The purpose of this post is to show how Ecological footprint (EF), Gross Domestic Product (GDP), and Genuine Progress Indicator (GPI) are connected between each other and how these indicators have been changing and increasing throughout the years due to  various reasons.

Ecological Footprint (EF) is an amount of human demand on Earth’s ecosystems. EF number shows us the amount of productive land and water which are required for the humankind’s consumption in order to produce energy and natural resources and to absorb the waste humans create. Leaving no ecological footprint would mean that humans gives back to the environment just as much as he’s taking.

Gross Domestic Product (GDP) is the market value of all final goods and services produced in a country per year. GDP is an indicator which presents the standard of living of a given country.

Genuine Progress Indicator (GPI) is an indicator used in order to measure the economic growth of a given country. GPI makes difference between desirable and undesirable costs which better guide to citizens’ welfare.

GDP and GPI differ from each other, because in each of them different components are used for calculations. GDP measures what is produced, but ignores what is required for creating specific production. Under GDP, high crime rates, all the workers’ hours spent at their desks, and environmental damage are all good for economy.

On the other hand, GPI has a point of view from which the economic activity is measured as an impact on the individual and on the society. Under GPI, low crime rates, pursuing amateur interests, and low EF are evaluated and beneficial for the economy.

The GPI is considered more “green” than the GDP because GDP increases with the increase of the pollution and the depletion of natural capital rates. In other words, the damages humans make in the environment benefit the GDP. On the other hand, GPI adjusts certain factors in order to measure the poulation’s economic growth. For instance, GPI subtracts the environmental costs, which makes the GPI more “green” that the GDP.

Picture 1: GDP vs. GPI (Source 5)

The following graph shows the change of GDP and GPI in the USA between 1950 and 2004.

Graph 1: The change of GDP and GPA in the USA (1)

Next graph shows the components of GDP and GPI and how both of these indicators are calculated.

Graph 2: Components of GDP and GPI (1)

Following table shows us some calculations of GDP, GPI, and their components in the USA from 1950 until 2004. In the text, which is right after the table, the numbers of the cells in the table are explained.

Component of GPI US total in 1950(trillion of dollars) Per capita in 1950(thousands of dollars) US total in 2004(trillion of dollars) Per capita in 2004(thousands of dollars)
GDP

1.153

7.572

7.589

25.902

Benefits

1.041

6.836

4.746

16.198

Environmental costs

0.407

2.672

3.990

13.618

Social and economic costs

0.476

3.126

3.926

13.400

GPI

1.311

8.610

4.419

14.082

Comparison of GDP and GPI in 1950 and in 2004 and what can be seen from it.

The GDP was 3.42 times greater in 2004 than in 1950. The GPI increased 1.635 times between 1950 and 2004. Both GDP and GPI have increased throughout the years.

As it can be seen from above, GDP is almost twice the GPI. One of the factors which contributed to this result is the deduction of environmental, social and economic costs from the sum of GPI and benefits costs when calculating the GPI. As it is shown and calculated from the table data, the GDP increase tells us that population (per capita) is spending more money. However, according to the GPI the population didn’t live much better between 1950 and 2004 even though more money was spent in 2004 than in 1950.

The increase of benefits, environmental, and social and economic costs and how it influences the overall trend between the GDP and the GPI.

Between 1950 and 2004, benefits increased by 2.369 times, environmental costs by 5.096 times, and social and economic costs by 4.286 times.

These results indicate that benefits costs have increased the least, and that environmental costs have increased the most. These facts have changed the results throughout the years. In order to calculate the GPI, we were supposed to sum up the GDP and benefits costs, and afterwards to subtract environmental and social and economic costs from that number. Since the smallest change (benefit costs) is added to the GDP and 2 greater changes were subtracted from this number (environmental and social and economic costs), GPI is not increasing as fast as the GDP is – it is more or less similar throughout the years.

The component which has gotten the worst over the years is the environmental costs. This fact shows us how humans are not paying attention to the nature and the environment. People are working hard so as to earn for leaving not realizing how they’ve been destroying the world around them. This led to the point where humans are spending much more money now than before, but their life standard didn’t improve much since 1950.

The factors which contribute to the difference between biocentric worldview’s and anthropocentric worldview’s GPI.

In my opinion, a person with anthropocentric worldview would have higher GPI than the person with biocentric worldview. A person with anthropocentric worldview would ignore the costs created by the human interaction with the nature, which directly influences the environmental costs – this component wouldn’t even exist. On the other hand, a person with biocentric worldview would be much more concerned about the nature and environment, which influences the GPI as well.

For all these reasons, it is more likely for a person with anthropocentric worldview to have higher GPI in 2005.

Values of my own the benefits, environmental costs, and social and economic costs comparing to the ones in the table and how should I improve them.

I believe that my own values of benefits, environmental costs, and social and economic costs are not far away from the ones given in the table. However, I would probably contribute to the benefits since I’ve been volunteering many times and I plan to volunteer in the future. I also think that I don’t produce high social costs. On the other hand, my EF (2.27) shows that I’m not behaving well towards the nature and the environment.

In order to help improve these trends in my own personal accounting, I would decrease my EF as much as possible by behaving differently and by changing my habits which contribute to the rise of EF components. Furthermore, I would do even more volunteer work and I would decrease the size of the household I have so as to increase the benefits cost and contribute to the GPI.

I’ve included the following video so as to rise the awareness of how we destroy our priceless planet everyday and how by doing so we enlarge our EF.

What Will You Do to Change the World?

Source 6

References:

1. Withgott, J. & Brennan, S. (2010). Environment: The science behind the stories. Fourth Ed. San Francisco: Pearson Education.

2. Cobb W. C. and John B. Cobb, Jr. (2000). What’s wrong with the GDP? Retrieved on April 30, 2011 from <http://dieoff.org/page11.htm>

3. Investopedia. Genuine Progress Indicator – GPI. Retrieved on April 30, 2011 from <http://www.investopedia.com/terms/g/gpi.asp>

4. CIA: Central Intelligence Agency. The World Factbook. Retrieved on April 29, 2011 from <https://www.cia.gov/library/publications/the-world-factbook/docs/notesanddefs.html#G>

5.  Willard, B. (march 8, 2011). Five Reasons Why a GPI Should Replace GDP. Retrieved on April 29, 2011 from <http://sustainabilityadvantage.com/2011/03/08/5-reasons-why-a-gpi-should-replace-the-gdp/>

6. BBC. “What will You do to change the world?” (Oct 7, 2010). Retrieved on April 30, 2011 from <http://www.youtube.com/watch?v=-6fXvCcY9rw>

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