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It’s a cruel irony for the 300,000 West Virginians forced to turn off their taps for five to ten days earlier this month after a chemical spill contaminated their drinking water supply that their inconvenience and, for some, illness and suffering, will count as a plus according to our leading economic indicator – the gross domestic product, or GDP.
Over time societies have come to equate the GDP – which measures the monetary exchange of goods and services in the marketplace – with progress. Virtually all nations measure it, and it is the principal metric used to gauge how wealthy a country is and whether the welfare of its citizens is going up or down.
The problem is lots of things detrimental to our well-being – including pollution and sickness – count as net positives as calculated by the GDP.
The Elk River in West Virginia. Credit: Tim Kiser/CC
After the January 9 spill of coal-processing chemicals into West Virginia’s Elk River, the expenditures made to clean up the contamination and flush the water system will add to the GDP, as will the payments to doctors and hospitals from the more than 200 residents treated for nausea and other ills associated with exposure to the tainted tap water.
Payments to beverage companies for all the bottled water bought during the tap water ban will bump up the GDP, as well, and so would the two dozen or so lawsuits filed by residents and businesses against Freedom Industries, the owner of the storage container that leaked the two chemicals into the river. (With the company’s filing for bankruptcy, most litigation has now halted.)
So, on balance, the spill will appear to have been a good thing – progress – according to our leading indicator.
Of course, that’s absurd.
Yet, GDP misconstrues or fails to account for important societal values all the time. As Robert F. Kennedy said in an address at the University of Kansas in 1968, the GDP measures “everything except that which makes life worthwhile.”
Momentum is building, however, to replace the GDP – which was developed during the 1930s and 1940s – with a better and more honest indicator of human progress and well-being.
In the January 16 issue of the journal Nature, Robert Costanza of the Crawford School of Public Policy at Australian National University in Canberra and ten colleagues call in a commentary piece for a united and collaborative effort to identify a successor to the GDP, possibly as early as 2015.
Much work has already been done. At least thirteen alternative indicators of human welfare already exist, and some have been applied to a large number of countries. The Index of Sustainable Economic Progress (ISEP) and the General Progress Indicator (GPI), for example, modify the GDP to account for such things as household and volunteer work on the plus side, while subtracting environmental and social costs such as crime and pollution.
According to the GPI, genuine progress peaked in 1978, and has gradually fallen since. The GDP, on the other hand, has continued to soar.
Bhutan measures the well-being of its citizens with a gross national happiness index, one of four survey-based indices, which captures psychological well-being, community vitality, health, education, cultural and biological diversity among other societal attributes.
The Better Life Index, one of seven composite indices, has been applied to some 36 OECD countries and includes measures of housing, health, civic engagement, safety, environment and life satisfaction.
To help organize the process of searching for a successor to the GDP, Costanza and his colleagues have recently formed the Alliance for Sustainability and Prosperity (www.asap4all.org), described as a web-based “network of networks” to communicate about research on elements that contribute to a sustainable quality of life.
The challenge of dethroning the GDP will not be easy. The “green” GDP promoted by former U.S. President Bill Clinton, which accounted for some of the environmental downsides of growth, was effectively killed by the coal industry, the Nature piece points out.
But the search for a successor is a crucial undertaking, because it will reveal important information about ourselves and the society in which we want to live.
It’s been said that we are what we measure. If we want to be a society that values money above all else, then maybe the GDP is the best measure after all.
But if we want to strive for a society that values clean water, good health, vital communities, and a livable planet for future generations, then we need a different indicator to measure our progress.
