Oregon Genuine Progress Initiative Project Description and Proposal October 2013 I. Opportunity 1 The Oregon GPI Project Description: With growing populations and demand for services many states are facing increasingly difficult revenue shortfall challenges. That makes the need to accurately assess the efficacy of public investments more important than ever. One of the principle approaches the State of Oregon is employing to address this challenge is the shift to a longer-range budget framework and more comprehensive metrics to evaluate the true effects of policy and budget decisions. These steps are necessary to make the transition to funding programs based on the actual outcomes they produce rather than just the volume of services they deliver. Toward this end, coupled with the development of a Ten Year State Budget plan, the State of Oregon is developing a Genuine Progress Indicator (GPI) to aid state government and partners in making more effective policy and budget decisions. The GPI uses a triple bottom line approach quantifying fiscal capital as well as human and natural capital stocks. It is a lens that showcases internalized full costs and benefits of policy decisions. The State of Oregon believes this approach is timely and necessary because currently we are too often asking the wrong questions and measuring the wrong things. Measuring the size of the economy through the Gross Domestic Product (GDP) or Gross State Product (GSP) does provide some useful information but it is dangerously incomplete as an accurate measurement of economic or societal progress. Under GDP the money spent to keep a child in juvenile jail is measured as just as positive as the money spent to give a child a good education. The GDP registered the clean up costs of the BP Deepwater Horizon oil spill catastrophe as a net gain, completely ignoring the environmental and social impacts to Gulf Coast communities. The primary problem with using the GDP or GSP metric alone is that we are managing for constant economic growth, without measuring the true costs of that growth or assessing whether the type of growth we are generating is making us healthier, wealthier or stronger. Even the man who created the GDP, Simon Kuznets, warned in 1962 that, “Distinctions must be kept in mind between quantity and quality of growth, between costs and returns, and between the short and long run. Goals for more growth should specify more growth of what and for what.” The Commission on the Measurement of Economic Performance and Social Progress explains, “[T]hose attempting to guide the economy and our societies are like pilots trying to steer a course without a reliable compass. The decisions they (and we as individual citizens) make depend on what we measure, how good our measurements are and how well our measures are understood. We 2 are almost blind when the metrics on which action is based are ill-designed or when they are not well understood. For many purposes, we need better metrics.” The integration of the Oregon Ten Year Budget Plan with the Genuine Progress Indicator metrics provides a unique opportunity to deliver big results for Oregon and well beyond. A longer-range state budget plan allows a clearer assessment of the return on investments, and potential unintended consequences, resulting from state budget expenditures. For example the return on investment for delivering effective early learning services cannot be quantified in a two-year biennial budget cycle but it has at least a five-to-one ROI by years 5 and 6. While a longer-range state budget process is important, it covers only government expenditures. The Genuine Progress Indicator provides a vehicle for linking public and private investments and expenditures. It creates opportunities for engaging diverse partners in assessing and acting upon the true impacts of our economic decisions. The Oregon GPI initiative is poised to leverage a burgeoning movement of leaders from civil society, governments, and academia who are moving ahead developing and applying comprehensive economic indicators that go beyond GDP. The GPI is the leading candidate for this role in the United States. Currently, twenty states have some level of activity related to development of GPI initiatives. The challenge, though, is transitioning the GPI from a gauge of full-cost accounting to an analysis tool for policy makers and budget analysts. While some states have developed potential implementation frameworks, no state has yet fully applied GPI calculations to policy and state budget decisions. In order for the GPI (or other comprehensive metrics) to be effective tools for transformative change, they need to be brought out of the realm of academia and analysis and applied to policy and budgeting decisions. Oregon leadership is committed to taking the next step and making that happen. Oregon has a rich history of working toward more comprehensive metrics, with the most well known example being the Oregon Progress Board and benchmarks. Still, former Progress Board leadership explains that their efforts were unsustainable in large part because they were not applied to state budget decisions. Governor Kitzhaber is committed to utilizing the Oregon GPI metrics to shape the Ten Year State Budget and to develop upcoming biennial budgets. The Governor has charged State agencies to proactively assist in the development of Oregon’s GPI in order to recognize the interplay of seemingly disparate policy and bureaucratic initiatives. The outcome will be a greater appreciation of multiagency cooperation toward achieving shared goals and outcomes. 3 Oregon has potential to become a world-class center of excellence in the science and practice of GPI accounting and analysis due to an Administration willing to lead, the imperative of economic transformation, and the presence of skilled new economy practitioners. The Oregon GPI Development Phase Proposal: The State of Oregon is seeking $125,000 to support a six-month development and planning stage which will culminate in the public launch of the Oregon Genuine Progress Indicator. These funds will be used to deliver the following: Upgrade the current draft Oregon GPI calculations and report: Working with Portland State University the Oregon GPI initiative has developed a baseline GPI indictor report. However, a group of international GPI practitioners are making considerable progress in upgrading and improving the overall GPI metrics. The intent is to upgrade the Oregon GPI utilizing the state of the art data. Establish strategic partners: Oregon has a robust ecosystem of resources that can contribute to the development and implementation of more effective, policy-directing metrics. In fact, part of the challenge is that many related efforts are already moving. These include Oregon State Universities’ Rural Explorer, Portland Pulse, and some new activity related to the defunct Progress Board. In addition, Portland State University and several not-for-profit organizations from both the human services and environmental arenas are very interested in partnering in the GPI initiative. Developing collective collaborations with diverse partners should provide an opportunity to leverage previous investments and new thinking related to metrics. Develop sub-accounts: An important innovation in the Oregon Genuine Progress Initiative is the development of a series of policy-related sub-accounts focusing on key aspects of foundational wealth in Oregon’s state economy. Specific subaccounts in development include a framework for measuring educational wealth and a framework for measuring environmental assets and the value of ecosystem services in the state. A third sub-account focused on valuations of population health is in the early planning stages. By focusing on education, health, and environment, Oregon’s GPI sub-account structure will bring GPI measurement principles into concrete decisionmaking contexts and illuminate key issues of public concern, with potentially significant positive impacts on government performance in these areas. In this light, we are coordinating the technical development of the subaccounts in consultation with state policy leaders and agency staff, to insure validity, feasibility, and utility of the measures in the state government context. 4 Build website: A key contribution of the GPI initiative is providing a framework and context to discuss policy and budget decisions in a more comprehensive manner, making clear the actual impacts our economic and policy decisions have on our actual well-being. The State of Maryland’s GPI website (www.green.maryland.gov/mdgpi) has proven to be an effective tool in communicating the importance of comprehensive measurement and decision-making. The State of Oregon intends to design a similar website. Messaging assistance: We will need to secure some strategic assistance in developing effective communications and strategies to build support for the GPI. This will inform the content of the website, written materials, speeches, presentations and media products. BUDGET: Item Development of education and health care sub-accounts Develop quantification of natural capital stocks Messaging assistance Website and Social Media development GPI Director Amount $25,000 $50,000 $10,000 $16,000 $24,000 TOTAL $125,000 The Oregon GPI Team: Sean McGuire: Sean McGuire worked in Maryland’s Department of Natural Resources for 15 years before moving to Corvallis, OR. For the past seven years, Sean was the Director of Sustainability Policies, where he focused on statewide systemic policy solutions and initiatives; including, the green economy, ecological economics, sustainability indicators, and ecosystem services, valuation, and markets. In 2009, Sean initiated Maryland’s Genuine Progress Indicator (the first State government to do so) and continues to be an active national leader on the GPI and other alternative, more comprehensive gauges of prosperity than traditional economic metrics. Sean earned his Master of Public Policy degree in Environmental Policy with a Certificate in Ecological Economics from the University of Maryland, and a B.A. in History of Public Policy from U.C. Santa Barbara. In 2012, Sean co-authored “Measuring Prosperity: Maryland’s GPI” published in Solutions Journal. 5 Cylvia Hayes: Cylvia has 23 years experience in clean energy and sustainable economic development. She is founder and CEO of 3EStrategies, a clean economy consulting firm and a Senior Fellow of and on the Board of Directors of the American Leadership Forum Oregon. Cylvia is the current First Lady of Oregon. Cylvia has been a practitioner of comprehensive Triple Bottom Line metrics for nearly twenty years. She is a consultant to Demos on the Beyond GDP Initiative, particularly working with states developing GPI indicators. Cylvia served as member and co-chair of the Oregon Renewable Energy Working Group which developed the state Renewable Energy Standard, Renewable Fuels Standard and other clean energy policies. She has considerable training and expertise in collaborative leadership skills and is a fellow and Board Member of the American Leadership Forum. Hayes is author of: Green Jobs Growth Plan: An Eight Year Map to a Green Economy in Oregon. An Analysis of Clean Energy Workforce Needs and Programs in Oregon, which has been named a national best practice by the U.S. EPA. Roadmap to Increasing Sustainability Measures and Fiscal Viability within the Energy and Weatherization Programs: Serving Working Families in a 21st Century Economy. Building a 21st Century Sustainable Economy, published in Just Below the Surface: Perspectives on the Gulf Coast Oil Spill. In her role as First Lady of Oregon, Cylvia is leading the Prosperity Initiative, working to reduce poverty and increase prosperity for all Oregonians. Demos, New York Demos combines research, policy development and advocacy to influence public debate and catalyze change. Demos works with advocates and policymakers around the country in pursuit of three overarching goals: (1) a more equitable economy with opportunity for all; (2) a robust democracy in which all Americans are empowered to participate, and (3) a strong public sector that can provide for our common interests and shared needs. Through its Sustainable Progress project, Demos is helping catalyze GPI work at the state level nationwide. Demos’s main role will be to organize the planning and strategy discussions for a new set of GPI sub-accounts in the areas of human (education and health focus) and natural capital and bring together the relevant Administration personnel in each area. Demos will also manage an 6 advisory process to insure alignment between Administration needs and what the sub-accounts reflect and to manage consulting contracts for technical work on sub account models, data, and initial releases starting with education. Demos will also work with GPI Initiative partners on driving national media coverage. Ecotrust. Ecotrust’s mission is to inspire fresh thinking that creates economic opportunity, social equity, and environmental well-being. Our goal is to foster a natural model of development to create more resilient communities, economies, and ecosystems. We do this by demonstrating new ways of doing business that are both profitable and good for communities and the environment, establishing tangible examples of success and sharing them with the world. We operate on the belief that the more integrated businesses, communities, and nature become, the more resilient all three will be. Ecotrust’s 22 years of very rich applied thinking, experimentation, and innovations in the systems that provide us with food, water, energy, shelter, and other things we need to live well here in our home region have resulted in important lessons, progress on the ground, and business models and other solutions. Examples include the co-management arrangement for the Kitlope Heritage Conservancy in British Columbia, an environmental bank, a greenrestored historic building that serves as our headquarters and profit center, and the world’s first ecological forest fund. As our organization has grown, so too has the reach of many of our innovations. For example, our award-winning decision support tools for integrated marine spatial planning are now being used across the U.S. and spreading to other countries. Ecotrust GPI Core Project Staff: Kristen Sheeran, Ph.D. Dr. Sheeran is Vice President of Knowledge Systems at Ecotrust, and Executive Director and co-founder of Economics for Equity and Environment Network (E3), a national network of economists developing new arguments for environmental protection. At Ecotrust, Dr. Sheeran oversees a research team that includes economists, geographers, system scientists, and software developers. Dr. Sheeran’s own research is focused on climate change, natural resource management, environmental policy, and development. She is author of an award winning book, Saving Kyoto (with Graciela Chichilnisky, New Holland, 2009) and has many published scholarly articles in Environmental and Resource Economics, Climatic Change, Ecological Economics, and other journals. Dr. Sheeran has also written about economics and the environment for a popular audience, including op-eds in the Washington Post and Baltimore Sun, and she is a frequent contributor to the blogs, Real 7 Climate Economics, Grist, and Triple Crisis. Articles referencing Dr. Sheeran and the work of E3 Network and Ecotrust have appeared in publications such as the New York Times, The Washington Post, Time, Wall Street Journal, Scientific American, Nature, and Mother Jones. Prior to her role with Ecotrust, Dr. Sheeran was an associate professor of economics at St. Mary’s College of Maryland. She graduated summa cum laude with a B.A. in economics and political science from Drew University, and received her Ph.D. in economics from American University. Noah Enelow, Ph.D. Noah Enelow is an Economist for Ecotrust's Knowledge Systems team. His areas of focus include ecological economics, valuation of ecosystem services, social-ecological resilience, and regional impact analysis. Dr. Enelow’s work with Ecotrust has consisted of identifying and developing promising research agendas, measuring the community economic impact of investments, and assisting in communicating the vision and mission of the company through writing, public speaking, and social media. Noah’s graduate training is in development economics, with a focus on rural institutions including cooperatives, agrarian supply chains, and farm labor relations. He spent eleven months researching fair trade supply chains and their impacts on coffee farmers in Peru, on a Fulbright fellowship during the 2006-7 academic year. Noah also brings three years of experience teaching development economics, international trade, and economic history at the college level. He holds a B.A. in Literature from Yale University and a Ph.D in Economics from the University of Massachusetts at Amherst. Mike Mertens, Senior Scientist Mike Mertens has served as Director of Spatial Analysis for Ecotrust for the last 7 years. He has over 20 years of experience in developing and using Geographic Information Systems (GIS) and other applications specific to various aspects of spatial data analysis and geographic information science. Most of his work has revolved around seeking an understanding of how humans interact with their environment and he has led a variety of projects at multiple scales, from site level assessments to global analyses. Mike has developed and advised on how to use GIS and spatially explicit, on-line tools for stakeholder driven decision processes for a wide array of applications and has led a variety of technical workshops teaching nonprofit organizations from around the world how to use GIS for conservation purposes. Mike received his B.S. in Natural Resource Planning from Humboldt State University and is currently a Ph.D. candidate in Regional Science at Portland State University. 8