Accounting for the Utilisation of Energy Resources within the Genuine Progress Indicator

• Main Author: Cook, David, 1983-
• Other Authors: Háskóli Íslands
• Format: Thesis
• Language: English
• Published: 2014
• Subjects: Hagfræði; Iceland
• Online Access: http://hdl.handle.net/1946/17702

This Master’s thesis critically examines the Genuine Progress Indicator (GPI), evaluating its robustness as an alternative measure of sustainable economic welfare. It is recognised that the GPI was initiated to mainly reflect strong rather than weak sustainability principles and embrace a Fisherian conception of income and capital. In the light of these two core understandings, this thesis reviews the GPI’s accounting methodology for the costs of non-renewable energy resource utilisation. It is argued that the most apt means of applying cost deductions for the utilisation of fossil and nuclear fuels is the full-cost replacement approach, expressed in terms of the present value of the most suitable renewable energy fuel alternative. Prior to this thesis, neither existing calculation methodologies nor academic reviews of the GPI had considered the importance of maintaining sustainable yields from renewable energy resources. In particular, geothermal resources, although renewable in the sense of the Earth’s almost ubiquitous capacity to store heat, are frequently utilised for electricity generation at a rate that is unsustainable. Pressure recovery and fluid-heat recharge periods typically endure for several decades or more. Where geothermal resources are utilised unsustainably, this thesis contends that the GPI should deduct costs for the excess depletion of ‘renewable’ energy resources. This approach would maintain the GPI’s methodological correctness as a measure of sustainable economic welfare in current time terms. Failure to do so is affirmative of the weak sustainability paradigm, inferring that overexploited energy resources can be either fully replaced or partially substituted when their yields begin to diminish. This thesis draws upon the example of Iceland to delineate a new method for calculating a GPI cost deduction for the unsustainable utilisation of geothermal resources. The advised approach synthesises existing academic theory concerning the sustainable utilisation of geothermal resources and ...