Social damage costs Alberta
40% of its GDP, study finds

By Tom Spears

The costs of social and environmental damage in Alberta add up to 40 percent of the province's gross domestic product, but traditional economics leaves these and other useful figures out of a country's economic picture, a new analysis says.

Traditional economic studies look at goods and services, but it's more useful to add in non-traditional measurements such as the state of natural resources, pollution, and people's quality of life, says economist Mark Anielski.

"What's wrong with that is it doesn't really talk about our quality of living or the state of the environment, or the stock of natural resources," Mr. Anielski says. He's originally a forest economist who now directs a "green Economics" program for the Pembina Institute for Appropriate Development.

He has analyzed Alberta's economy using different economic indicators in a report commissioned by the federal government due to be released in a few days.

For instance, he says, traditional GDP figures leaves out the depletion of oil and gas reserves. These costs, and the cost of pollution from oil, coal and gas are worth $26.6 billion a year, or 24 percent of the province's GDP.

"This is the value of what we're depleting from the stock of natural resources," he said. "If we're drawing down an inventory, ... this is simply good accounting to value you inventory."

Then there's the quality of people's lives. In Alberta, he writes, "the total social costs associated with underemployment, auto crashes, crime, divorce, suicide and problem gambling totaled $15.4 billion in 1999, or 14 percent of GDP.

Mr. Anielski spoke yesterday at a one-day conference in Ottawa studying ways of re-writing economic indicators to reflect a more accurate picture than we get from a bare-bones list of how much money's spent.

"Traditional GDP measures cash flow very well," he said, "but it doesn't resonate with Canadians who experience quality-of-life issues every day."

Mr. Anielski's team found:

* The cost of policing and running prisons is $1.8 billion in Alberta. "We identify those as regrettable costs'," he said. In traditional economics "those get counted as economic growth" because people are earning and spending money.

* Auto crashes cost the province $3 billion a year in hospital costs, time lost from work and car repairs. "That shows up as growth in Alberta's $100-billion GDP numbers."

The Alberta example is his only case study, but Ontario's economic picture has the same flaws, said Mr. Anielski.

"We might expect to see similar results in Ontario or Quebec." While the East doesn't have major oil and gas industries, "we're dealing with the Great Lakes, water, forest, air pollution" and social costs such as poverty or crime.

by Tom Spears

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