Transcript Genuine Progress Indicator

Prototype
Genuine Progress Indicator
for New Zealand: 1970-2006
Presentation to Sustainable Otautahi Christstchurch
University of Canterbury
12 March 2012
Professor Murray Patterson
School of People, Environment and Planning
Massey University
NZ GPI Research Team
• Research Leader: Prof Murray Patterson
• Research Team (Socio-Economic Components):
– Dr Garry McDonald,
– Jenna Zhang
– Derrlyea Hardy
– Nicky Smith
• Research Team (Environmental Components):
– Vicky Forgie, Robbie Andrew
– Dr Nancy Golubiewski,
– Bruce Taylor, Nick Potter, Hillary Phipps
• External Audit Panel:
– Prof Eric Neumayer (London School of Economics)
– Prof Martin O’Connor (University of Versailles)
– Dr Philip Lawn (Flinders University)
Roadmap
• Why a Genuine Progress Indicator?
• History of the Genuine Progress Indicator
(World-wide, NZ)
• Results: New Zealand GPI
Rationale
• Primary Motivation = to develop a better measure of
societal progress than the GDP
• GDP was never intended to be a measure of the nation’s
welfare
“the welfare of a nation can scarcely be inferred from a
GDP” (Kuznet 1934)
• GDP measures ‘the amount of production of goods and
services in the economy’
Where the GDP Gets it Wrong!
•Boundary Problem (doesn’t include external costs and
benefits)
– household work (benefit)
– ecosystem services (benefit)
– soil erosion (cost)
•GDP Incorrectly includes some “costs” as benefits
– car accident
– pollution event
•Equity Problem
– $ income poor person > $ income rich person
•Failure to take account changes capital stock
– particularly natural capital (eg, depletion of Maui gas field)
Genuine Progress Indicator:
Quick Overview
1. Developed from Daly and Cobb (1990)
2. Measures societal progress across economic, social and
environmental spheres
3. Based on welfare theory from neoclassical (conventional)
economics
4. It is one of many measures of “societal progress”
‒
‒
But, the most widely used, most widely accepted.
Refer to Patterson (2002) for coverage of other indicators.
5. Standard international template, allows comparison between
nations – we altered this in the NZ GPI
Paradigm Shift in Last 5 Years
• Two years after the Stiglitz-Sen-Fitoussi report: What
well-being and sustainability measures?" Conference
organised by France and the OECD to take stock of
initiatives and reflections at national and international
levels.
> Download conference programme - 12 October 2011
(pdf, 580 kb)
> Watch video - 12 October 2011
• European Parliament resolution underlines that the
Rio+20 Summit should deliver an alternative model
to measure growth and welfare 'beyond GDP'.
> Read resolution, European Parliament - 29 September
2011
• European Commission proposes provisional set of
resource efficiency indicators and launches a twoyear stakeholder process to further improve them.
NZ GPI Research Project
• Funded by the Foundation of Research Science &
Technology ($400,500) & Parliamentary Commissioner
for the Environment ($110,000)
• Started June 2006 Ends June 2009
- National GPI:
- Regional GPI: Auckland and Waikato
• Standard international template, some (stock)
componnets were dropped as they should be in a
sustainability measure.
• Data for every year from 1970 to 2006
• 20 individual indicators, and one headline index
NZ GPI Results
Component Indicators of GPI
Base Data only -----
positive
positive
positive
negative
X
positive
negative
negative
negative
negative
negative
X
Excluded as a Stock
Excluded as a StockNegative
(positive)
Negative
(positive)
Negative
(positive)
Negative
(positive)
negative
Negative
(positive)
Negative
(positive)
negative
negative
Excluded as a Stock
X
• Cautious and conservative in our
estimates
Socio-Economic Components
120,000
100,000
Personal consumption of goods & services
($2006 million)
Personal Consumption
80,000
60,000
Personal Consumption
adjusted by Income
Distribution
40,000
20,000
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
0
Growing Inequity
Flat to Declining Growth:1970-1980
Strong Growth: 1991-2006;
Public Consumption Expenditure
(Non-Defensive) ($2006 million)
30,000
25,000
20,000
15,000
10,000
5,000
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
0
Includes: education, health, community services
Doesn’t include ‘defensive expenditures’ – $ needed to eliminate/
avoid the unwanted side-effects of economic growth
– e.g. health expenditure resulting from air pollution.
Services of Public Capital
14,000
($2006 million)
12,000
10,000
8,000
6,000
4,000
2,000
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
0
• Services from publically owned infrastructure – eg, roads and water supply
• Decline during economic reforms 1984-1990 – taken a long time to recover
• Not that easy to measure. Calculated as depreciation of capital stock
Value of Unpaid for Household and
Community Work ($2006 million)
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Second largest contributor to GPI (next to personal consumption)
Cost of Unemployment
-100
-200
($2006 million)
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
0
-300
-400
-500
-600
-700
-800
-900
Calculated on the basis of
‘involuntary leisure hours’
Cost of Underemployment
($2006 million)
-200
-300
-400
-500
-600
-700
Calculated on the basis of the extra
hours that a worker wants to work
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
-100
1970
0
Cost of Overwork
-2,000
-3,000
-4,000
-5,000
Work more than 50 hours a week
Extra hours at average wage rate.
No 1970-1985 data, so modelled.
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1978
1976
1974
1972
-1,000
1970
0
1980
($2006 million)
-100
-200
-300
-400
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
Defensive Expenditure on Health
($2006 million)
0
Cost of Crime
($2006 million)
-2,000
-3,000
-4,000
-5,000
1970 -1992: Year-after-year crime got worse
1992 : turning point
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
-1,000
1970
0
Cost of Commuting
($2006 million)
-2,000
-3,000
-4,000
-5,000
-6,000
Treat with caution.
Data has a number of assumptions.
Currently being revised.
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
-1,000
1970
0
Environmental Components
Loss and damage to terrestrial
ecosystems
($2006 million)
-200
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
0
-400
-600
-800
-1,000
Cost of Deforestation (net loss of ecosystem services +
passive values) Approx.20%
Damage caused by Pests Approx.80%
Loss of wetlands($2006 million)
2006
2003
2000
1997
1994
1991
1988
1985
1982
1979
1976
1973
-500
1970
0
-1,000
-1,500
-2,000
Most undervalued
Ecosystem!
$50,000 per hectare
per year
-2,500
-3,000
-3,500
Based on 3 known points (1972,1983,2002) for spatial coverage – the rest interpolated
Scarcity value of 2% pa applied in the valuation
Loss of soils($2006 million)
0
-500
-1,000
-1,500
-2,000
-2,500
-3,000
65% Loss of production due to Erosion
5% Ecological impacts of Erosion
30% Net loss of land due to Urban Expansion
Loss of air quality
($2006 million)
-200
-300
-400
-500
-600
-700
Only reliable data for PM10 from 1996-2006
1970 – 1995 time series regression
Air quality is improving , but more people affected.
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
-100
1970
0
Land Contamination and Landfills
-150
-200
-250
-300
-350
Peak Landfill Volumes
-400
-450
-500
Mainly cost of landfills, but also includes the clean-up costs of contaminated sites
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1980
1978
1976
1974
1972
-100
1970
-50
1982
($2006 million)
0
Climate Change
2006
2003
2000
1997
1994
1991
1988
1985
1982
1976
1973
-500
1970
0
1979
($2006 million)
-1,000
-1,500
-2,000
-2,500
-3,000
Used Proxy: cost of paying for NZ’s GHG emissions.
Based on net greenhouse gas emissions:
(1) Energy & Industry (+), (2) Agriculture (+), (3) Forestry Plantings/Harvest (-/+)
Loss of Water Quality
($2006 million)
0
-500
Significant increase in
non-point source
from this date onwards
-1,000
-1,500
-2,000
-2,500
($2006 million)
-50
-100
-150
-200
-250
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
Ozone based on Deaths
($2006 million)
0
2006
2004
2002
2000
1998
1996
1994
1992
($2006 million)
1990
1988
1986
1984
1982
1980
1976
1974
-100
1972
-50
1970
0
1978
Noise Pollution
-150
-200
-250
-300
-350
-400
-450
-500
Only based on traffic noise
The near-linear trend, due to near-linear increase in vehicle-km.
New Zealand GDP vs GPI
($2006 million)
180,000
GDP
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
0
Key Findings:
• 1970-1984: Both indicators are similar
• Since 1984: Genuine Progress Indicator less than GDP
•Since 1984: The gap is widening.
New Zealand GDP vs GPI
($2006 million)
180,000
GDP
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
0
Conclusions and Caveats
• Data is inadequate in number of components (cost of
overwork, cost of commuting, air quality, water quality,
noise pollution)
• Proxies for Welfare Needed to used for some
components (climate change, water quality)
• Nevertheless, the overall trends in the GPI presented
today robust
• Challenge to the Government ...... We need a GPI,
and proper resources to construct it.
“It is better to be roughly
right, than precisely wrong”.
John Maynard
Keynes
Thank you