Project gets $4m for getting growth right

By SIMON COLLINS science reporter

Researchers have been given $4 million to adjust New Zealand's measurements of economic growth to take account of social and environmental costs such as soil erosion.

A team from Massey University and Landcare Research estimates that soil erosion alone costs New Zealand $126 million a year, shaving the country's true growth rate in the past year from 4 per cent to about 3.9 per cent.

In other countries, adjustments for similar social and environmental costs such as crime and pollution have sometimes wiped out true economic growth completely.

Massey Associate Professor Murray Patterson said the aim was to produce a "genuine progress indicator" (GPI) which could be compared with the financial gross domestic product (GDP).

"The typical pattern in most developed countries is that from the mid-1970s the GPI has flattened out when the GDP has continued to rise," he said.

"Big social and environmental costs really hit home from the mid-70s. For example, the rate of road use has risen very dramatically, which will have impacts in terms of carbon dioxide emissions, and there are a lot of social costs in terms of drug use and crime."

An Australian index produced by Canberra's Australia Institute found that from 1991 to 2000, when Australia's GDP per head grew from A$21,000 to A$27,000 ( $23,600 to $30,400), the cumulative "genuine progress" was only 4 per cent.

"A lot of their environmental impacts are from salination of their soils," Dr Patterson said.

"We don't have those kinds of impacts, but the principles and the way they have done the analysis in Australia are reasonably transferable to New Zealand."

Dr Patterson and his colleagues have been given $700,000 a year for six years from the Foundation for Research, Science and Technology for the project, which will also study genuine progress in key regions.

They will collect data on physical flows of materials and products to analyse each region's "metabolism" - the way it transforms energy, water and other materials into products and wastes. They will then work with local councils, businesses and community groups to develop various scenarios for the ways the regional economies might change in the future.

Landcare sustainable business manager Richard Gordon said the ultimate goal was to allow planners to ask "what if" questions such as "what if tourism increases by this much" or "what if the Government imposed a carbon tax".

Landcare and Massey plan to create a joint institute, which may be called the Institute of Ecological Economics, to carry out the research. It will be based in Palmerston North.

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