Genuine progress indicator

Genuine progress indicator (GPI) is a metric that has been suggested to replace, or supplement, gross domestic product (GDP) as a measure of economic growth. The genuine progress indicator is designed to take fuller account of the well-being of a nation, only a part of which pertains to the health of the nation's economy, by incorporating environmental and social factors which are not measured by GDP. For instance, some models of GPI decrease in value when the poverty rate increases. The GPI is used in ecological economics, "green" economics, sustainability and more inclusive types of economics by factoring in environmental and carbon footprints that businesses produce or eliminate. "Among the indicators factored into GPI are resource depletion, pollution, and long-term environmental damage." GDP gains double the amount when pollution is created, since it increases once upon creation (as a side-effect of some valuable process) and again when the pollution is cleaned up, whereas GPI counts the initial pollution as a loss rather than a gain, generally equal to the amount it will cost to clean up later plus the cost of any negative impact the pollution will have in the mean time. While quantifying costs and benefits of these environmental and social 'externalities' (they are only 'externalities' from the perspective that only increases in financial and man-made capital is important) is a difficult task, "Earthster-type databases could bring more precision and currency to GPI's metrics." "Another movement in economics that might embrace such data is the attempt to 'internalize externalities' - that is, to make companies bare the costs" of the pollution they create (rather than having the government or society at large bear that cost) "by taxing their goods proportionally to their negative ecological and social impacts."

GPI is an attempt to measure whether the environmental impact and social costs of economic production and consumption in a country are negative or positive factors in overall health and well-being. By accounting for the costs borne by the society as a whole to repair or control pollution and poverty, GPI balances GDP spending against external costs. GPI advocates claim that it can more reliably measure economic progress, as it distinguishes between the overall "shift in the 'value basis' of a product, adding its ecological impacts into the equation."^{(Ch. 10.3)}

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