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alternative indicator. For more than 50 years, the System of NationalAccounts has been used, quoted and refined around the world. Every countryhas accepted GDP as a measure of economic activity; furthermore, increasingit has become a universal goal, from Canada to China. Consequently, radicalmodifications to the GDP are unlikely because of the importance ofinternational comparability. However, as Statistics Canada‟s Hans Messingerremarks, the importance of international comparability “does not precludeourselves putting out alternative measures to (GDP).”(18)B. What Makes a Good Indicator?According to the Winnipeg-based International Institute of SustainableDevelopment, a good alternative economic indicator is characterized by thefollowing factors:policy relevance;simplicity;validity;time-series data;availability of affordable data;ability to aggregate information;sensitivity; andreliability.In some cases, constructing indices requires creating new data sets; in others,data must be reused in new ways. Probably the most difficult criterion tofulfil is that it be “scientifically valid” (this covers issues such asmeasurement and definitional problems). Again, it should be noted that theseissues apply equally to the GDP when it is used as an indicator of socialwelfare.ADAPTING <strong>THE</strong> GDP: SOME ONGOING PROJECTSA. SNA Satellite AccountsThe rise of environmentalism has been one of the main forces behind thealternative-indicators movement. In response, the 1993 revisions to the SNAby the United Nations, World Bank, International Monetary Fund,Organisation for Economic Co-operation and Development (OECD), and theCommission of the European Communities incorporated guidelines to allowfor a “satellite system for integrated environmental and economic accounting,to make explicit environmental protection expenditures, to link resource useand waste production to economic data and to calculate an environmentallyadjusted Net Domestic Product to account for natural resource depletion andenvironmental degradation.
In accordance with this goal, the World Bank in 1997 publishedExpanding the Measure of Wealth: Indicators of EnvironmentallySustainable Development, and Statistics Canada released onDecember 4, 1997, the new Canadian System of Environmental andResource Accounts, which will be incorporated into the country‟snational balance sheets and input-output accounts. In fact, a majorgoal of Statistics Canada‟s new Environmental Protection ExpenditureAccounts is „to provide those who might be interested in calculatingan environmentally-adjusted GDP along these lines with theinformation necessary to do so.‟(from GPI Atlantic‟s Measuring Sustainable Development)Incorporating natural resources into balance sheet accounts provides astatement of national wealth (value of capital from which a nation can derivefuture income). Currently, this includes machines that harvest timber, but notthe timber itself. Both are capital assets, but unlike the situation of a nationlosing all its capital (as currently defined), a nation could exhaust a naturalresource and it would not show up in the calculation of the national accounts.The reason for this is the fact that man-made capital is taken into accountwhen it is created; however, “discovered” natural capital is never accountedfor on a balance sheet.The satellite system reorganizes the SNA framework to better serveenvironmental analysis to make explicit spending on environmentalprotection activities, and to present the value of natural resource asset stocksand the yearly change in these stocks. It also describes theenvironment/economy interaction in physical terms, linking data on resourceuse and waste production to economic data from SNA. The result is anenvironmentally adjusted Net Domestic Product.B. Redefining Progress’ Genuine Progress Indicator (GPI)Redefining Progress, a San Francisco-based policy organization(www.rprogress.org), is at the forefront of the alternative economic/socialindicator movement. Their Genuine Progress Indicator (GPI) adjusts theGDP to account for “negative” growth (such as resource depletion andspending for crime prevention) versus “positive” growth. Its goal is to createa single-number indicator that will supplant GDP as a measure of economicand social welfare.The GPI is designed to measure economic welfare and sustainable economicdevelopment. It begins with consumer spending adjusted for incomeinequality, to which it adds and subtracts various factors deemed to contributeor hamper sustainable economic development and social welfare (see Table1).
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