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GDP: The Sustainability Challenge

A presentation on national GDP as a driver of both economic growth and environmental decline. This presentation proposes an alternative and sustainable metric instead of the traditional GDP metric. For Global Change course.

Michele Zang

on 14 April 2014

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Transcript of GDP: The Sustainability Challenge

What is GDP?
Limitations of GDP
Global Case Studies
Action Plan and Policy
For a happier, brighter future.
GDP: The Sustainability Challenge
Anna Johnson and Michele Zang
Sustainable Gross Domestic Product (GDPs)
Definition and History
What does it measure?
What does it NOT measure?
Alternatives to the GDP
Policy Components
United Nations
Pass a bill requiring all nations to adopt the GDPs by the year 2030.
Concentrated Interdependence
Target the top 12 countries who contribute to 2/3 of the global economy

A Policy for the People
We value what we measure, but we don't measure what value.
This allows ample time for systemic adjustment to the new metric.
Revisions are allowed to be proposed to bill, but the main purpose of the policy (ensuring that national success goes beyond monetary measure) will remain the goal of the policy.
Emerging markets are on the rise, it is imperative that we change the GDP policy, because their economic growth is driving the resource depletion
The prediction is that other countries will follow the "big guys"
GDPs: The Breakdown
GDP is a measurement of the total dollar value of all goods and services produced domestically over the course of a year (7). It has been the dominant metric of economic activity and national success since 1944 (3).
Indicator of the "health" of an economy
Competitive driver of economic growth
Metric chosen by global economic leaders in a post-war economy
Formula: GDP= C+I+G+(EX-IM)
C: Private consumption
I: Private investment
G: Government expenditure
EX-IM= Net difference of imports and exports (4)
Does economic success = national success?
Standard of living
Human happiness
Human development
Social inequality
Income inequality
non market-transactions
Household work
Volunteer efforts
Environmental degradation (5)
GPI: Genuine Progress Indicator
Focuses on sustainability and environmental impact (10).
Resource depletion
Environmental damage
Income distribution
Higher educaiton
Lifespan of consumer durables and public infrastructure
Dependence on foreign assets
*Subjectivity makes these measures vulnerable (i.e. political manipultion)
*Happiness and social well-being not fully accounted for.
Alternative metrics that provide a more complete report of a nations success, status, and well-being.
HPI: Happy Planet Index
Focuses on social, economic, and environmental well-being.
Collects data from Gallup, World Values Survey, and the Ecological Footprint to assess the relationship between social/economic well-being and environmental consumption (per quantity of environment consumed). (9, 13)
Why haven't we ditched the GDP?
Daphne Wysham, Institute for Policy Studies (14)
"The concept of GDP is so entrenched in our national and international discourse that it is hard to imagine it any other way."
Many countries are beginning to recognize the need for a better metric of national success (3).
Global examples of alternative metrics at work
1990s: Finland adopts GPI system and recalculates metrics.
To understand the inconsistences between the growth of GDP and the unsatisfied average Finn.

GPI conversions revealed that GPI had peaked in 1989 and has been on the decline.
Finland prefers realistic GPI metric over GDP (8).
Sustainable development to Reduce Carbon Emissions in China (1).
Emerging market experiencing severe pollution
Plans in action to slow GDP growth to fight hazardous effects that industrialization and pollution have had on air quality and the ecosystem.
GDPs incorporates:
some features of the traditional GDP
the multidimensional model of the GPI
a framework and criteria like the Happy Planet Index (HPI) for well-being.
GDPs is careful in its assignment of monetary values to abstract values of the worth of environmental protection and well-being measures, which is one of the major criticisms of the GPI.
GDPs provides a more accurate representation of the well being of a society by analyzing and understanding all that contributes to the progress, success, and welfare of a society.
Source: http://rebuild21.org/social-progress-index-michael-porter/
Source: http://www.theguardian.com/environment/2014/mar/12/china-smog-pollution-beijing
Source: http://www.whitehouse.gov/about/inside-white-house
Works Cited

1. Baster, Naomi. Adjusting China's GDP: A green accounting illustration. International journal of green economics, 4(2), 197-204. 2010.

2. Beyond GDP: Social Progress Index vs. Happy Planet Index. Rebuild21, Apr. 2015. Web. 14 Apr. 2014. <http://rebuild21.org/social-progress-index-michael-porter/>.

3. Costanza, Robert. Time to Leave GDP Behind. Nature International Weekly Journal of Science, 15 Jan. 2014. Web. 27 Feb. 2014. <http://www.nature.com/news/development-time-to-leave-gdp-behind-1.14499#/GDP>.

4. Daly, Lew, J.Mijin Cha, and Dan Thompson. The Myth of GDP. Demos, 26 Jan. 2012. Web. 27 Feb. 2014. <http://www.demos.org/sites/default/files/publications/GDP-Does-Growth-Equal-Progress-Demos_0.swf>.

5. GDP: An Imperfect Measure of Progress. Bloomberg View, 30 Jan. 2013. Web. 27 Feb. 2014. <http://www.bloombergview.com/articles/2013-01-30/gdp-an-imperfect-measure-of-progress>.

6. Inside the White House. N.p., n.d. Web. 14 Apr. 2014. <http://www.whitehouse.gov/about/inside-white-house>.

7. Is GDP a satisfactory measure of growth?. OECD Observer, Jan. 2005. Web. 28 Feb. 2014. <http://www.oecdobserver.org/news/archivestory.php/aid/1518/Is_GDP_a_satisfactory_measure_of_growth_.html>.

8. Hoffren, Jukka, and Hanna Ratto. "Analysis: Development of Sustainable Economic Welfare in Finland." Finnish Statistics. Statistics Finland, 2008. Web. 28 Feb. 2014. <http://genuineprogress.net/wp-content/uploads/2013/01/GPI-Finland-Paper.pdf>.

9. Schwartz, Judith D. Is GDP an Obsolete Measure of Progress?. TIME, 20 Jan. 2010. Web. 27 Feb. 2014. <http://content.time.com/time/business/article/0,8599,1957746,00.html>.

10. Szell, Gyorgy. "Beyond GDP." Indian Journal of Industrial Relations 46.4 (2011): 545+. Academic OneFile. Web. 27 Feb. 2014.

11. Vaughn, Adam. Nine Chinese cities suffered more days of severe smog than Beijing. N.p., Mar. 2014. Web. 14 Apr. 2014. <http://www.theguardian.com/environment/2014/mar/12/china-smog-pollution-beijing>.

12. Willard, Bob. 5 Reasons Why a GPI Should Replace the GDP. N.p., Mar. 2011. Web. 14 Apr. 2014. <http://sustainabilityadvantage.com/2011/03/08/5-reasons-why-a-gpi-should-replace-the-gdp/>.

13. World Values Survey. N.p., n.d. Web. 12 Feb. 2014. <http://www.worldvaluessurvey.org/>.

14. Wysham, Daphne. A New Set of Tools for Measuring Economic Progress. IPS, 24 Oct. 2011. Web. 27 Feb. 2014. <http://www.ips-dc.org/blog/a_new_set_of_tools_for_measuring_economic_progress>.
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