A policy analysis of Victoria's Genuine Progress Indictor

The Journal of Socio-Economics 37 (2008) 864–879

A policy analysis of Victoria’s GenuineProgress Indictor

Matthew Clarke a,∗, Philip Lawn b,1

a School of International and Political Studies, Deakin University, 221 Burwood Highway,Burwood, Vic. 3125, Australia

b School of Business Economics, Flinders University, GPO Box 2100, Adelaide, SA 5001, Australia

Accepted 1 December 2006

Abstract

Measuring sustainable well-being is an important task in determining whether people’s lives are improvingor becoming worse over time. A new index, the Genuine Progress Indicator (GPI), has been developed inorder to measure sustainable well-being. The GPI is comprised of a large number of individual cost andbenefit items that account for various social, environmental and economic impacts associated with a growingeconomy. Various policy implications flow from the result of applying this new well-being metric. This paperbriefly reviews an application of the GPI to the state of Victoria, Australia for the period 1986–2003, beforediscussing the policy implications of this application.Crown Copyright © 2007 Published by Elsevier Inc. All rights reserved.

JEL classification: P16; Q20; Q43

Keywords: Victoria; Well-being; Genuine Progress Indicator

1. Introduction

Measuring sustainable well-being is important in determining whether people’s lives areimproving or worsening over time. Yet there is little consensus on how well-being should bedefined and it is often discussed without explicit explanation (Clarke and Islam, 2004). Aggregateincome accounts, such as per capita Gross Domestic Product (GDP) or per capita Gross State Prod-uct (GSP) at the sub-national, were not designed to measure well-being (Kuznets, 1941, 1968).

∗ Corresponding author. Tel.: +61 3 9244 6007; fax: +61 3 9244 6644.E-mail addresses: [email protected] (M. Clarke), [email protected] (P. Lawn).

1 Tel.: +61 8 8201 2838; fax: +61 8 8201 5071.

1053-5357/$ – see front matter. Crown Copyright © 2007 Published by Elsevier Inc. All rights reserved.doi:10.1016/j.socec.2006.12.058

mailto:[email protected]

mailto:[email protected]

dx.doi.org/10.1016/j.socec.2006.12.058

M. Clarke, P. Lawn / The Journal of Socio-Economics 37 (2008) 864–879 865

Yet from their inception, income accounts have assumed this role both in the economic literatureand in public debate (Beckerman, 1994; Hjalte et al., 1977; World Bank, 2001; Gylfason, 1999).Indeed, prior to the current formulation of these income accounts, other estimates of nation’s pro-ductivity were also used as indicators of society’s well-being (Pigou, 1920; Hicks, 1940). Suchan approach implicitly assumes that well-being and economic growth are either the same conceptor, at the very least, closely related (see Dollar and Kraay, 2001; Quay, 2001). However, thisrelationship fails to consider a number of important economic costs and non-welfaristic impactsof economic growth on well-being.

An alternative indicator of well-being has recently been developed. The Genuine ProgressIndicator (GPI) is a monetary-based index designed to ascertain the impact of a growing economyon sustainable well-being. The GPI is comprised of a large number of individual cost and benefititems that account for various social, environmental and economic impacts associated with agrowing economy. Various policy implications flow from the result of applying this new well-beingmetric.

This paper reviews the results of a GPI study for the Australian state of Victoria, 1986–2003.Victoria is Australia’s second most populated state and has the second largest economy. Victoriais located in the southeast corner of mainland Australia. Various policy implications follow fromthese results and are discussed in some detail in the second half of this paper. We acknowledgethat this policy discussion is normative in nature. We hold that it is in fact the role of economiststo engage in policy debate, not simply to provide economic analysis in isolation. We recognizethis is a contentious position.

This paper is set out as follows: The GPI is introduced in Section 2 and its results analysedin Section 3. Section 4 briefly notes some of the benefits of the GPI approach before the policyimplications flowing from these results are discussed in Section 5, before the paper is concludedin Section 6.

2. Introducing the GPI

The Genuine Progress Indicator (GPI) is a monetary-based index that has been designed toascertain the impact of a growing economy on sustainable well-being. Economic growth has anumber of impacts, both positive and negative, that are not properly accounted for within standardnational account measures. The GPI is comprised of a large number of individual benefit and costitems that account for these wide-ranging impacts of economic growth, including social andenvironmental benefits of costs as well as the standard economic variety. Therefore, whilst theGPI embraces some national accounting values, its full calculation depends on a number of othervalues that normally escape market valuation.

2.1. Methodology

A number of GPI studies have now been undertaken for a wide range of countries (see forinstance, Diefenbacher, 1994; Moffat and Wilson, 1994; Rosenberg and Oegema, 1995; Jacksonand Stymne, 1996; Jackson et al., 1997; Stockhammer et al., 1997; Guenno and Tiezzi, 1998;Castaneda, 1999; Hamilton, 1999; Lawn and Sanders, 1999; Lawn, 2000a; Clarke, 2004). Onlyon two occasions has the GPI been calculated at the state or provincial level (Costanza et al.,2004; Anielski, 2001).

The individual items used to construct the Victorian GPI are listed in Table 1. The itemsin Table 1 have been selected in response to the fact that, while GDP and GSP are adequate

866 M. Clarke, P. Lawn / The Journal of Socio-Economics 37 (2008) 864–879

Table 1Items and the valuation methods used to calculate the GPI

Item Welfarecontribution

Method of valuation

Consumption expenditure (CON) + Adjusted for all cigarette, tobacco and half of alcoholexpenditureAdjusted for part expenditure (considered defensive) of rent,health, government final expenditure, food, electricity, vehicleoperating costs, transportation, communication, hotel, cafesand restaurants, and insurance and other financial services

Expenditure on consumer durables(ECD)

− ECD equals the sum of private expenditure on clothing,footwear, furnishings, household equipment, and vehiclepurchases

Service from consumer durables(SCD)

+ Service equals the depreciation value of existing consumerdurables (depreciation rate of stock assumed to be 10% perannum)• SCD = 0.1 × value of consumer durables

Adjusted consumption Timing adjustment of consumption benefits• CON − ECD + SCD

Distribution Index (DI) ± DI based on the change in income distribution over the studyperiod (1986 = 100.0)

Adjusted consumption (weighted)(**)

Adjusted CON weighted by the DI

• Adjusted CON ÷ DI × 100

Welfare generated by publiclyprovided service capital (**)

+ Welfare assumed to equal 75% of public sector consumptionof fixed capital

Value of non-paid household labour(**)

+ Non-paid household labour is valued using the net opportunitycost method

Value of volunteer labour (**) + Volunteer labour is valued using the net opportunity costmethod

Cost of unemployment,underemployment, and labourunderutilisation (**)

− Calculated by multiplying the CU8 number of underutilisedlabour by the estimated cost per unemployed person

Cost of crime (**) − Calculated by multiplying various crime indexes by theestimated cost of each crime category

Cost of family breakdown (**) − Calculated by multiplying the approximate number ofdysfunctional families (based on divorce numbers) by theestimated cost per family breakdown

Change in foreign debt position (**) ± Annual cost equal to the change in net foreign liabilities fromone financial year to the next

Cost of non-renewable resourcedepletion (*)

− Calculated by using the El Serafy (1989) ‘user cost’ formula todetermine the amount to set aside to sustain a flow of incomeequal to that generated by the exhausted resource

Cost of lost agricultural land (*) − Calculated to reflect the amount required to compensatecitizens for the cumulative impact of past and presentagricultural practices

Cost of irrigation water use (*) − Calculated to reflect the amount required to compensatecitizens for the cumulative impact of excessive irrigation wateruse

Cost of timber depletion (*) − Calculated by using the El Serafy (1989) formula to determinethe cost in circumstances where the rate of timber extractionexceeds the rate of timber regeneration and plantationestablishment


Table 1 (Continued )

Item Welfarecontribution

Method of valuation

Cost of air pollution (*) − Calculated by weighting the estimated 1992 cost of airpollution by an air pollution index

Cost of urban waster-water pollution(*)

− Calculated by weighting the estimated 1994 cost of urbanwaster-water pollution by a waste-water pollution technologyindex

Cost of long-term environmentaldamage (*)

− Calculated to reflect the amount required to compensatecitizens for the long-term environmental impact of energyconsumption

Lost natural capital services (LNCS) Sum of (*) items. The LNCS sub-total reflects the cost ofsacrificing some of the source, sink, and life-support servicesprovided by natural capital

Ecosystem Health Index (EHI) ± EHI based on the change in remnant vegetation over the studyperiod

Weighted LNCS (**) Lost natural capital services (LNCS) weighted by the EHI• LNCS ÷ 100 × EHI

Genuine Progress Indicator (GPI) Sum of (**) items• GPI Beginning with adjusted CON (weighted)

Population • Population of study regionPer capita GPI GPI ÷ population• Per capita GPI • GPI ÷ population

indicators of the volume of national and state/provincial-based economic activity, respectively,they are unable to reflect the impact of a growing economy on sustainable well-being. That is:

• GDP ignores many of the benefits generated by economic activity (e.g., the value of householdand volunteer work and the services provided by existing consumer durables);

• GDP counts the production of additional human-made capital as a current benefit when, in fact,the benefits of newly produced human-made capital – such as durable producer and consumergoods – are enjoyed in future years;

• GDP counts some of the costs of economic activity as benefits. For example, the cost ofdefensive and rehabilitative expenditures is counted as a benefit yet it constitutes the opportunitycost of economic activity because the resources used have been diverted from potentiallybenefit-yielding endeavours;

• given that income is best defined as the maximum amount that can be produced and consumed inthe present without depleting the stock of welfare or income-generating capital (Hicks, 1946),the calculation of GDP fails to involve the necessary subtraction of any natural capital depletioncosts;

• the calculation of GDP also fails to take into account the welfare impact of a changing distri-bution of income and the social cost of rising unemployment and increasing foreign debt levels(Robinson, 1962; Easterlin, 1974; Abramowitz, 1979; Daly and Cobb, 1990).

Table 1 also describes the valuation method used in the calculation of each item and whetherthe item contributes positively (+) or negatively (−) to sustainable well-being. A full descriptionof how these separate estimations were made can be found in Lawn and Clarke (2006).


Fig. 1. Victoria’s GPI p.c. compared to GSP p.c. (2002–2003 dollars).

3. Analysis of Victoria’s GPI

Between the period 1986–2003, Victoria’s GPI increased (in constant 2003 dollars) from$18,839 per Victoria to $22,951 (see Appendix A). This rise was less than 1.5% per annum orjust under 22% over the study period. This growth in sustainable well-being should be consideredquite modest, especially when compared to the increase in Victoria’s GSP per capita – an annualincrease of 45% over the study period or 2.5% per annum. Victoria’s GSP per capita was $26,744in 1986 and $39,067 in 2003. The difference between Victoria’s GSP per capita and GPI per capitagrew from $7,905 to $11,136 per Victorian during this time (see Fig. 1).

Victoria’s GPI per capital fluctuated throughout the study period. After an initial steep rise to$20,879 in 1987, per capita GPI varied minimally from year to year to be slightly lower in 1993at $20,336 per Victorian. However, per capita GPI fluctuated considerably over the next 7 years.It rose and fell in each alternate year between 1993 and 2000, ending marginally higher in 2000at $21,677 per Victorian. The per capita GPI then rose in both 2001 and 2002, but fell again in2003. The 2003 value of $22,951 per Victorian was slightly lower than its 1999 peak of $23,403.At the same time, Victoria’s GSP rose steadily (albeit it more rapidly after 1995) with much fewervariations.

Interestingly, the difference between the two indicators changed very little between 1986 and1993. Although this had a lot to do with the slow rate of growth in Victoria’s per capita GSP overthis period, a disconcerting aspect of the comparison between the two indicators is that, beyond1993, per capita GPI did not accelerate in the same manner as per capita GSP.

This relationship is can also illustrated by normalising both indices and starting both GSP percapita and GPI per capita with an index of 100.0 in 1986, as in Fig. 2. Both figures shows thatVictoria’s per capita GPI closely followed the trend movement of its per capita GSP until 1996.Beyond 1996, and particularly after 1999, the growth rate of Victoria’s GPI was unable to keeppace with the rate of increase in Victoria’s per capita GSP. This suggests firstly that the rapid


Fig. 2. Victoria’s GPI p.c. compared to GSP p.c. (Index 1986 = 100).

increase in per capita GSP over the past decade did not translate very effectively into a rise insustainable well-being. Secondly, and as alluded to earlier, it appears that as much as the rise inper capita GSP yielded significant extra benefits to the average Victorian, it came at the expenseof increasing social and environmental costs.

By deconstructing the index, it is possible to briefly explain the fluctuations in Victoria’s percapita GPI, why its general rise did not begin until after 1993, and why the rise in the per capitaGPI was poor compared to the rate of economic growth experienced during this time.

The major influences on Victoria’s per GPI included:

• the sheer magnitude of consumption and its increase after 1997. From 1997, the magnitude andsize of consumption in Victoria increased significantly compared to the decade prior to this.Whilst consumption had increased steadily (other than a 2-year fall in 1991 and 1992), thisgrowth accelerated markedly from 1997. It should be noted that this increase in consumptionwas in line with growth recorded across Australia at this time (Lawn and Clarke, 2006);

• the increasing disparity in income distribution between 1988 and 1990, and again from 1994 to1996. There was a significant deterioration in income equality in Victoria in this period. Withinthe GPI, income inequality reduces the positive well-being impact of consumption by actingas a deflator;

• the value of unpaid work (non-paid household work plus volunteer work). Unlike per capitaGSP, the per capita GPI includes unpaid work. Therefore the constant and steady increase inboth non-paid household work and volunteerism in Victoria during this period had a positiveimpact on the GPI, lifting it higher than would have been the case if these figures had remainedat 1986 levels;

• the rapid increase in the cost of unemployment (broadly defined) between 1990 and 1994and the continuing relative high cost of unemployment between 1996 and 2003 despite thesignificant fall in the official unemployment rate. The GPI is negatively impacted on by the


costs associated with unemployment. So as these costs increased markedly in the first half of the1990s, this constrained growth in the per capita GPI. Further, even whilst official unemploymentfell following this, the costs of unemployment remained significantly high to continue actingas a constraint to growth in Victoria’s GPI growth;

• the fluctuations throughout the study period of Victoria’s share of the change in Australia’sforeign debt. As a dynamic metric, the foreign debt assigned to Victoria fluctuated throughoutthe period thus impacting on the per capita GPI from 1 year to the next; and

• the increasing cost of environmental damage (lost natural capital services), in particular, therising cost of long-term environmental damage caused by Victoria’s excessive rate of energyconsumption. This was the largest costs associated with achieving economic growth in Victoriaduring this period and subsequently had the greatest negative impact on Victoria’s per capitaGPI.

Minor influences on Victoria’s per GPI included the rise in the service from consumerdurables after 1996, the decrease in the welfare from publicly provided service capital between1992 and 1997, and the increase in the combined cost of crime and family breakdown after1996.

4. Benefits of the GPI

4.1. Systems analysis

The original development of income-adjusted measures of welfare (Sametz, 1968; Nordhausand Tobin, 1973; Daly and Cobb, 1990) contained an implicit acknowledgement that the economywas part of a larger interrelating system. This general approach highlights the positive and negativeconsequences that achieving economic growth has on other sub-systems within society. Thisrecognition is an important tenet of this framework.

Systems analysis must also be considered when drawing policy implications from GPI results.It should be assumed that, just as economic growth impacts on other sub-systems, a focus onthe environment can also impinge upon other sub-systems. It should also be assumed that theseinterrelating consequences can have positive or negative welfare implications. Before policiesbased upon GPI results are adopted and implemented, a thorough systems analysis of their impactmust be undertaken.

4.2. Capturing sustainability paths

Sustainability cannot be adequately reflected within an index number, such as GDP. However,as ‘sustainability is a property of the path the economy is on and not of the state of the systemat any given time’ (Atkinson et al., 1997, p. 62), indicators, such as the GPI can provide insightsinto this “sustainability” path.

Enhancing this sustainability path is a distinct strength of the policies emanating from GPIresults. Such policies can improve a nation’s performance in achieving sustainable development.

4.3. Encouraging alternative development prescriptions

In the same manner as the Human Development Index (UNDP, 1995), the GPI is an alternativemeasure of development to traditional representative indicators, such as GDP per capita. By


defining development more widely than simply income, the value of the GPI in terms of its policyimplications lies in its questioning of development orthodoxy and creation of a space in whichalternative development prescriptions are encouraged.

Given their very nature, it is unlikely that the policy implications suggested by the GPI resultswill be immediately implemented. However, by proposing wider development prescriptions, theGPI, like the HDI, can impact on the policy debate by encouraging dissent from the orthodoxy.Over the long-term, this impact may be significant enough to result in the implementation of moreextensive anti-growth policies.

5. Policy implications

By comparing the trend movement of per capita GPI with the physical growth rate of theeconomy, it is possible to determine if economic growth has been translated into improvementsin sustainable well-being. In the mid- to late-1980s, the higher rate of growth of the Victorianeconomy narrowed the gap between the per capita GPI of Victoria and that of the Rest-of-Australia.The gap, however, widened during the period from 1993 to 1998 when the Victorian economygrew at a much lower rate than the economy of the Rest-of-Australia. Finally, from 1999 to theend of the study period, the very high rates of growth of both economies in 2000 and 2003 causedthe per capita GPI of Victoria and the Rest-of-Australia to decline.

Overall, the message appears to be very clear. A lower rate of growth is beneficial to sustainablewell-being and is a relationship that could be intensified if more was done in both Victoriaand Australia generally to narrow the gap between the rich and the poor; increase resource useefficiency; encourage better rather than more production; and endeavour to keep renewable naturalcapital stocks and critical ecosystems intact.

As discussed, the primary purpose of constructing the GPI was an alternative measure ofwell-being to GDP to highlight the full impact of a growing economy on sustainable well-being.It is important that some discussion is given around the policy implications that follow fromthis consideration (Clarke, 2004, 2006). Yet public policies are not made in a political vacuumand policies that may be of great value to a nation’s citizens cannot always be implementedimmediately or at all because of institutional failings, misgivings held by the majority of thepopulation, and concerns that some people could be adversely affected. However, despite these‘political’ constraints, the following policy implications are produced outside this constraint. Wefurther note explicitly that whilst the policy implications discussed below flow from the applicationof the GPI to the Australian state of Victoria, it is reasonable to argue that these policy implicationswill have relevance for many other economies as the Victorian per capita GPI results are not widelydifferent to other applications (see for instance, Diefenbacher, 1994; Moffat and Wilson, 1994;Rosenberg and Oegema, 1995; Jackson and Stymne, 1996; Jackson et al., 1997; Stockhammer etal., 1997; Guenno and Tiezzi, 1998; Castaneda, 1999; Hamilton, 1999; Lawn and Sanders, 1999;Lawn, 2000a).

5.1. Taxation

Tax revenues can be maintained (or even increased) by shifting the tax burden away fromincomes, profits and labour and moving it to resource depletion and pollution using through-put taxation (or tradable depletion and pollution permits) (O’Riordan, 1997; Lawn, 2000a,b).Throughput taxes are collected on resource throughput per unit of economic activity (Daly, 1996;Lawn, 2004a,b). By reducing tax on income and profits, business is encouraged to seek higher


value-adding production operations as well as qualitatively improve the stock of human-madecapital. Reductions of tax on labour will reduce unemployment through lowering labour costs.The imposition of these depletion and pollution taxes therefore assists to increase the efficiencyof this resource use which, in turn, reduces the pressure per unit of economic activity on thenatural environment. Reforming tax in this manner rewards those engaged in welfare-enhancingactivities over those whose activities actually reduce well-being.

5.2. Land

The value of agricultural land lies in its propagating properties. If overused, the propertiesreduce and can eventually disappear. Sustainable farming practices remove this risk. Farmersdirectly benefit from the sustainable use of their agricultural land. Yet governments can practi-cally assist farmers by assuming some of the financial costs associated with sustainable land usepractices. We argue that sustainability is a public good and thus requires government intervention.The first major component of a sustainable land use policy is the use of subsidies and substantialtax rebates to assist farmers to adopt sustainable land use practices. The second policy componentis the levying of penalties on farmers who fail to fulfil their stewardship responsibility. Impor-tantly, a similar approach could also be applied in the case of the forestry, mining, and irrigationindustries. While many would query the possible high cost of this restructuring process, we areconfident that it amounts to much less than the eventual social and environmental cost of failingto adopt a proactive stance.

5.3. Ecosystems

Biodiversity is necessary to sustain the natural environment’s life-supporting services. Toensure this, around 20 percent of a nation’s land area should be preserved as habitat for wildlifeconservation (Wilson, 1992). Legislation similar to the Native Vegetation Clearance Act of SouthAustralia (1990) is a central instrument in maintaining this biodiversity. Wholesale land clearancein South Australia has ceased since this law was passed. We would further argue that compensationbe made available in instances of the potential loss of agricultural production to ally equityconsiderations. Again, the preservation of such biodiversity must be considered a public goodthus requiring government investment.

5.4. Green production

Both state and federal governments can play a significant role in the establishment and devel-opment of high-tech, resource-saving industries by taking a greater lead in the procurement ofproducts containing recycled materials, and of plant, machinery, and equipment powered byrenewable energy sources. The construction of low energy-using public buildings would alsobenefit significantly. Green procurement policies help to develop ready markets for low environ-mental impact goods that allow emerging green industries to rapidly attain the critical mass andeconomies of scale required to compete against traditional industries.

5.5. Employment

Whilst the previous policy implications have focused on environmental determinants of well-being, this final policy implication directly addresses a significant social determinant of well-being.


State and federal governments should restore full employment as the centrepiece of macroeco-nomic policy or at least give achieving full employment equal prominence to controlling inflation.Unemployment (and underemployment and labour underutilisation) imposes significant welfarecosts on society, resulting in inequities that can become structural in nature (Mitchell et al., 2003;Sen, 1997). As unemployment is a severe example of inefficient resource use, every efficiency-concerned government should be disturbed by the enormous waste that it represents. Althoughthere is little opportunity to consider how full employment can be restored in an economy wherethe growth rate has been slowed or perhaps brought to a halt (i.e., the steady-state economy), weinvite all readers to consider the work of the Centre of Full Employment and Equity (Universityof Newcastle, Australia) and the papers appearing in the International Journal of Environment,Workplace, and Employment.

We would also like to stress that an important underlying assumption to these policy rec-ommendations is that any proposed policy that negatively impacts on a small percentage of thepopulation warrants compensation in some form—perhaps in the form of a direct compensationpayment or a community level project to offset localised impacts. In this way, the welfare ofaffected citizens can be maintained so as to allow beneficial policies to be introduced.

6. Conclusion

Assessing sustainable well-being is an important, but difficult, task. GSP fails to encapsulatethe full impact of a growing state economy on sustainable well-being. GSP not only ignores non-market production, it overlooks many social and environmental costs and makes no allowancefor the impact that a change in the distribution of income can have on sustainable well-being.GSP is also deficient in that its calculation assumes that all current consumption expenditureis welfare-enhancing in the present when, in fact, current expenditure on consumer durablesgenerates welfare benefits in future years. The same also applies to the treatment of publiclyprovided service capital and net capital investment. The GPI has been developed to assist withthis task.

Victoria’s per capita GPI fluctuated over the study period but, overall, rose from a value of$18,839 per Victorian in 1986 to $22,951 per Victorian by 2003. This constituted a 21.8% rise insustainable well-being over the study period or an average rate of increase of 1.46% per annum.It is clear to us that Victoria’s per capita GSP greatly overstates the sustainable well-being ofthe average Victorian. For instance, our study showed that the difference between Victoria’s percapita GSP and per capita GPI averaged around $9,500 per Victorian over the study period.In fact, the disparity increased from $7,905 per Victorian in 1986 to $11,136 per Victorian by2003.

We argue that the high growth rates of the Victorian economy over the past decade have failedto translate effectively into increases in the sustainable well-being of the average Victorian. Thissuggests that the extra benefits generated by high rates of growth were largely offset by the ever-increasing rise in social and environmental costs. We believe that Victoria’s per capita GPI wouldhave been higher in 2003 if the Victorian economy had been physically smaller but qualitativelybetter (i.e., if better goods were produced rather than a lot more goods).

From a policy viewpoint, we acknowledge that the Victorian Government is limited in itscapacity to increase Victoria’s GPI simply because a great deal of what impacts on the Victorianeconomy remains the exclusive policy domain of the federal government. This aside, we believethat the Victorian Government can still play a significant role in boosting the sustainable well-beingof the average Victorian.


Given our reservations regarding the relationship between GSP growth and sustainable well-being, we believe the Victorian Government should be doing more to: (a) integrate economic,social, and environmental policies, and (b) treat all benefits and costs as ‘economic’ since, nomatter their origin, they are all real and impact on Victoria’s sustainable well-being (even if they arenot reflected in GSP). In particular, the Victorian Government needs to focus its policy initiativeson “qualitative improvement” (development), not just “quantitative expansion” (growth), whichcan be achieved by designing and implementing policies of the kind outlined and discussed inthis paper.

Appendix A

Genuine Progress Indicator (GPI) and real GSP for Victoria, 1986–2003

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Appendix A (Continued )

Year CON ($) ECD ($) Consumerdurables ($)

SCD ($) AdjustedCON ($)

DistributionIndex

WeightedCON(3) ($)

WPPSC ($) H/holdlabour ($)

Volunteerlabour ($)

a b c d e f g h i j(c × 0.1) (a − b + d) 1986 = 100.0 (e/f) × 100

1986 57,602.8 −10,144.0 85,868.1 8,395.7 55,854.5 100.0 55,854.5 3,486.0 58,397.9 2,222.01987 58,397.3 −9,701.0 87,381.0 8,586.8 57,283.1 98.7 58,009.1 3,304.0 58,985.4 2,668.71988 59,939.5 −9,728.0 89,154.3 8,738.1 58,949.6 102.1 57,717.4 2,911.9 59,555.6 3,115.41989 62,635.0 −10,065.0 91,070.8 8,915.4 61,485.4 105.7 58,181.5 2,731.6 60,108.8 3,562.21990 64,413.3 −10,209.0 93,068.8 9,107.1 63,311.3 107.9 58,663.5 3,586.3 60,645.1 4,008.91991 63,298.3 −9,289.0 93,669.4 9,306.9 63,316.1 101.1 62,629.5 3,578.9 61,164.9 4,455.61992 64,308.3 −9,205.0 93,950.4 9,366.9 64,470.2 98.6 65,378.4 3,877.9 62,491.9 4,902.31993 65,256.3 −9,582.0 94,779.7 9,395.0 65,069.3 102.3 63,612.9 2,982.3 63,786.7 5,349.11994 65,867.8 −9,436.0 96,212.8 9,478.0 65,909.7 105.2 62,624.4 3,367.7 65,049.6 5,795.81995 69,241.5 −9,689.0 97,048.0 9,621.3 69,173.8 108.2 63,935.4 3,812.2 66,281.3 6,242.51996 71,464.0 −9,843.0 96,747.0 9,704.8 71,325.8 113.3 62,938.9 3,164.4 67,482.3 6,689.31997 73,609.3 −10,418.0 97,464.0 9,674.7 72,866.0 110.5 65,961.2 2,052.3 67,945.4 7,136.01998 77,659.5 −11,570.0 99,306.0 9,746.4 75,835.9 110.1 68,856.3 2,552.5 68,392.7 7,582.71999 81,419.3 −12,662.0 101,903.0 9,930.6 78,687.9 110.7 71,082.0 3,076.4 68,824.4 8,029.42000 84,994.0 −13,374.0 105,068.0 10,190.3 81,810.3 109.5 74,723.5 3,084.4 69,241.0 8,476.22001 86,983.0 −13,471.0 109,250.0 10,506.8 84,018.8 111.3 75,477.2 3,002.8 69,642.5 8,922.92002 90,836.3 −14,512.0 114,557.0 10,925.0 87,249.3 111.7 78,107.8 3,318.2 70,029.3 9,369.62003 94,193.3 −15,378.0 120,353.0 11,455.7 90,271.0 111.2 81,158.7 3,557.1 70,401.6 9,816.4

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Year Cost ofu/e ($)

Cost ofcrime ($)

Cost offamily b/d

Vic. share ofo/s debt ($)

Non-ren. res.dep. ($)

Lost agric.land ($)

Irrig. wateruse ($)

Timberdep. ($)

Air polln. ($) Urban w/wpolln. ($)

k l m n o p q r s t

1986 −4,233.9 −3,488.4 −855.6 −11,706.5 −3,018.7 −1,007.2 −3,863.3 28.3 −1,544.9 −1,103.11987 −4,505.3 −3,893.7 −866.8 −4,148.7 −2,850.9 −1,015.9 −3,948.5 26.3 −1,565.8 −1,096.31988 −3,948.6 −3,904.7 −878.0 −3,387.2 −3,351.3 −1,024.7 −4,090.1 26.3 −1,633.5 −1,098.71989 −3,613.1 −3,906.6 −889.1 −6,394.5 −3,519.1 −1,033.9 −4,164.1 32.8 −1,682.4 −1,102.11990 −3,421.8 −3,662.3 −900.3 −5,558.7 −3,767.6 −1,043.2 −4,273.3 11.4 −1,757.6 −1,105.31991 −6,253.3 −3,885.0 −911.4 −3,865.6 −4,349.6 −1,052.4 −4,418.0 6.8 −1,702.5 −1,105.81992 −8,538.4 −3,552.4 −861.4 −6,048.2 −4,362.3 −1,061.5 −4,563.6 35.9 −1,645.6 −1,103.21993 −9,263.1 −3,224.8 −895.2 −4,544.1 −4,441.2 −1,070.8 −4,611.7 −3.4 −1,699.2 −1,096.81994 −9,353.7 −2,992.1 −919.1 1,790.3 −4,300.2 −1,080.4 −4,708.8 −14.5 −1,741.5 −1,090.41995 −8,079.4 −2,887.5 −969.1 −5,688.7 −3,914.6 −1,090.1 −4,876.1 −14.6 −1,784.9 −1,088.51996 −7,361.6 −2,840.6 −1,022.5 −862.5 −3,691.2 −1,100.0 −5,014.0 23.1 −1,845.8 −1,089.71997 −7,863.0 −3,040.3 −1,020.2 −4,116.0 −3,385.8 −1,110.0 −5,161.8 23.1 −1,879.7 −1,087.51998 −7,528.7 −3,191.9 −1,007.5 −5,239.4 −3,257.5 −1,120.1 −5,296.4 102.6 −1,953.0 −1,087.11999 −7,129.1 −3,486.8 −1,043.1 −784.7 −2,342.5 −1,130.5 −5,403.7 102.6 −2,070.1 −1,088.42000 −6,340.1 −3,751.5 −982.5 −11,205.0 −3,212.7 −1,141.4 −5,468.9 102.5 −2,116.4 −1,091.32001 −6,030.6 −4,016.9 −1,089.3 −7,561.9 −2,973.4 −1,152.6 −5,591.7 102.6 −2,157.2 −1,095.72002 −6,491.7 −4,262.5 −1,063.1 −5,157.1 −2,521.0 −1,164.1 −5,716.1 59.1 −2,214.8 −1,097.52003 −6,203.4 −4,545.8 −1,083.6 −8,251.9 −2,556.1 −1,176.0 −5,826.6 102.6 −2,249.3 −1,100.7

M.C

larke,P.Law

n/T

heJournalofSocio-E

conomics

37(2008)

864–879877


Year L-T envdamage ($)

LNCS ($) EHI WeightedLNCS ($)

GPI ($) RealGSP ($)

Vic. Pop.(thousands)

Per capitaGPI ($)

Per capitareal GSP($)

Per capitaGPI ($)

Per capitareal GSP

u v w x y z aa bb cc dd ee∑o to u 1986 = 100.0 (v/w) × 100 (y/aa) (z/aa) 1986 = 100.0 1986 = 100.0

1986 −10,780.9 −21,289.7 100.0 −21,289.7 78,386.3 111,277.3 4,160.9 18,839.0 26,743.9 100.0 100.01987 −11,174.2 −21,625.3 99.9 −21,648.4 87,904.4 113,913.9 4,210.1 20,879.4 27,057.2 110.8 101.21988 −11,579.6 −22,751.6 99.8 −22,808.5 88,373.4 120,027.6 4,262.6 20,732.4 28,158.5 110.1 105.31989 −12,008.4 −23,477.2 99.6 −23,562.8 86,217.8 124,854.1 4,320.2 19,957.1 28,900.3 105.9 108.11990 −12,457.6 −24,393.1 99.6 −24,502.8 88,858.0 131,737.0 4,378.6 20,293.7 30,086.6 107.7 112.51991 −12,897.5 −25,518.9 99.5 −25,642.3 91,271.3 128,882.9 4,420.4 20,647.9 29,156.6 109.6 109.01992 −13,332.0 −26,032.3 99.5 −26,167.0 91,483.3 125,822.0 4,455.0 20,535.0 28,242.9 109.0 105.61993 −13,783.4 −26,706.5 99.5 −26,853.8 90,950.0 131,224.1 4,472.4 20,335.9 29,340.9 107.9 109.71994 −14,234.0 −27,169.8 99.4 −27,328.8 98,034.0 135,835.7 4,487.6 21,845.7 30,269.3 116.0 113.21995 −14,704.6 −27,473.4 99.4 −27,643.6 95,003.2 140,606.5 4,517.4 21,030.6 31,125.6 111.6 116.41996 −15,188.6 −27,906.2 99.4 −28,088.6 100,099.1 146,860.5 4,560.2 21,950.8 32,205.2 116.5 120.41997 −15,680.0 −28,281.8 99.3 −28,476.3 98,579.1 151,056.9 4,597.2 21,443.3 32,858.4 113.8 122.91998 −16,202.9 −28,814.5 99.3 −29,022.4 101,394.2 158,516.3 4,637.8 21,862.5 34,179.1 116.0 127.81999 −16,743.9 −28,676.4 99.3 −28,893.0 109,675.6 169,699.3 4,686.4 23,402.9 36,211.0 124.2 135.42000 −17,300.9 −30,228.9 99.2 −30,467.6 102,778.2 175,225.5 4,741.3 21,677.0 36,957.0 115.1 138.22001 −17,864.9 −30,732.9 99.2 −30,986.0 107,360.7 180,391.3 4,804.7 22,344.8 37,544.6 118.6 140.42002 −18,446.2 −31,100.7 99.1 −31,367.5 112,483.0 187,064.4 4,857.2 23,157.9 38,512.6 122.9 144.02003 −19,038.9 −31,845.0 99.1 −32,129.1 112,720.1 191,875.1 4,911.4 22,950.6 39,067.1 121.8 146.1

Note: All values are in millions of 2002-2003 dollars except where indicated.


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A policy analysis of Victoria's Genuine Progress Indictor

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