ABSTRACT

Introduction to the GPI Renewable Natural Resource Accounts

The more trees we cut down and the more fish we sell the more rapidly the economy grows. Because it only counts the value of natural resources when they are harvested and exchanged in the market, the GDP effectively counts natural resource depletion as growth, which in turn is interpreted as a sign of progress and well being.

This is simply bad accounting. It is like a factory owner selling off his machinery and counting the income as profit, regardless of the loss of future goods and services. If we kept our personal or business accounts the way we currently keep our national and provincial accounts, we would soon be bankrupt. The GDP confuses current income with investment.

By contrast, the Genuine Progress Index sees our natural resources as capital assets, subject to depreciation in the same way as produced capital. "Sustainable" development means that we live off the interest, or services rendered by these assets, without depleting the capital.

In assessing the value of this capital, the GPI looks at the full range of functions performed by our natural resources. For example, a forest does provide timber for human consumption. But it also protects against soil erosion, sequesters carbon, regulates the climate, protects watersheds and habitat, and provides recreation. These ecological and social functions also have economic value, even if they are not exchanged in the market.

By exploring these linkages, the GPI demonstrates that protecting the non-market values of our forests in the end enhances timber values too. In other words ecological and economic priorities are not at odds. Protecting the former can enhance the latter. For example, maintaining age and species diversity in forests increases resilience, reduces defoliation in spruce budworm infestations, maintains high value species, and fetches higher market prices for wider diameter timber.

This introduction to the GPI renewable resource accounts (33 pages) explains the GPI approach to natural resource accounting, and provides preliminary results of the research to date. The researchers have found dramatic declines in age and species diversity in Nova Scotia forests; a 30% loss in soil organic matter in the region's agricultural areas; and other troubling signs of a potential future decline in resource productivity. Valuations are given for the province's fisheries; and some preliminary results are presented on the potential costs of climate change to the region.