- Investigates the causes of economic imbalances.
- Investigates the effect of the global financial system and/or the monetary system in fostering a sustainable economy.
- Explores and develops market-based solutions.
CSE completed an analysis of the economic benefits of Baltimore's new stormwater management plan using the Genuine Progress Indicator (GPI) as a framework for analysis. The GPI is a measure of economic wellbeing that takes social and environmental costs into account as well as the benefits of green infrastructure. Our results show that emphasizing green infrastructure solutions to stormwater pollution in Baltimore will generate up to $25 million in benefits each year with a social return on investment of nearly 40%.
The GPI was first adopted by the State of Maryland in 2010 as a measure of sustainable economic wellbeing, and is now being developed for use at the county and municipal level. The first iteration of Baltimore’s GPI is now available. Baltimore’s GPI accounts for the benefits of household spending, green and built infrastructure, unpaid labor, parks and open space, as well as the costs of income inequality, pollution, and social costs like unemployment and homelessness. After determining all the ways Baltimore’s stormwater management plan (SMP) could enhance the GPI, we quantified those effects that could be with readily available data. By doing this, we found:
• The SMP has the potential to generate nearly $20 million in economic benefits each year with no special emphasis on GPI-enhancing design features. If those features were added – features like local hiring preference, greater emphasis on green infrastructure, and location of BMPs in residential areas – then the SMP’s annual economic contribution would rise by 29% to over $25 million per year.
• Over a 20-year period, the SMP as currently configured is likely to generate over $22 million in net benefits with a benefit-cost ratio of 1.08 and a social return on investment of over 8%.
• With GPI-enhancing features added, net benefits could be substantially larger. Our analysis shows that 20-year net benefits could be over $107 million with a benefit-cost ratio of 1.40 and social a return on investment of nearly 40%. This underscores the importance of paying attention to design features of the SMP as it is implemented on the ground and recognizing that some design features will pay off far better from a social, economic, and environmental perspective than others.
Our project was implemented in three phases or Tasks, developed collaboratively with the City of Baltimore. These included:
Task 1: Matrix describing all of the ways the SMP can add value to Baltimore’s GPI
The first task was to create a matrix linking each major component of the SMP (a portfolio of BMPs) to each of the aggregate indicators and sub-indicators represented in Baltimore’s GPI. Datasheets were compiled for each BMP to enable the analysis of these linkages. These data sheets contain BMP descriptions, cost data, labor supply metrics (to help determine the degree to which labor outside the City will be required), and nutrient reduction potential.
With these data in hand, CSE then identified linkages between each BMP and the GPI. Linkages were described in terms of the degree of influence: strong, potentially strong, weak, or no effect. Linkages described as “potentially strong” are ones where flexible design features can come into play. The results were presented in a matrix included in the final project report. The matrix was a useful tool not only in helping to guide the final SMP analysis, but also for identifying components and BMPs that have the highest GPI “bang for the buck.”
Task 2: Identify design features for each component and BMP that amplify GPI benefits
In preparing the matrix, CSE identified stormwater management components and BMPs that have a potentially strong and beneficial GPI impact if certain design features were in place. The second task was to refine this list of design features and quantify their marginal GPI impact where possible. For example, with any capital expenditure that involves construction activities, contractors can be either local with most employees residing in Baltimore or from afar, with most employees residing outside the City. This will have a significant impact on the GPI because the resulting income streams map directly into the GPI’s calculations of household consumption expenditures, its largest single benefit category. So adding the design feature “prioritize local employment impacts” may have a large potential impact on GPI benefits.
The full list of design features analyzed by CSE are described in the final report. The analysis of marginal economic impacts was a complex and intensive calculation process, but was indeed completed successfully and shows just how important these design features will be as the SMP is implemented. Appendix A of the final report presents the analysis. As design features that enhance GPI benefits are added, GPI benefits could increase substantially. The biggest gains would be associated with BMP1 (stream restoration, +51%), BMP3 (stormwater pond retrofits, +54%), BMP4 (micro practices, 89%) and BMP8 (green roofs, +242%). Modest increases would also accompany GPI-enhancing features added to BMP2 (bioretention, +29%) and BMP5 (green spaces, +28%).
Task 3: GPI impacts analysis for the SMP
The final task was to develop and run a spreadsheet-based model analyzing the GPI impacts of a suite of stormwater management components and BMPs included in the SMP published in December of 2014. CSE developed estimates for two broad scenarios: (1) a “Baseline” scenario assuming that SMP BMPs will be implemented without any special design features that could enhance their GPI contributions, and (2) a “GPI-Max” scenario that quantifies annual SMP benefits if a number of GPI-enhancing design features are adopted during the implementation phase. The analysis answers the question: “What would Baltimore’s GPI be today if the SMP were fully implemented?” Key findings are set forth in the final report and summarized more succinctly in CSE’s blog published at the time the report was released.
Economic growth as defined by gross domestic product (GDP) and its related indicators is a fundamental cause of economic imbalance because GDP fails to account for the costs of economic activity on society, the environment, or future generations. Instead, all economic activity is classified as beneficial in the GDP framework. The GPI corrects this imbalance by accounting for social and environmental costs and helping to identify economic activities that can be sustained into the future as well as unsustainable activities that are depleting our stocks of natural, built, human and social capital.
As an aggregate measure of economic wellbeing, the GPI is most valuable as a policy analysis tool - helping to identify policies that enhance the GPI and those that create more economic costs than benefits. Our GPI analysis of Baltimore's SMP was an important application of the GPI because so many jurisdictions across the country are grappling with the best way to control stormwater pollution and the GPI helps identify measures that maximize the social and economic impact of these programs.
While the initial scope of our GPI related work is in the State of Maryland, it will serve as a model that can be extended to at least 20 states that are now following Maryland's lead in adopting the Genuine Progress Indicator as an overall measure of economic performance and guide to public policy. Our work on both the GPI and the GPI benefits of stormwater pollution control can be replicated in these states once the GPI is fully embraced and in place. Vermont and Oregon are the furthest along, but there are at least 18 additional states where the GPI will be put in place over the next 3 years.
Our results were disseminated broadly to the stormwater practitioner community in Maryland, non-profits working to protect the Chesapeake Bay, and decision makers in County governments across Maryland now considering GPI projects of their own. Since the report was released, we have had many expressions of interest from other jurisdictions in Maryland, not only to help develop GPI accounts, but to apply GPI analysis of public policy initiatives. We are deeply grateful to the Walker Foundation for helping position CSE to expand our Maryland work in the years ahead.
Project Link http://sustainable-economy.org/category/green-infrastructure/
(Check sent: 7/10/2014)