Calvin profs at forefront of national conversation on defining economic success

Calvin professors Matt Heun (engineering) and Becky Haney (economics) and Clemson professor Michael Carbajales-Dale (environmental engineering and earth sciences) are at the forefront of a national conversation about how the success of a nation should be measured.

See full story: Measuring What We Treasure.

On Friday, Feb. 27, the three professors will be at Calvin discussing their recently published book: Beyond GDP: National Accounting in the Age of Resource Depletion. Their talk begins at 3:30 p.m. in the Science Building (Room 010).

In their new book, they argue that society is in a new era where measuring success based simply on GDP is no longer wise. Instead, they argue countries must now take a biophysical approach to economics or adopt a “green GDP.” This new approach would account for the depreciation of natural capital in appraising wealth. Natural capital includes natural resources, such as minerals, fossil fuels, forests and fresh water. But a green GDP would also account for the degradation of ecosystems, which provide important goods and services to the economy and well-being.

For example, a tree might be valued at a certain dollar figure, but a whole forest provides much more in value than the cumulative total of the trees’ dollar value. Forests provide recreation, habitat and carbon sequestration.

Heun uses the metaphor of a metabolism to better understand the economy: “Living organisms take in materials and energy from the biosphere and expel wastes. You need to consider all of the ways the economy is tied to the biosphere and how the economy is really a metabolism that uses energy to process natural resources to make products, some of which provide a better life for us all.”

After making this point in their book, Haney, Heun and Carbajales-Dale suggest more technical formulas by which to do accounting that could be used to better equip scientists and policymakers to make wise decisions.

“Our framework takes into account flows of materials,” he said. “For instance, iron ore comes out of the environment, so that includes the mining industry, but then it goes into steel production and finally to construction. The way materials are stockpiled in certain sectors of the economy changes the picture.

“And the story needs to include the fact that natural resources are now constrained,” said Carbajales-Dale. “The way we currently look at economics was built for the 20th century, when we were still on the upside of resource extraction.”

The authors provide a firm theoretical foundation in Beyond GDP, which they say is needed before proceeding along a path for gathering new data. And the book ends with a list of practical steps to be taken in creating a more comprehensive system of national accounts.

 “When I think, write and speak about this, I think there are so many advantages to having good information and making policies and judgments based on that information, especially with politically charged topics like energy and climate changes,” said Heun.

“In my opinion, information contained in the ‘green GDP’ or other international efforts are a good starting place for getting information we need to make good decisions about energy and the economy,” he added.