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Mark Anielski, Director, Sustainability Measurement, Pembina Institute

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.

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Mark Anielski, Director, Sustainability Measurement, Pembina Institute

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  1. Measuring Genuine Well-being: The Genuine Progress Indicator System of Sustainable Well-being Accounts for AlbertaAtkinson Foundation MeetingTorontoOctober 1, 2001 Mark Anielski, Director, Sustainability Measurement, Pembina Institute Senior Fellow, Redefining Progress, Oakland CA

  2. “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

  3. “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

  4. Redefining Economics Economics Oiko nomikus Wealth (Capital) Weal th Household Management Well-Being Condition of sustainable “living capital” stewardship

  5. U.S. GPI.. declining economic welfare $30,000 $25,000 U.S. GDP per capita $20,000 US $ per capita, 1992 chained dollars $15,000 U.S. GPI per capita $10,000 $5,000 $- 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 Source: Data derived from spreadsheets from the U.S. Genuine Progress Indicator (GPI) for 1999. Redefining Progress, Oakland, CA. www.rprogress.org

  6. U.S. …making money, growing poor

  7. Canada….better economic well-being?

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

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

  10. Elements of Well-being Societal Well-Being Account Economic Well-Being Account Environmental Well-Being Account • 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

  11. Societal Well-being Indicators 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 • 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 and Personal Well-Being Account Genuine Progress Indicators Economic Well-being Account Environmental Well-being Account * 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.

  12. Environmental Well-being Accounts • 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 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 Environmental Well-being Account Genuine Progress Indicators Economic Well-being Account Societal Well-being Account * 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.

  13. Economic Well-being Accounts • 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 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) Economic-Well-being Account Genuine Progress Indicators Societal Well-being Account Environmental Well-being Account * 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.

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

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

  16. Historical Portraits of Well-being 1999 1998 1961 The worst The best

  17. Alberta Economic Growth vs. Genuine Progress Index 100.0 90.0 GDP Growth Index Best year: 1999 Worst year: 1961 80.0 Index (where 100=best) 70.0 60.0 GPI Well-Being Index 50.0 Best year: 1961 Worst year: 1998 40.0 1961 1966 1971 1976 1981 1986 1991 1996 1999 Source: Alberta GPI Accounts 1961-1999

  18. 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)

  19. Alberta GDP versus Sustainable Economic Welfare The value of unpaid work is estimated at $38.8 billion (1998$) or 35.4% of Alberta’s GDP in 1999. The social and human capital costs are estimated at $23.4 billion (1998$) or 21.3% of Alberta’s GDP. Total environmental costs and natural capital depreciation is estimated at $26.4 billion (1998$) or 24.0% of Alberta’s GDP. Pembina Institute

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

  21. Condition of Well-being Report

  22. GDP grows but to whose benefit? 40,000 40,000 Despite increasing economic growth since 1981, average real disposable incomes have stagnated since peaking in 1981. 35,000 35,000 30,000 30,000 25,000 25,000 GDP Per Capita (1998$) 20,000 20,000 Personal Disposable Income Per Capita (1998$) 15,000 15,000 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) 10,000 10,000 Economic growth 5,000 5,000 Disposable income - - 1961 1966 1971 1976 1981 1986 1991 1996

  23. Economic well-being at risk? Pembina Institute

  24. Another day older…. 40,000 7,000.00 35,000 6,000.00 30,000 5,000.00 25,000 4,000.00 Premature Mortality 20,000 GDP Per Capita (1998$) 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. 3,000.00 15,000 2,000.00 10,000 Economic growth 1,000.00 5,000 Premature mortality - - 1961 1966 1971 1976 1981 1986 1991 1996 Pembina Institute

  25. …. and deeper in debt 40,000 55,000 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 35,000 45,000 30,000 35,000 25,000 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 (1961-1999). GDP Per Capita (1998$) 20,000 25,000 Debt per Capita (1998$) 15,000 15,000 10,000 5,000 Economic growth 5,000 Household debt - (5,000) 1961 1966 1971 1976 1981 1986 1991 1996 Pembina Institute

  26. More GDP…more poverty? 40,000 30 Between 1961 and 1999, the level of poverty (LICO) increased 37.1%; Alberta had Canada’s third lowest poverty rate 35,000 25 30,000 20 25,000 Poverty (% of all persons living below the low income cut-off) 20,000 15 GDP Per Capita (1998$) 15,000 10 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). 10,000 5 Economic Growth 5,000 Poverty - - 1961 1966 1971 1976 1981 1986 1991 1996 Pembina Institute

  27. 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

  28. Jubilee? 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 1980. The eight wealthiest Albertans earned an estimated 5,645 times more per hour than an Albertan working full-time at the minimum wage.

  29. Less time with the kids but more GDP 40,000 200 180 35,000 160 30,000 140 25,000 120 Parenting and Eldercare (hours per person 15 years and over per year) GDP Per Capita (1998$) 20,000 100 The value of unpaid work in Alberta in 1999 is estimated at $38.8 billion (1998$) or 35.4% of Alberta’s GDP. 80 15,000 60 10,000 40 Nearly 70% of full-time employed, married mothers feel rushed and stressed on a daily basis Economic growth 5,000 20 Parenting and eldercare - - 1961 1966 1971 1976 1981 1986 1991 1996

  30. More divorces add to GDP growth 40,000 55% The rate of divorce rose 4.6% per annum compared to real GDP growth of 4.4% per year, 1961 to 1999 35,000 45% 30,000 35% 25,000 Family Breakdown (% of marriages that end in divorce) GDP Per Capita (1998$) 20,000 25% The estimated cost of divorce and family breakdown in Alberta in 1999 is estimated to contribute $148 million(1998$) to Alberta’s economic growth. 15,000 15% 10,000 5% Economic growth 5,000 Family breakdown - -5% 1961 1966 1971 1976 1981 1986 1991 1996 Source: Statistics Canada, CANSIM special retrieval and Alberta Economic Accounts 1999

  31. $40,000 $35,000 $30,000 $25,000 GDP per capita (1998$) $20,000 $15,000 $10,000 $5,000 2.0 $- - 1961 1966 1971 1976 1981 1986 1991 1996 Rising suicide adds to the GDP 20.0 18.0 16.0 14.0 12.0 Suicide is the leading cause of death amongst Calgary males aged 10-49 years. Suicide rate per 100,000 10.0 8.0 6.0 GDP at market prices, expenditure based (1998$ per capita) Suicide rate for both sexes per 4.0 100,000 population Pembina Institute

  32. Health of democracy? 40,000 100 90 35,000 80 30,000 70 25,000 60 Democracy (voter participation %) GDP Per Capita (1998$) 20,000 50 40 15,000 30 10,000 20 Economic growth 5,000 Voter participation 10 - - 1961 1966 1971 1976 1981 1986 1991 1996 Pembina Institute

  33. Growing Ecological Deficits… 40,000 12.0 35,000 10.0 30,000 8.0 25,000 Ecological Footprint (hectares per capita) GDP Per Capita (1998$) 20,000 6.0 Alberta has the fourth largest ecological footprint in the world after the United Arab Emirates, Singapore and the United States of America. 15,000 4.0 10,000 2.0 Economic growth 5,000 Ecological footprint - 0.0 1961 1966 1971 1976 1981 1986 1991 1996 Pembina Institute

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

  35. $40,000 $35,000 $30,000 $25,000 GDP per capita( 1998$) $20,000 20 $15,000 15 $10,000 10 $5,000 5 $- 0 1961 1966 1971 1976 1981 1986 1991 1996 Depleting oil and gas capital…more GDP 45 There are less than 10 years of natural gas reserves remaining, based on current production and stocks. However, Alberta has more oil in the oil sands than Saudi Arabia’s official reserves, more than 300 years of production. 40 35 30 25 Crude Oil and Natural Gas Reserve Life (years remaining) GDP at market prices, expenditure based (1998$ per capita) Crude Oil and Natural Gas Reserve Life Average The estimated cost of depreciation of nonrenewable resources is estimated at $10.6 billion in 1999 or 9.7% of GDP.

  36. $40,000 $35,000 $30,000 $25,000 GDP per capita (1998$) $20,000 $15,000 1.50 $10,000 1.00 $5,000 0.50 $- - 1961 1966 1971 1976 1981 1986 1991 1996 Depleting timber capital…more GDP 4.00 More than 90% of Alberta’s forests are fragmented 3.50 3.00 2.50 Timber Sustainability Index (ratio of growth to depletions) 2.00 GDP at market prices, expenditure based (1998$ per capita) Timber Sustainability Index, the ratio of annual increment (growth) divided by total harvest, energy and agriculture depletions

  37. Growing Carbon budget deficit…more GDP 40,000 5 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. 35,000 4 30,000 25,000 3 Carbon Budget GDP Per Capita (1998$) 20,000 2 15,000 Economic growth Carbon budget deficit 10,000 Carbon budget deficit 1 Carbon budget surplus 5,000 - - 1961 1966 1971 1976 1981 1986 1991 1996 Pembina Institute

  38. Water quality improving but is it sustainable? 40,000 100 90 35,000 80 30,000 70 25,000 60 Water Quality Index GDP Per Capita (1998$) 20,000 50 40 15,000 30 While surface (river) water quality has improved very little is known about the long-term sustainability of Alberta’s groundwater aquifers. 10,000 20 5,000 Economic growth 10 Water quality - - 1961 1966 1971 1976 1981 1986 1991 1996

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

  40. Alberta GPI Balance Sheet (1960-2000) (physical and monetary stock accounts) For additional information: www.pembina.org marka@pembina.org Pembina Institute

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