The Alberta government could lead the province into a more sustainable future, by improving the accounting procedures it uses to measure progress and well-being.
That's the opinion of economist Amy Taylor of The Pembina Institute, who has just completed a study of the methods used in Alberta to measure long-term sustainability.
Taylor says that Alberta-which is a leader in the use of indicators-can now build on this good work by learning from innovative new accounting models under development in Canada and elsewhere.
Why bother? Current, conventional measurements of national progress, such as the Gross Domestic Product or the United Nations System of National Accounts, can't be relied on to measure the true well-being of a country. In fact, they violate basic principles of financial accounting.
That's because they treat the liquidation of natural capital assets-such as oil, gas and forests-as income. They don't account for the reduction in the inventory of these resources when they are exploited.
More and more, however, governments, businesses and other organizations are starting to use a wider variety of "indicators" to measure their progress and accomplishments, and to make important decisions.
Alberta is a leader in this regard. The provincial government was the first in Canada to adopt publicly reported indicators to track its progress on important social, economic and environmental goals.
The Pembina Institute believes this is a step in the right direction, because genuine sustainability —including environmental, social and economic — factors should be the long-term goal of any government.
So what's next? It's time for the province to expand on its good work to date, and take the next steps to create a truly sustainable accounting framework.
How? Instead of just tracking and reporting on progress, the government should create a new, more comprehensive accounting framework that is capable of assessing the full benefits and full costs of all forms of capital in Alberta — human, social, natural and built.
"This means incorporating unaccounted-for benefits such as time spent raising children, caring for elders and volunteering," explains Taylor, Director of Pembina's Ecological Fiscal Reform Program. "It also means measuring the depreciation costs associated with drawing down finite oil and gas stocks and unsustainable forestry and agricultural practices."
For guidance, the government could draw on Pembina's recently updated Alberta Genuine Progress Indicator (GPI), which tracks 51 social, environmental and economic indicators in a cost benefit framework.
Read Sustainability Indicator Frameworks in Alberta: Setting the Context and Identifying Opportunities.
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For more information, contact:
Amy Taylor
Director, Ecological Fiscal Reform Program
403.678.3355