Measuring Genuine Well-being: The Genuine Progress Indicator System of Sustainable Well-being Accounts for Alberta Atkinson Foundation Meeting Toronto October 1, 2001 Mark Anielski, Director, Sustainability Measurement, Pembina Institute Senior Fellow, Redefining Progress, Oakland CA

“The welfare of a nation can scarcely be inferred from a measurement of national income as defined by the GDP… goals for ‘more’ growth should specify of what and for what” Simon Küznets Pembina Institute

“The Gross National Product includes air pollution and advertising for cigarettes, and ambulance to clear our highways of carnage. It counts special locks for our doors, and jails for the people who break them. GNP includes the destruction of the redwoods and the death of Lake Superior. It grows with the production of napalm and missiles and nuclear warheads. And if GNP includes all this, there is much that it does not comprehend. It does not allow for the health of our families, the quality of their education, or the joy of their play. It is indifferent to the decency of our factories and the safety of our streets alike. It does not include the beauty of our poetry or the strength of our marriages, or the intelligence of our public debate or the integrity of our public officials. GNP measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile.” Robert F. Kennedy March 18, 1968

Redefining Economics Economics Oiko nomikus HouseholdManagement sustainable “living capital” stewardship Wealth (Capital) Weal th Well-BeingCondition of

U.S. GPI.. declining economic welfare $- $5,000 $10,000 $15,000 $20,000 $25,000 $30, US $ per capita, 1992 chained dollars Source: Data derived from spreadsheets from the U.S. Genuine Progress Indicator (GPI) for Redefining Progress, Oakland, CA. U.S. GDP per capita U.S. GPI per capita

U.S. …making money, growing poor

Canada….better economic well-being?

Societal and Personal Well-Being Economic Well-Being Genuine Progress Indicators Account Environmental Well-Being Genuine Progress Indicators (GPI) Sustainable Well-being Accounting System Spiritual Well-Being Quality of Life Values Key determinants of well-being Quality of life needs and priorities based on citizen input and dialogue CPRN’s Quality of Life Dialogue with Canadians 51 Indicators of Well-being

Social Accounts -Human Capital -Social Capital Economic Accounts - Economic Output - Produced Capital - Financial Capital Genuine Progress Indicator Account Environmental Accounts -Natural Capital - Ecosystem Services Full Cost & Benefit Accounts ($$) Condition of Well-Being Accounts (qualitative/quantitative) GPI Sustainable Income Statement GPI Balance Sheet (GPI) Sustainable Well-being Accounting System: GPI Accounts

Elements of Well-beingSocietalWell-BeingAccount EconomicWell-BeingAccount EnvironmentalWell-BeingAccount Economic Growth Economic Diversity Trade Disposable Income Personal Expenditures Taxes Debt Savings Rate Household Infrastructure Public Infrastructure Income Inequality Poverty Paid Work Time Unemployment Underemployment Parenting and Eldercare Leisure Time Volunteerism Commuting Time Family Breakdown Crime Democracy Intellectual Capital Life Expectancy Infant Mortality Premature Mortality Disease Obesity Suicide Substance Abuse Auto Crashes Gambling Ecological Footprint Ecosystem Health Carbon Budget Energy Efficiency Oil and Gas Reserve Life Agriculture Sustainability Timber Sustainability Wetlands-Peatlands Fish & Wildlife Air Quality Water Quality Toxic Waste Landfill Waste

Regrettable Societal Costs and Benefits ** Value of housework Value of parenting and eldercare Value of volunteer work Value of free time Cost of unemployment and underemployment Cost of auto crashes Cost of commuting Cost of crime Cost of family breakdown Cost of suicide Cost of gambling Cost of obesity and unhealthy lifestyles Cost of gambling “Cost” of income inequality (GDP adjusted by the Gini coefficient for income inequality) Societal Well-being Indicators Account Societal and Personal Well-Being Account Economic Well-being Account Genuine Progress Indicators Environmental Well-being Account Societal and Personal Well-being Indicators Poverty (% living below LICO and a Living Wage); Income distribution (Gini coefficient) Unemployment rate Underemployment rate Paid work (time use) Household work (time use) Parenting and eldercare (time use) Free (leisure) time Volunteer time Commuting time Life expectancy Premature mortality Infant mortality Obesity Suicide Youth drug use Auto crashes Divorce and family breakdown Crime Problem gambling Voter participation Educational attainment * Indicators are expressed in non-monetary units or normalized qualitative indices. ** All values are expressed in monetary units which can be used to generate the GPI Net Sustainable Income statement adjusting GDP for unaccounted benefits and costs.

Regrettable Environmental and Natural Capital Depreciation Costs** Cost of public and private environmental clean-up Cost of toxic waste management Cost of household/business waste management and pollution control costs Deprecation cost of nonrenewable resource use Cost of long-term environmental damage from fossil fuel use Cost of unsustainable forest resource use Cost of loss of farmland Cost of loss of wetlands and peatlands Cost of loss of wildlife and fisheries Cost of loss of ecosystem services Cost of air pollution Cost of water pollution Environmental Well-being Accounts SocietalWell-beingAccount Environmental Well-being Account Environmental Well-being Indicators* Conventional crude oil and natural gas reserve life Oilsands reserve life Energy use Agriculture sustainability (composite index) Timber sustainability index Forest fragmentation Parks and wilderness Fish and wildlife population health Wetlands Peatland Water quality Air quality Greenhouse gas emissions Carbon budget deficit Hazardous waste Landfill waste Ecological footprint ** All values are expressed in monetary units which can be used to generate the GPI Net Sustainable Income statement adjusting GDP for unaccounted benefits and costs. * Indicators are expressed in non-monetary Units or normalized qualitative indices. EconomicWell-beingAccount Genuine Progress Indicators

Full costs and benefits of economic output, produced, and financial capital Gross Domestic Product (GDP) Personal Consumption Expenditures (PCE) PCE adjusted for income inequality/distribution (“cost” of inequality) Non-defensive government expenditures Value of services of consumer durables Cost of consumer durables (regrettable depreciation) Value of public infrastructure services Net capital investment Cost of household and personal debt servicing (see also, Societal costs) Economic Well-being Accounts SocietalWell-beingAccount Economic- Well-being Account Economic Well-being Indicators Economic growth (real GDP per capita) Economic diversity (distribution of GDP by sector) Trade balance (exports less imports) Real disposable income Real weekly wages Personal consumption expenditures Transportation expenditures Taxes (real $ per capita) Household and personal debt per capita Savings rate Public infrastructure (value of services) Household infrastructure (value of services) EnvironmentalWell-beingAccount Genuine Progress Indicators * Indicators are expressed in non-monetary units or normalized qualitative indices. ** All values are expressed in monetary units which can be used to generate the GPI Net Sustainable Income statement adjusting GDP for unaccounted benefits and costs.

A Portrait of Alberta’s Condition of Well-being (GPI Balance Sheet) Diagnosis 1999 Environmental Well-being Conditions Societal and Personal Health Conditions Economic Well-being Conditions

Alberta’s Condition of Well-being Diagnosis for 1999: The GPI Sustainability Circle Index

Historical Portraits of Well-being The best The worst

Alberta Economic Growth vs. Genuine Progress Index Index (where 100=best) GDP Growth Index Best year: 1999 Worst year: 1961 GPI Well-Being Index Best year: 1961 Worst year: 1998 Source: Alberta GPI Accounts

The GPI Sustainable Income statement GDP – personal consumption expenditures adjust for income inequality + value of unpaid work (housework, parenting, volunteerism) + value of the household and public infrastructure - cost of household debt servicing - value of the loss of human and social capital: - loss of leisure time - cost of underemployment and unemployment - cost of divorce, suicide, auto crashes, divorce, gambling -value of natural capital depreciation: - nonrenewable natural capital (minerals, oil, gas,coal) - unsustainable renewable natural capital (forests, agriculture) -cost of loss of ecosystem services: - (carbon sequestration, air pollution,water pollution, forests, wetlands, and peatlands) = Net Sustainable Income (output)

Alberta GDP versus Sustainable Economic Welfare Pembina Institute Total environmental costs and natural capital depreciation is estimated at $26.4 billion (1998$) or 24.0% of Alberta’s GDP. The value of unpaid work is estimated at $38.8 billion (1998$) or 35.4% of Alberta’s GDP in The social and human capital costs are estimated at $23.4 billion (1998$) or 21.3% of Alberta’s GDP.

Pictures at the Exhibition: The Story of Alberta’s Well-being and Sustainability

Condition of Well-being Report

GDP grows but to whose benefit? - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40, GDP Per Capita (1998$) - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 Personal Disposable Income Per Capita (1998$) Economic growth Disposable income Despite increasing economic growth since 1981, average real disposable incomes have stagnated since peaking in In a 1999 national survey, 23% of Albertans (highest in Canada) said they would not have enough savings to sustain themselves beyond one month’s salary. ( Source: Canadian Council on Social Development )

Economic well-being at risk? Pembina Institute

Another day older…. Pembina Institute - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40, GDP Per Capita (1998$) - 1, , , , , , , Premature Mortality Economic growth Premature mortality Premature mortality from all causes has been declining steadily since 1980; the average life expectancy of Albertans (men and women) has increased more than 7 years from 72.0 years in 1961 to 79.3 years in 1999.

…. and deeper in debt - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40, GDP Per Capita (1998$) (5,000) 5,000 15,000 25,000 35,000 45,000 55,000 Debt per Capita (1998$) Economic growth Household debt Household debt servicing costs now exceed real disposable income for the first time in history. The average household debt per Albertan has almost doubled in 40 years from 57% of real disposable income in 1961 to 109% in 1999 Pembina Institute While real per capita household debt grew at a rate of 11.3% per annum, real disposable income grew by only 2.1% per annum ( ).

More GDP…more poverty? - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40, GDP Per Capita (1998$) Poverty (% of all persons living below the low income cut-off) Economic Growth Poverty Pembina Institute Between 1961 and 1999, the level of poverty (LICO) increased 37.1%; Alberta had Canada’s third lowest poverty rate We estimated roughly 20% of Albertans used the provinces 74 food banks; 17.2% of households are estimated to live below a living wage ($24,332 per annum for family of four).

GROWING GAP: Gap Between Alberta’s Rich (Top Income Quintile) and the Poor (Lowest Income Quintile) Comparing Incomes on a Before Government Transfers, After Taxes, and Total Income Basis, 1981 to 1998

Hourly Income Comparisons, Alberta, 1998 The top 20% income group of Albertans earned 14.5 times more than the lowest 20% almost double the ratio of 8.2 in The eight wealthiest Albertans earned an estimated 5,645 times more per hour than an Albertan working full-time at the minimum wage. Jubilee?

Less time with the kids but more GDP - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40, GDP Per Capita (1998$) Parenting and Eldercare (hours per person 15 years and over per year) Economic growth Parenting and eldercare The value of unpaid work in Alberta in 1999 is estimated at $38.8 billion (1998$) or 35.4% of Alberta’s GDP. Nearly 70% of full-time employed, married mothers feel rushed and stressed on a daily basis

More divorces add to GDP growth - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40, GDP Per Capita (1998$) -5% 5% 15% 25% 35% 45% 55% Family Breakdown (% of marriages that end in divorce) Economic growth Family breakdown Source: Statistics Canada, CANSIM special retrieval and Alberta Economic Accounts 1999 The estimated cost of divorce and family breakdown in Alberta in 1999 is estimated to contribute $148 million(1998$) to Alberta’s economic growth. The rate of divorce rose 4.6% per annum compared to real GDP growth of 4.4% per year, 1961 to 1999

Rising suicide adds to the GDP Suicide rate per 100,000 GDP at market prices, expenditure based (1998$ per capita) Suicide rate for both sexes per 100,000 population Pembina Institute Suicide is the leading cause of death amongst Calgary males aged years.

Health of democracy? - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40, GDP Per Capita (1998$) Democracy (voter participation %) Economic growth Voter participation Pembina Institute

Growing Ecological Deficits… Pembina Institute Alberta has the fourth largest ecological footprint in the world after the United Arab Emirates, Singapore and the United States of America. - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40, GDP Per Capita (1998$) Ecological Footprint (hectares per capita) Economic growth Ecological footprint

Alberta’s Footprint, fourth largest in the world…. 5 times the global ecological carrying capacity Pembina Institute Global Biological Capacity

Depleting oil and gas capital…more GDP Crude Oil and Natural Gas Reserve Life (years remaining) GDP at market prices, expenditure based (1998$ per capita) Crude Oil and Natural Gas Reserve Life Average There are less than 10 years of natural gas reserves remaining, based on current production and stocks. However, Alberta has more oil in the oil sands than Saudi Arabia’s official reserves, more than 300 years of production. The estimated cost of depreciation of nonrenewable resources is estimated at $10.6 billion in 1999 or 9.7% of GDP.

Depleting timber capital…more GDP Timber Sustainability Index (ratio of growth to depletions) GDP at market prices, expenditure based (1998$ per capita) Timber Sustainability Index, the ratio of annual increment (growth) divided by total harvest, energy and agriculture depletions More than 90% of Alberta’s forests are fragmented

Growing Carbon budget deficit…more GDP - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40, GDP Per Capita (1998$) Carbon Budget Economic growth Carbon budget deficit Pembina Institute The estimated cost of Alberta’s carbon emissions to global warming in 1999 are estimated at $4.1 billion (1998$) or 3.7% of Alberta’s GDP. Carbon budget deficit Carbon budget surplus

Water quality improving but is it sustainable? - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40, GDP Per Capita (1998$) Water Quality Index Economic growth Water quality While surface (river) water quality has improved very little is known about the long-term sustainability of Alberta’s groundwater aquifers.

Next Steps…. GPI Sustainability Accounting and Reporting National GPIProvincial/State GPILocal GPICorporate GPI Global Reporting Initiative (GRI) Quality of Life Indicators GPI Accounts for Ontario, Quebec, B.C., Alberta Maritimes National GPI Accounts: Canada, U.S.

Alberta GPI Balance Sheet ( ) (physical and monetary stock accounts) Pembina Institute For additional information: