Genuine Progress Indicator (GPI)
Topic of the practice
Indicator for sustainable well-being creation
Good Practice Information
In spite of the fact that the 3-dimensional approach to sustainability has been repeatedly reconfirmed by the EC (through policies, studies, action plans, recommendations etc), regions have been slow to take up this notion and even slower to introduce measurements reflecting it.
TThe Genuine Progress Indicator (GPI) tries to capture the economic, social and environmental dimensions of well-being in one single measure by deliberate pricing of environmental degradation, resource depletion and social aspects. The indicator measures sustainable well-being creation at macro level (nation, region, province). It also accounts for non-market services and benefits (+) that are ignored in the tradional national accounting framework and subtracts (-) for negative externalities (defensive expenditures or time loss) due to social inequality, working life and urbanisation.
The indicator forms an overall picture of the sustainable well-being creation in the area, pointing out the strengths and weaknesses of the area.
The GPI has been applied widely internationally. It was first calculated for Finland in 2008 by Hanna Rättö and Jukka Hoffrén in Statistics Finland. The GPI index can be expressed by using the equation GPI = Cadj. + B - F - H + I, where Cadj. is consumer expenditure adjusted to account for income distribution, B is non-market production and benefits, F private costs and defensive expenditures, H costs of environmental degradation and depreciation of natural capital and I growth in capital and net change in international position (Rättö 2008, Talberth 2007). The Finnish GPI consists of 23 different indicators (components), as follows: individual consumption expenditure, income distribution (GINI), value of household work, value of higher education, value of volunteer work, services of consumer durables, services of highways and streets, cost of crime, loss of leisure time, cost of unemployment, cost of consumer durables, cost of commuting, cost of automobile accidents, cost of water pollution, cost of air pollution, cost of noise pollution, loss of wetlands, loss of forest.
The Genuine Progress Indicator was tested and a background study was co-financed in two Finnish regions of the FRESH project: Kainuu and Päijät-Häme. The GPI was calculated and tested as a potential new composite indicator measuring regional economic, social and environmental progress.
Evidence of success
The GPI has been tested internationally since 1996. It has proven to be methodologically operational, sound and transferable; however, its parameters need to be contextualised for different regional conditions.
Contact details to obtain further information on the practice
Juha Hertsi and Jyrki Haataja
Regional Council of Päijät-Häme; Joint Authority of Kainuu Region
Annex completed on: 03-23-2011