Archive for the ‘GPI’ Tag

Green Economics: TEEB, GNH, GPI, and GDP

It is fortuitous if not synchronicitous that as Canada’s finance minister plans the next federal budget that this article The Guardian posted on its website October 2010 should resurface. It reports on the UN-sponsored research of London-based economist Pavan Sukhdev, who “was ordered to look at the value of nature in the same way British economist Nicholas Stern’s famous 2006 report looked at the financial implications of climate change.” Unsurprisingly, Sukhdev concluded that “ecosystem goods and services” — bees’ pollination of plants, trees’ filtration of the atmosphere and production of oxygen, for example — need to be taken into account at the level of economic policy decision making. Sukhdev’s research has led consequently to The Economics of Ecosystems and Biodiversity (TEEB) initiative, which seeks “to sharpen awareness of the value of biodiversity and ecosystem services and facilitate the development of effective policy, as well as engaged business and citizen responses.” The push to green political economy does not begin with TEEB, however. Indeed, there has been movement afoot to replace or at least complement GDP as the sole indicator of economic well-being for some time, with what has come to be called the Genuine Progress Indicator (GPI) that takes into account not only the amount of money that changes hands but free time, air and water quality, and access to education, culture, and healthcare.

I first heard about the GPI watching The Other Final, a film about a soccer match between the world’s two lowest-ranked teams, Monserrat and Bhutan. In the course of this documentary, H. E. Lyonpo Jigme Y. Thinley, Bhutan’s Minister of Foreign Affairs, explains in an eminently educated English his country’s political philosophy, one focussed on “Gross National Happiness” (GNH), a focus turning on the insight, as he explains, that, since the ultimate goal of every human is happiness, the happiness of the nation’s citizens is therefore the responsibility of government. At these words, I clapped my hands and yelled out, “We’re moving to BHUTAN!”, never had I heard anything so plainly sane. As naive, belatedly Utilitarian, or even silly as the expression “Gross National Happiness” must sound to Western ears, it is inspired by very real concerns. In 1972, as Bhutan opened itself to modernization, its Buddhist monarch, Jigme Singye Wangchuck, was eager to avoid the social and environmental damage too often occasioned by “development” and so sought an alternative to GDP as the sole instrument of economic performance, a tool insensitive to precisely the woes development brings. Instead, throughout the 1970s and 1980s, Bhutan developed a GNH index to measure time use, living standards, good governance, psychological well-being, community vitality, culture, health, education, and ecology, alongside the developed world’s more mainstream economic markers. The Bhutanese search for a more balanced economics was not without influence or collaborators. In 1994 the economic think tank Redefining Progress was established and the GPI was first articulated there by Clifford Cobb, Ted Halstead, and Jonathan Rowe.

The flipside to the work of institutions like TEEB, Redefining Progress, or Canada’s Pembina Institute is the continuing perversely exclusive reliance on Gross National Product (GNP) or Gross Domestic Product (GDP) figures by, among others, the Canadian government. This reliance is mystifying and frustrating in equal measure given the consistent criticism of just such a reliance by the architects of GDP themselves. Simon Kuznets, the inventor of the concept, famously declared to the American Congress that “the welfare of a nation can scarcely be inferred from a measurement of national income as defined by the GDP…goals for ‘more’ growth should specify of what and for what.” The progressive economist Mark Anielski explains the problem vividly:

The GDP is simply a gross tally of the monetary transactions in the nation. The more people spend, the more the GDP goes up. If the result is greater than the year before then we say the economy has “grown” and that we are better off. The word “growth,” which pervades economic reportage and debate, means simply this: Americans and Canadians spent more money than they did the year before. The ideal economic or GDP hero is a chain-smoking terminal cancer patient going through an expensive divorce whose car is totalled in a 20-car pileup, while munching on fast-take-out-food and chatting on a cell phone. All add to GDP growth. The GDP villain is non-smoking, eats home-cooked wholesome meals and cycles to work.

Perhaps Robert Kennedy summed it up best:  “(GNP/GDP) measures everything except that which makes life worthwhile.”

Despite such consistent, long-term criticism of the GDP fixation and even debate in the Canadian Parliament concerning the GPI, I’m pessimistic Canada’s ministers of finance, federal and provincial, will change their thinking. Of all the national political parties, only the Green Party has the implementation of the GPI as part of its official platform. But a deeper problematic encompasses all these instruments. The GPI and TEEB were developed to measure increasingly — sometimes acutely — scarce resources to enable us to manage them better;  however, their scarcity is the result of precisely our perceiving nature as merely a resource to be exploited and thereby needing to be managed. A truly green economics would need to be a branch of ecology rather than a field of the social sciences. And that would be a revolution in thinking even more utopian than one that could imagine implementing policies conducive to Gross National Happiness.