The Vermont
Genuine Progress
Indicator
Eric Zencey
Fellow and Coordinator, Vermont Genuine
Progress Indicator Project
Laws of Thermodynamics
You can’t make something from nothing
and you can’t make nothing from
something.
Laws of Thermodynamics
2. You can’t recycle energy.
The Entropy Law and the Economic
Process, Harvard University Press,
1971
13
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
Implication:
Measure what matters:
Sustainable delivered
wellbeing
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
GDP Fails horribly
• AND the emphasis on maximizing matter—
and-energy throughput means it isn’t
sustainable AT ALL….
A sustainable system or entity does not
undercut its own preconditions for
existence.
Premise:
Humans in society enjoy the benefit of
services of four stocks of capital:
built
natural
social
cultural.
• No society can be sustainable if its operation
depends on the draw-down of built, natural,
social, or cultural capital.
From which it follows
Sustainable wellbeing requires the
preservation of these four forms of capital
GPI =
Economic
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Personal Consumption
Income Inequality
Adj. Personal Consumption
Services of Consumer
Durables
• Cost of Consumer Durables
• Cost of Underemployment
• Net Capital Investment
Environmental
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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
+
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Social
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
Per Capita GSP v. GPI
Per Capita GSP v. GPI
GPI Economic
GPI
GPI Social
GPI Environmental
Per Capita GSP
less Government Expenditures
less Business Investment
Personal
Consumption
Personal Consumption
adjusted for Income Distribution
Less the Cost of Consumer Durables
Plus the Services of Consumer Durables
Less the Cost of Underemployment
Plus Net Capital Investment
Per Capita GSP vs.
GPI Economic Factors
Less the Cost of Water,
Air, and Noise Pollution
Less the Cost of Climate Change,
Ozone Depletion, and Nonrenewable
Resource Depletion
Less the Net Change of Wetlands,
Forestlands, and Farmlands
Per Capita GSP vs.
GPI Economic +
Environmental Factors
Less the Cost of Family Changes,
Crime, and Personal Pollution Abatement
Less the Cost Commuting
and Motor Vehicle Accidents
Less the Cost of Lost Leisure Time
Plus the Value of Household Work
and Volunteer Work
Plus the Value of Higher Education
and Services of Highways & Streets
Per Capita GSP vs.
GPI Economic +
Environmental +
Social Factors
Per Capita GSP vs. GPI
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.
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.
Further Information
www.vtgpi.org
• Current and previous reports of VT GPI
• Technical report on methodology
• Other GPI related news
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/
The Vermont
Genuine Progress
Indicator