The Vermont Genuine Progress Indicator

1. The Vermont Genuine Progress Indicator Eric Zencey Fellow and Coordinator, Vermont Genuine Progress Indicator Project

11. Laws of Thermodynamics You can’t make something from nothing and you can’t make nothing from something.

12. Laws of Thermodynamics 2. You can’t recycle energy.

13. The Entropy Law and the Economic Process, Harvard University Press, 1971 13

14. Implication “Seen solely from a thermodynamic perspective, an economy consists of nothing more than a set of institutions that transform valuable, low-entropy inputs into valueless waste.” 14

15. Implication: Measure what matters: Sustainable delivered wellbeing

16. GDP Fails horribly • Assumes “more stuff” = happiness & wellbeing • Assumes growth in transactions = more stuff • Neglects elements of wellbeing that aren’t bought or sold (health, social engagement, strong families & neighborhoods, good governance, etc.) • Miscounts costs as benefits (like storm damage) • Doesn’t count unpaid work • Doesn’t count ecosystem services

17. GDP Fails horribly • AND the emphasis on maximizing matter—and-energy throughput means it isn’t sustainable AT ALL….

18. A sustainable system or entity does not undercut its own preconditions for existence.

19. Premise: Humans in society enjoy the benefit of services of four stocks of capital: built natural social cultural.

20. No society can be sustainable if its operation depends on the draw-down of built, natural, social, or cultural capital.

21. From which it follows Sustainable wellbeing requires the preservation of these four forms of capital

22. Economic + Environmental + Social GPI = • Personal Consumption • Income Inequality • Adj. Personal Consumption • Services of Consumer Durables • Cost of Consumer Durables • Cost of Underemployment • Net Capital Investment • Cost of Water Pollution • Cost of Air Pollution • Cost of Noise Pollution • Cost of Net Wetland Change • Cost of Net Farmland Change • Cost of Net Forest Cover Change • Cost of Long-term Environmental Damage • Cost of Ozone Depletion • Cost of Non-Renewable Energy Resource Depletion • Value of Household Work • Cost of Family Changes • Cost of Crime • Cost of Personal Pollution Abatement • Value of Volunteer Work • Cost of Lost Leisure Time • Value of Higher Education • Services of Highways and Streets • Cost of Commuting • Cost of Motor Vehicle Crashes

23. Per Capita GSP v. GPI

24. Per Capita GSP v. GPI GPI Economic GPI GPI Social GPI Environmental

25. Per Capita GSP less Government Expenditures less Business Investment Personal Consumption

26. Personal Consumption adjusted for Income Distribution

27. Less the Cost of Consumer Durables

28. Plus the Services of Consumer Durables

29. Less the Cost of Underemployment

30. Plus Net Capital Investment

31. Per Capita GSP vs. GPI Economic Factors

32. Less the Cost of Water, Air, and Noise Pollution

33. Less the Cost of Climate Change, Ozone Depletion, and Nonrenewable Resource Depletion

34. Less the Net Change of Wetlands, Forestlands, and Farmlands

35. Per Capita GSP vs. GPI Economic + Environmental Factors

36. Less the Cost of Family Changes, Crime, and Personal Pollution Abatement

37. Less the Cost Commuting and Motor Vehicle Accidents

38. Less the Cost of Lost Leisure Time

39. Plus the Value of Household Work and Volunteer Work

40. Plus the Value of Higher Education and Services of Highways & Streets

41. Per Capita GSP vs. GPI Economic + Environmental + Social Factors

42. Per Capita GSP vs. GPI

43. Vermont Act 113 An act relating to the genuine progress indicator (a) Purpose. The purpose of the genuine progress indicator (“GPI”) is to measure the state of Vermont’s economic, environmental, and societal well-being as a supplement to the measurement derived from the gross state product and other existing statistical measurements. (b) Definition. The GPI is an estimate of the net contributions of economic activity to the well-being and long-term prosperity of our state’s citizens, calculated through adjustments to gross state product that account for positive and negative economic, environmental, and social attributes of economic development. (c) Intent. It is the intent of the general assembly that once established and tested, the GPI will assist state government in decision-making by providing an additional basis for budgetary decisions, including outcomes-based budgeting; by measuring progress in the application of policy and programs; and by serving as a tool to identify public policy priorities, including other measures such as human rights.

44. Further Developments • GPI forms the structure of the Comprehensive Economic Development strategy being developed by the state (which will be announced shortly). • The budgeting committees of the state legislature have begun integrating GPI measures into their work, through development of GPI related performance goals and through exploring the adoption of “GPI notes” on bills that are introduced • The state auditor has announced his intention to start auditing state programs against criteria developed from GPI • A prominent socially responsible business has begun talks with the Gund about integrating GPI into their criteria for performance evaluation.

45. Further Information www.vtgpi.org • Current and previous reports of VT GPI • Technical report on methodology • Other GPI related news

46. Further Information Also, consider attending “Happiness and Wellbeing: Building a National Movement” the fifth North American Conference on Gross National Happiness, in Burlington, VT, May 29 and 30. For details see http://www.gnh2014.com/

47. The Vermont Genuine Progress Indicator