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Between the Issues, August 1999

The Nova Scotia Genuine Progress Index: Valuing our natural resources

by Ron Colman

We currently measure our progress as a society according to our economic growth rates. If the gross domestic product (the sum total of all goods and services exchanged for money) is growing at a good rate, we describe the economy as "robust," "dynamic," and "healthy."

A growing economy, we assume, translates into social wellbeing and prosperity. That assumption guides policy and even determines what issues make it onto the policy agenda.

According to this measure, the more rapidly we deplete our natural resources and the more fossil fuels we burn, the faster the economy grows and, therefore, the "better off" we think we are. Because we assign no value to our natural capital, we actually count its depreciation as gain. This is like a factory owner selling off his machinery and counting it as profit, with no regard to the reduced flow of services in the future.

In Nova Scotia we are constructing an index of sustainable development, the Genuine Progress Index (GPI), that is designed to give us a more accurate picture of our wellbeing. Unlike the GDP, which values only capital produced by humans, the GPI values natural, social and human capital. Among its 20 social, economic, and environmental components, the Nova Scotia GPI therefore includes four natural resource accounts that assign explicit value to our soils, forests, fisheries and nonrenewable resources, and assess the sustainability of our harvesting practices and consumption habits.

In the Genuine Progress Index, natural resources are valued as finite capital stocks, subject to depreciation like produced capital. Genuine progress is measured by our ability to live off the income or "services" generated by our resources, without depleting the capital stock that is the basis of wealth both for our children and ourselves.

The GPI acknowledges not only directly marketable products, but the full range of ecological and social services provided by these resources, which also have indirect economic value. The GPI forestry account, for example, counts

not only timber production, but also the value of forests in protecting watersheds, habitat and biodiversity, guarding against soil erosion, regulating climate and sequestering carbon, and providing for recreation and spiritual enjoyment. Healthy soils and the maintenance of multispecies, multiaged forests in turn provide multiple economic benefits by enhancing timber productivity, increasing the economic value of forest products, protecting against fire, disease and insects, and supporting the burgeoning ecotourism industry.

Unlike our current measures of progress, based on the illusion of limitless growth, the GPI accounting framework therefore clearly recognizes inherent limits to our economic activity based on finite resource stocks with limited regenerative capacity, and thus points to economic policies modelled on the balance and equilibrium that exist in nature.

David Suzuki recently remarked that the only biological organism that has unlimited growth as its dogma is the cancer cell, the apparent model for our conventional economic theory. Until we apply the same basic accounting logic to our natural capital as we currently do to our produced capital, we are unlikely to cut through the pervasive illusion that "more" is "better," or to deviate from the selfdestructive path of limitless growth. Including natural resource values in our core economic accounts and measures of progress is essential if we are to shift our economic system in a profound way to chart a sustainable future for our children.

The three renewable resource accounts will be completed in the fall of 1999. Statistics Canada has designated the Nova Scotia GPI as a pilot project for Canada, so we are hopeful that this work will have an impact beyond this province.

On the next page, Jennifer Scott, who is working on the agriculture account, discusses just one of the many indicators we could use to measure progress. Look for articles on the GPI fisheries and forestry accounts in the November issue of BTI.


Ron Colman is the director of GPI Atlantic, a nonprofit research association working for genuine progress in Nova Scotia.

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