The Genuine Progress Indicator –
Just another tool or tomorrow’s vision?

The Genuine Progress Indicator is designed to create value
for economic, environmental and social services.

How Much is a Gallon of Gasoline?

Everyone could come within a few cents at guessing the price. The guessing game really starts when trying to factor in the environment and human impacts. How much is that stream or wetland in your neighborhood worth? Now, rather than being able to come up with a reasonable estimation, it becomes a speculative and emotional decision. This is one of many factors which led to the introduction of the Genuine Progress Indicator (GPI) http://www.green.maryland.gov/mdgpi/ in Maryland.

The GPI factors in environmental and social costs that other indicators like the Gross State Product (GSP) do not have the ability to calculate. The GSP is a pure gauge of if you make 1,000 dollars; than it contributes 1,000 dollars to the economy. It does not account for the lost environmental benefits resulting from the addition of the new strip mall down the street. Problems result from new development such as runoff from paved surfaces and roof, cutting down preexisting trees, increased commuting time, and the use of sediment ponds to replace natural filtration of the ecosystem which was changed. These are just a few of the problems created but used to highlight the impacts of development without concern for future consequences.

Data to calculate the GPI was recently updated to include 2009 information. It showed a modest increase of 3.84% in the Gross State Product and a decline in the GPI of 1.18%. The largest factor leading to the downturn was the current economic climate and further separation of the rich and poor. Some of the main forces contributing to the decline were underemployment and a decrease in net capital investment. Read more about how the values changed in the recent press release.

The results of the GPI were not all bad, as the environmental and social indicators improved slightly, but were not able to overcome the economic impacts from the recession. The environmental indicators were boosted by the overall increase in acres for wetlands and forestry. Take some time to run the model and evaluate trends resulting from various indicators.

The GPI uses weighted formulas from 26 quality of life indicators http://www.green.maryland.gov/mdgpi/indicators.asp, to create a picture of the true costs of economic growth. It considers the positive as well as the negative factors. The indicators not only account for environmental costs but also factor in social costs such as the benefits of volunteerism. The GPI if used as a tool can help citizens and policymakers understand the actual costs and benefits of the state’s economic activity. The current GSP lacks long-term capacity to evaluate unintended consequences that will need to be addressed such as water quality issues from runoff.

The GPI is certainly not the be all and end all for sustainability issues facing our communities. The principle design of incorporating sustainability includes factors such as the economic, social and environmental changes of a project or policy. Ideally all three of these elements would carry equal weight to ensure these changes are carried out with long term thought and minimal effect to the environment. The GSP is designed to measure short term progress with no vision for the long range consequences created by these projects.

There have been some objections stated regarding the methodology used to create the calculations for the GPI. All of the formulas can be referenced at the website and are based on the best scientific and economic data currently available. The use of these numbers from sound data provides the best opportunity for the GPI to start from a scientific rather than emotional perspective. It can be argued that the current value for a wetland of $1,973 per acre may be too low or high. GSP currently values environmental and societal benefits at zero.

The setting of the cost can be related to the introduction of a new product. When a technology is new like a plasma television, the introductory cost of $5,000 is relatively high to the current cost around $1,000. The reduction in cost over time comes from customers paying for the failures and learning curve to improve the product and its profitability. Only once the issues are resolved and improved does the cost start coming down.

If the GPI is allowed to develop in a similar manner, the same process will occur through rational debate. The calculations and values of specific indicators will be adjusted as a result of public comments, scientific evaluations, and academic studies. The danger of starting out with values created by emotional responses could skew the overall trends and undermine the quantitative value of the GPI.

GSP has prospered to date because numbers matter, and when local leaders or a community are reviewing a project, they can project the number of jobs or anticipated revenue. One thing that can not be calculated using GSP is the true environmental cost in terms of loss of environmental benefits, increased traffic, additional infrastructure increases (water, sewer, etc.), and growth from people moving in to fill the jobs.

Sure local groups and activist jump into action to protect an area, but these usually result from emotional connections and attachments. They are sometimes viewed as standing in the way of progress, because there currently is not an accepted tool to evaluate the long-term costs of losing resources. The GPI can help bridge the gap and provide a basis for decision making rooted in results that can be calculated. It is only one tool for guiding decision making, but it brings the process one step closer to an accepted measurement of project feasibility.

This tool provides the opportunity to make decisions based on objective, quantifiable and defendable data. Again, the truth is that numbers matter. This is the reason progress has forged ahead and public support can be generated. The analysis of GSP produces hard numbers that people can relate to and form a basis of understanding.

The efforts to Save the Bay have gone on for decades now. Sure it is a complicated issue because of the multi-jurisdictional leaders and citizens that must interact to develop beneficial actions. Yet, unless the true costs of the environment are accounted for both in growth and environmental restoration, a full recovery of the ecosystem will not occur.

This results from the underlying assumption that GSP directly relates to economic prosperity and is proportional to quality of life. No one can argue that economic prosperity creates beneficial changes in terms of technology and the comfort with which we are able to live. However, the current system does not have the ability to calculate the loss of an opportunity to fish with your children at a local stream, which resulted from the environmental degradation caused by an inadequate growth plan.

Many countries measure their growth with something similar to the GPI but Maryland is the first state to develop a model for these challenges. The model is currently being tested by some local governments in Maryland, and a high school in Michigan is using it for one of their class projects to evaluate the town in which they live.

The ideal candidate to use the GPI would be a local government with control over planning issues in their district. If you are interested in using the model, or would like more information, please contact Sean McGuire at (410) 260-8727.

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