over 250 individual economic, social and environmental metrics that have bearing on quality of life. CSE is one of the few organizations in the US that performs this service. We are also partnering with other non-profits and sustainability commissions and councils to provide training in order to build capacity for GPI accounting in cities, counties, and states nationwide.
In association with Redefining Progress, CSE published the existing set of US accounts in 2007. CSE will be updating the US accounts with partners in late 2015 to demonstrate a new “GPI 2.0” methodology. CSE also served in an advisory capacity to help the State of Maryland create the first official state-level GPI accounts in 2010 and will be working with the state’s Department of Natural Resources to update those accounts with new methods in 2015 as well.
CSE is also working to disaggregate the GPI further so counties and cities can use it as a tool for prioritizing budgets and shaping sustainable land use and economic development strategies. Our first city-level GPI accounts were published in late 2014 for the City of Baltimore, Maryland and we will continue to update those accounts as needed. CSE is now exploring opportunities in other states and cities to replicate this work.
|PROJECT FILES AND LINKS|
|REPORT||Baltimore GPI 2012-2013|
|PRESS RELEASE||Baltimore’s Genuine Progress Indicator Shows Healthy Economic Growth in 2013|
|BLOG||Baltimore’s Genuine Progress Indicator Shows Healthy Economic Growth|
|OPINION EDITORIAL||Newark Star-Ledger, “How Sandy Reveals the Twisted Logic of GDP,” by John Talberth and Daphne Wysham|
|AGENCY WEBSITE||Maryland Genuine Progress Indicator|
|BOOK CHAPTER||State of the World 2008, “A new bottom line for progress,” by John Talberth|
|REPORT||GPI Accounts – United States 2006 Update|
|PARTNER WEBSITE||Genuine Progress.net|
GPI policy analysis
As an aggregate measure of economic well being, the GPI can be used to evaluate the beneficial or adverse impacts of public policies. In Maryland, CSE has used the GPI to quantify the genuine progress benefits of policy initiatives including Baltimore’s Climate Action Plan, Baltimore’s Stormwater Management Plan, Maryland’s 2014 Minimum Wage Act and a suite of policies designed to reduce inequality. The analysis of the Minimum Wage Act took the form of a “GPI note,” an innovative approach to analyzing legislative proposals that provides a far better sense of economic impacts than the more conventional fiscal impact notes prepared by Maryland’s Department of Legislative Services and similar agencies in other states.
CSE has also used the US GPI accounts to model the impacts of tax cuts, trade openness, and urbanization. As CSE continues to build out its Genuine Progress program, we will apply the GPI to other policy initiatives of interest to our agency and non-profit partners.
GPI 2.0 – an upgrade to the science of GPI accounting
The GPI is one of the most ubiquitous sustainability metrics and has been vetted in the economics literature for over twenty years. Despite this, GPI accounting methods have changed little since the late1980s, and consensus on new approaches that rectify theoretical and methodological shortcomings noted in the literature is just now beginning to emerge.
In 2014, CSE organized an international online discussion group of practitioners to propose and debate advances to the basic GPI architecture, methods, and data sources under the rubric of “GPI 2.0.” We are also participating in processes and forums hosted by other partners such as the Gund Institute at the University of Vermont and Demos, a New York-based nonprofit.
Part of the GPI 2.0 methodology is reflected in our Baltimore GPI accounts, and CSE is now working with partners to extend this work to the State of Maryland and US in a peer-reviewed paper planned for 2015.