General Progress Index
puts a social face on Gross Domestic Product

The whole confrontation in Quebec city about the FTAA [Free Trade Area of the Americas.] is just one manifestation of the fact that people are concerned about well-being and quality of life. Gross Domestic Product (GDP) is the most quoted measure of the economic health. The GDP fails to consider the social, environmental and sustainable aspects of our culture. The GDP is simply the sum of personal, government and business expenditures on all goods and services produced during the year at market prices.

Destruction from crime waves, floods and earthquakes add to GDP, because money is spent for protection and to rebuild property, but these events aren't good for people. Quebec city's GDP for the Summit weekend, with all the police activity and everything, will be higher. Their economic activity index will go up for this weekend. Now does anybody think that's because quality of life has improved for this weekend? The answer is no.

The proposed Genuine Progress Index (GPI) is an index that combines indicators of economic, social and environmental well-being. It may include factors for human goodness, health, life expectancy, disposable income, leisure, volunteer activity, and unpaid women's work, sustainable development, greenhouse-gas emissions and natural capital.

Some progress on the use of a GPI has already been made by studies in Nova Scotia and Alberta. The latter indicated that while GDP has increased by 4.4% annually, well-being measured by their GPI declined by 0.5% annually. Income has remained relatively flat even though GDP has continued to increase.

These GPI methods are somewhat different and use 22 and 51 criteria including GDP to arrive at a composite index.

They count environmental degradation as a cost rather than a gain to the economy.

For water resources, the GPI includes a value for the quality of drinking water.

Indicators are powerful. What we count and measure reflects our values as a society and literally determines what makes it onto the policy agenda of governments. As we enter the new millennium, these indicators will tell us whether we are making progress, whether we are leaving the world a better place for our children, and what we need to change.

The GPI can thus send far more accurate signals to policy makers and provide far more comprehensive measures of progress and well-being than current measures based on market statistics alone.

Conventional statistics even count pollution as an economic gain by adding the cleanup costs to the GNP statistics.

By contrast the GPI explicitly values the manifold functions of a forest, including protection against soil erosion, watershed protection, climate regulation and carbon sequestration as well as benefits to recreation and tourism.

For example, GDP currently counts the value of our forests, soils and ocean resources only when timber, produce, and fish are harvested and sent to market. By that measure the more fish we sell and the more trees we cut down and sell, the more the GDP will grow.

The depletion of our natural resources is thus mistakenly counted as economic gain, even though our natural wealth may be seriously diminished and even will eventually suffer. A loss was experienced in the collapse of the cod fishery and the dramatic reduction of jobs it produced.

Citizens are no longer content to be governed without their involvement. A well-being measurement institution would provide a channel for involving both those with recommendations and those who want to know what is going on.

It is time that our legislators create a national Canadian GPI with citizens' consultations and advice from social scientists. Alberta and Nova Scotia have been working on their GPIs for four years and the United States has data on their General Progress Indicator since 1995.

The Well-Being Measurement Act (Bill C-268) introduced to the House of Commons by Joe Jordan MP, (Liberal) indicates the way ahead.

In developing the regulations, GPI definitions by our international trading partners should be considered so that we may be able to make world wide comparisons of well-being. The effects of trade on depressing our labour standards by imports from low wage countries, and from countries with inferior environmental standards should be clear. We have some worldwide environmental responsibility. E.g., our purchase of Amazon valley beef results in deforestation which has caused irreversible deterioration in soil quality as well as a reduction of the carbon sink of the rainforest.


By Harold P. Koehler