Costing Quality of Life
Why We Should Place A Dollar Value on Sustainability
Work over the past twenty years to develop ways to measure and cost human and environmental wellbeing is beginning to bear fruit, with implications for policy-makers.
The idea that we can place a dollars and cents value on wellbeing, once considered ridiculous or at least impossible, is becoming mainstream as governments and societies cope with difficult social and environmental issues.
Developing a Complete View of Quality of Life
For many years international bodies such as the Organisation for Economic Cooperation and Development (OECD) have accepted that gross domestic product (GDP), an economic measure of the value of goods and services exchanged for money, is not the only measure of success or wellbeing in a society.
Quality of life indicators attempt to measure other things as well, such as people’s health, social participation in their society, housing, safety and cultural wellbeing. Both the public and private sectors have been involved in developing such indicators. A public-sector example is the set of social indicators developed by Statistics New Zealand.
Indicators reflect what a society considers important, and to some extent are region- or even city-specific. Over time sustainability and natural environment issues have been added to social and economic markers to obtain a more complete picture. Debate at the grass-roots and national levels on indicators has proven a good way to focus attention on difficult issues.
The Next Step: Assessing the Cost of Sustainability
Some governments and non-governmental organisations have moved beyond considering the best indicators of quality of life, and are trying to place an economic value on this concept and the idea of sustainability.
For example, the non-profit organisation GPI Atlantic is working at developing a Genuine Progress Index (GPI) for Atlantic Canada, to be used as a model for Canada as a whole.
Inspired by the Genuine Progress Index first developed in the mid-1990s by the California-based thinktank Redefining Progress, and based on principles from green and welfare economics, the GPI endeavours to put a price on aspects of the quality of life.
The problem with GDP as a measure is that it does not take into account the value of things such as unpaid work, health, and clean air, and does not reflect the cost of negatives such as crime. In some cases behaviour that is regarded as damaging in a sustainable society, such as increased energy use, is treated as a positive because it promotes GDP growth.
Developing a useable Genuine Progress Index is a difficult task, as it involves not only agreement on indicators but development of new costing methodologies and a theoretical framework regarding how everything fits together. But Australia and the Canadian province of Alberta, as examples, have versions, and efforts to construct GPI are underway around the world (such as at the New Zealand Centre for Ecological Economics).
Much in the same way that concern about future supplies of oil have made investigation into alternative energy more economic, the difficulties of designing a GPI seem less significant in recent times, given the importance to governments of understanding the dollars and cents benefits of initiatives such as recycling.
According to the GPI Atlantic website, work on comprehensive indexes such as these is important because they provide concrete information on the real costs of clearcutting forests or traffic congestion in cities. Having actual numbers makes a difference to people and policy-makers, providing “guidance which allows us to evaluate our activities, and change our behaviour accordingly”.
