The Value Revolution in Economics Wealth, Indicators & Accounting

Redefining Wealth Quantitative: Money & Material Accumulation Qualitative: Well-being Regeneration

Industrialism River Economy: Linear Flows Divided Economy: –Production / Consumption –Formal / Informal –Workplace / Home Resource-intensive / people displacing/deskilling Concentrated production / energy forms

Industrialism: The Divided Economy Invisible Visible Use-value Exchange-value Consumption Production People Things Unpaid Paid Women Men Informal Formal Private Public

Invisible Economy (1) Total Productive System of an Industrial Society (layer cake with icing) GNP-Monetized ½ of Cake Top two layers Non-Monetized Productive ½ of Cake Lower two layers GNP Private Sector Rests on GNP Public Sector Rests on Social Cooperative Love Economy Rests on Natures Layer Private Sector PublicSector underground economy Love Economy Mother Nature All rights reserved.Copyright© 1982 Hazel Henderson 2

Invisible Economy (2)

Green / Postindustrial Lake Economy: --cycling / waste-as-food / biomimicry Integration of production & consumption --home / workplace People-intensive / Knowledge-culture-based --resource-displacing Decentralized / distributed …Make the Invisible Visible: What is counted counts

Historical Trends Dematerialization Detoxification (& decarbonization) Decentralization

Waste, Demand & Artificial Scarcity Permanent War Economy The Suburb Economy: Oil / Autos / Subdivisions

Indicators [If it is to be achieved, the new economic system] will result from our becoming better ecological accountants at the community level. If we must as a future necessity recycle essentially all materials and run on sunlight, then our future will depend on accounting as the most important and interesting discipline. Wes Jackson, Becoming Native to This Place

Indicators & real wealth Qualitative Wealth is far more complex: requires more quantification Qualitative Wealth is place-based or specific to circumstances Qualitative Wealth is needs-based, requiring examination of consumption.

A Dashboard for the Cockpit The Family of indicators: –Mass balance –Genuine Progress (GPI) –Ecological Footprint –5 capitals: personal, professional, spiritual, environmental and financial –Firm sustainability accounting –Industry-based accounts: food, building, forestry, etc. –Sustainable Community Indicators –Etc. etc.

The Evolution of Indicators Difficulties with many early indicator sets: –Wish-lists, divorced from solutions or relationships –Either too detailed or too aggregated /oversimplified Next Generation of Indicators: from librarians to plumbers

Indicators organized around a purpose highlight important trade-offs Varieties: those that… –cause an outcome (e.g. reduce air pollution) –document the outcome (e.g. amount of smog) –react to the outcome (air pollution legislation)

Genuine Wealth Assessment Life-cycle

Business-related Applications Internal accounts Natural Step, ISO 14000, Eco-footprint, Sustainability Reporting Government Regulation Alternative Industry Standards --LEED green bldg.; FSC wood ; B Corporation ; Innovative Business Models: -- B Corporation -- McDonough/Braungart Protocol --Local Food Plus

Business Applications-II Builds external costs into firm decisions Essential to Triple Bottom Line SBLS: can be translated into financial bottom line Crucial to Stakeholder relationships Made easier by network support: --market transformation

Business Applications-III Sustainability accounting : Global Reporting Initiative Triple Bottom Line accounting Social accountability reports Outcome-based reporting & mapping etc.

Genuine Wealth Applications All 5 capitals: financial, built, natural, social, human Balance sheet for each Full-cost sustainable income statement Progress indicators Genuine Progress Report

LCA and Product life-cycles: Environmental Lock-in over a Products Development Cycle