GPI: an alternative to traditional bottom line

An alternative to the traditional bottom line?

VTDigger    May 30, 2012                 Alan Panebaker

Starting next year, the Legislature will consider the value of things like clean water, volunteer work and time off for employees when it creates its budget.

Under a law signed by Gov. Peter Shumlin this month, the Gund Institute for Ecological Economics will create what is called a “genuine progress indicator” for the state.

The “GPI” will supplement the gross state product to measure the state’s economic, environmental and social well-being.

Once the report is complete, it will go back to lawmakers who will consider the costs and benefits of budget decisions.

Jon Erickson, managing director of the Gund Institute for Ecological Economics at the University of Vermont, spelled out how the genuine progress indicator system will work at a conference Wednesday at the college. Erickson said the institute will pull together Vermont-specific indicators of general well-being. Indicators like clean water and volunteer work would have positive financial value and those on the minus side of the equation, such as crime and pollution, would have a negative value.

Lake Champlain, for example, Erickson said, would likely be in the minus column — for now. “As we make progress in cleaning up Lake Champlain, it would be less of a minus,” he said.

The genuine progress indicator is an alternative to the traditional gross state product calculations Vermont budget-writers and economists use to measure the state’s prosperity. The gross state product demonstrates how many goods and service a state has produced, while a genuine progress indicator takes into account the environmental and social costs of that production.

Erickson said just looking at the objective gross state product doesn’t show the whole picture.

“If we build society around one number and that number is blind to the cost of growth, then you’re going to kind of get what you measure and get a society that has consumers and not citizens,” he said.

Maryland already has a voluntary genuine progress indicator system in place. Vermont is the first state in the country to legislate the mechanism.

Sen. Anthony Pollina, a Washington County Progressive, shepherded the bill S.237, now Act 113, through the Legislature. Pollina said he hopes the GPI will help reshape the legislative debate over budget and public policy priorities.

“We’re not putting a value on things we really cherish like clean water and safe communities and farmland and forestland and volunteering, and we’re not putting an economic value on things we should be considering as we go forward,” he said.

Pollina said he hopes the GPI will give advocates more solid footing to make the case economically for social and environmental issues. For example, he said, putting a dollar value on the cost of delaying cleanup of Lake Champlain could help spur more action from the Legislature to act sooner.

“I think it will give policymakers and citizens the information they need to make the case,” he said.

Linda Wheatley, co-founder of Gross National Happiness USA, has been analyzing the value of non-economic factors like volunteer work and social programs since the organization came together in 2009.

Wheatley said it is difficult to put an economic value on social and environmental indicators.

“We defer or default to those that are easy to measure,” she said. “That’s how we ended up with the GDP.”

Wheatley said the Gross National Happiness idea stems from a 1972 decision by the King of Bhutan to use well-being indicators to guide national development. In 2008, she visited the International Gross National Happiness Conference in Bhutan and started a similar project in Vermont.

The movement was based on the idea of studying happiness in addition to economic growth.

Vermont Secretary of Agriculture Chuck Ross, who attended Wednesday’s conference, said he supports the idea of measuring a happy, productive and sustainable society.

“We want to talk about what it is we want for outcomes,” he said. “We need to find things to measure and figure out strategies to move us in that direction. Not as easy as falling out a log to figure out how to do it best.”

Ross said the GPI is about determining what Vermonters want as a society. For example, he said, the state should maintain and conserve its natural resource base as part of its economic base.

Ross said indicators could include the number of acres under management in forestry, acres under a specified farm plan and acres sustainably managed for maple production. Those numbers could indicate how the state’s resource-based economic foundation is faring. Measuring what the state has preserved can be a better indication of how well it is doing than how many goods it produces or raw unemployment figures, according to Ross and others.

The enabling legislation that allows the Gund Institute to develop the GPI system was overwhelmingly approved by the Senate and passed the House 97-41.

Critics are concerned that the law will delegate the evaluation of what is important to Vermont to unelected people who will define well-being by things they ideologically support rather than what is good for the state.

Rep. Anne Donahue, a Republican from Northfield, said on the House floor, “To endorse a bill that attempts to put numbers on abstract values without a legislative endorsement of the product prior to implementation is an irresponsible delegation of our responsibilities.”

Republican Rep. Heidi Scheuermann of Stowe said she was afraid the “Genuine Progress Indicator (otherwise known as the Happiness Index) will be used as a tool to avoid addressing the real economic challenges facing Vermont families and businesses.”

Rep. Duncan Kilmartin, R/D-Newport, was more flippant.

“Voting ‘no’ on this piece of legislation puts me in a state of euphoria and ecstasy, elevated well above and beyond my normal state of ‘happiness,’” he said.

The Gund Institute will spend the next six months or so refining the Genuine Progress Indicator, which will be presented to the Legislature next session.

Whether it makes Vermonters happier about the state’s economy remains to be seen.

Correction: In 1972, the young King of Bhutan came up with the Gross National Happiness idea, not the Genuine Progress Indicators as we originally reported. Many thanks to an alert reader who sent us the correction through our Report an Error form located at the end of each story posted on